What is a DBA? Everything new startups need to know
How would you like to present your business to the world? Your startup name says a lot about your new endeavor. Choosing a company name is one of the first and most significant tasks in a long checklist of items to get a startup off the ground. And filing a DBA with your state or local government offices makes it official.
What is a DBA?
If you’re asking yourself, “What is a DBA?” the term is short for "doing business as.” Many small business owners don’t want to use their own name as the company name and prefer something more descriptive of their products and services. When you register your company’s DBA name, you’re notifying the public that you intend to do business as something different than your legal name.
A DBA is also known as a fictitious business name or assumed business name. DBAs first started as a form of consumer protection to ensure marketplace transparency. Having to file a “doing business as” with a local jurisdiction prevented unscrupulous small business owners from hiding behind more than one company name while continuing their questionable practices.
Today, filing a DBA or fictitious business name adds transparency by creating a public record of who the owner of the business is. Registering a DBA makes it possible to operate your business under a trade name that represents your brand or service, while still letting the public know who is behind the company.
Don’t confuse a DBA filing with a limited liability or corporate filling. A DBA filing and registration doesn't set up a business as a separate legal entity like a corporation does. Filing a DBA only announces who the owner of the company is and doesn’t offer any liability protection.
Should startups file a fictitious business name?
Registering a DBA formally announces that a person or entity intends to operate using the assumed name for which they filed. To avoid non-compliance, file a DBA before you start doing business. Some jurisdictions may allow you to register your startup’s name within a certain amount of time after you launch your business, but it’s best to file right away. Here’s why:
- You may need a DBA to open a business bank account.
- Signing business contracts and leases might require proof of a fictitious business name filing.
- You may be asked for your company’s DBA registration for work contracts.
- You may need a business certificate of good standing from the Secretary of State to show a potential client or financial institution that your business is reliable.
It’s crucial to register your fictitious business name before you start doing business—it’s illegal to run your business using an unregistered business name. States could potentially impose harsh civil and criminal penalties for failure to register a DBA trade name.
Does my small business need to do a DBA registration?
Any business using a variation of the owner’s legal name needs to file for a DBA. Your company’s business structure or entity type may provide more clues.
Companies set up as a sole proprietorship need to file for a DBA if they’re not using the owner’s legal name as the business name. If you choose to use your name plus a description of your product or service, you won’t need to file or register a DBA.
For example, Mike Smith is a plumber. If his company name is Mike Smith Plumbing, he would not need to file for a fictitious business name. But, if his company name were to be Smith Plumbing, then a DBA would be required because his company moniker does not match his full legal name.
Corporations and LLCs
Incorporating a company creates a legal business entity that is separate from the owner. Many businesses choose to set up their startups as corporations to protect themselves and their personal assets from any liabilities pertaining to the company. A limited liability company (LLC) is similar. Like a corporation, the business owner receives legal protections against business-related issues.
You won’t need to file a DBA for corporations or LLCs because incorporating registers the legal entity’s name. However, if you plan on conducting business with a name other than that of your LLC or corporation, you’ll need to register your “doing business as” name.
Benefits of a DBA
DBAs come with advantages. Here are several reasons why filing one could benefit your startup:
- To stay in compliance with your local jurisdiction and avoid penalties for running a business using an unregistered fictitious name.
- It’s usually the least expensive way to operate using a fictitious business name.
- To keep your personal name off public record and maintain your privacy.
- You may legally run a separate business without having to incorporate each one.
- To strengthen your company’s public presence with a name that reflects your business values.
- To rebrand your startup if it needs a boost.
Although a DBA is required to run your business legally if you’re using an appellation other than your legal name, filing one doesn’t protect your business name from being used by others. To prevent others from using your company name, seek trademark protection.
How to file a DBA
You’ll need to register your “doing business as” name with your local government office. Rules, requirements, and costs are different in each state. The Small Business Administration (SBA) provides an updated chart detailing DBA filings by state.
Consult with your local government office or the SBA list of fictitious name filings by state to avoid confusion. Some states and counties allow new business owners to complete their DBAs online while other states require the individual to present themselves in person to file.
Sole proprietors may need to register at the county clerk’s office while LLCs and corporations may have to file at the state level. Here are the general steps required to file a DBA, regardless of jurisdiction:
1. Perform a company name search at your local government office to ascertain if your DBA has been registered or trademarked by someone else.
2. Fill out and sign a fictitious business name statement explaining what name you intend to do business as.
3. Pay the registration or filing fee (if applicable).
4. Place a “doing business as” advertisement in a local newspaper for at least a month to inform the public about your startup’s DBA filing.
5. Receive and save your fictitious name certificate.
6. Remind yourself to renew your business name registration, which may be required every few years, depending on the state.
If you find the filing process to be tedious or complicated, contract a business lawyer to guide you or help file your fictitious business name.
What happens after you register an assumed business name?
Once you register your DBA, you can conduct business legally. Save your filing statement as you may need to provide it to open a business bank account.
After you've successfully chosen your company's fictitious name and registered it at the state or county level, you could file for a trademark with the U.S. Patent and Trademark Office to prevent others from using—and profiting from—your company name.
The importance of a good DBA
Now that you can answer “What is a DBA?” you can assess its importance to your startup. Your business name is more than a name and logo on business cards or letterhead. It can be a powerful aspect of your marketing strategy, providing customers with the first impression of what your startup or business has to offer. Therefore, choose your company name thoughtfully and be sure to register it to avoid potential issues.