What You Need to Know About DBAs
Ch1. 20
Understanding DBAs, or “doing business as” names, is vital for many businesses. This chapter explains what DBAs are, why they’re important, and how to choose and register one for your business.
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An Insightful Guide to Understanding DBAs
In this section, we delve into the specifics of DBAs, including what they are, why they might be necessary for your business, and how to choose and register one. We also discuss the legal implications and advantages of DBAs, providing a comprehensive guide to understanding and utilizing this important business aspect.
Previous Video: Choosing a Memorable Business Name
What You Need to Know About DBAs – Transcript
During the course of business, it’s possible that you want to change the name of your business. But your business’s name is everywhere, and it’s tied up in a lot of legal documents that were created when your business was formed. Your business’s name is tied to an EIN number that you need to pay your business’s taxes. So what can you do if you want to change the name of your business?
Hey everybody, Will Scheren here from Small Business Startup Guide by TRUiC. This video is part of a larger course dedicated to helping small business owners cut through the noise and get to the essentials of starting and operating their business. If that sounds like it would be really useful to you, be sure to like and subscribe.
A DBA or “doing business as” is essentially a nickname for your company. DBAs are not business structures and are not separate legal business entities. They also don’t provide asset protection or any type of liability protection to any business structure.
What is a DBA? A DBA is also known as a fictitious name, trade name, or assumed name, but what does that mean?
“Doing business as” means that legally you’re able to accept payments, open bank accounts, and market under an additional assumed name. This can be very useful for branding and business growth. So if you name your business “Nick’s Awesome Burgers” and decide later that you want to shorten your name and just call your business “NAB,” a DBA will allow you to legally do business as “NAB.”
Keep in mind DBAs are not a separate legal business entity from your business, and they don’t provide any form of asset protection. Meaning if you’re a sole proprietorship or a partnership with the DBA, you still don’t have liability protection. For more information on liability protection, check out our video on business structures in this course.
DBAs can be used by both formal and informal business structures. Let’s break down why each type of business structure would want a DBA. Do you need a DBA? There are two types of business structures: formal and informal businesses. Informal business structures are sole proprietorships and partnerships. While formal business structures are corporations and LLCs.
By default, if you’re a sole proprietorship, your business’s name is your surname. If you want to create a business name and start operating under that name, then you need to file a DBA. Partnerships are more likely to use DBA because if they don’t, then their name must include the surnames of all of the owners.
DBAs are also useful for formal business structures like LLCs and corporations. If you decide to rebrand your business, you can file for a DBA with a new name. This can be a shortened version of your current name, an acronym of your current name, or a completely different name altogether. If you’re interested in rebranding and changing your company name outright, filing for a DBA is a much more simple process than filing for a legal name change.
DBAs can often be used if you want to expand your company and add new brands to your business model that you want to keep separate. If you’re a burger place that starts to sell ready-made burger meals at retail, you may want a DBA that brands those differently than your restaurant.
You can have any number of DBAs under a company, but more isn’t necessarily better. The more DBAs you have, the more maintenance and upkeep your company will have. In addition to this, your company will be liable for anything that happens with any of your DBAs. They’re not separate from your business. This means that if your ready-made burgers start doing poorly, your restaurants would be liable for any debts. For this reason, sometimes it’s more beneficial to have separate LLCs.
DBAs are also useful for banking. If you don’t have a DBA, you can only send and receive payments as your business’s legal name. So if you receive a check for a brand that doesn’t have a DBA, you won’t be able to deposit it into your business’s bank account. Taxes are unaffected. Even with DBAs, you’ll still use your official business name on any legal tax documents.
How to Get a DBA. Steps to get a DBA vary by state. We’ve provided a link to our website where you can find your state-specific requirements below this video. In general, DBAs cost between $10 and $100, and you may need to publish in a newspaper when you create your DBA. You can either follow these next steps to file a DBA on your own, or you can hire a service to do it for you.
The first thing that you’ll want to do is a name search to see if that name is available in your state. After that, you’ll want to do a quick web search to see if the URL is available. Even if you don’t plan on making a website today, you may want to purchase the web domain to prevent someone else from buying it. Then you’ll want to register your DBA with the state. Depending on your location and business structure, you may need to register your DBA with the Secretary of State or with the county clerk’s office.
And with that, you’ll have a DBA.
So in review, DBAs, or doing business as, are trade names, assumed names, or fictitious names of a business. Informal business structures can use DBA in place of their business owners’ surnames, and formal business structures can use DBA as a means to rebrand, add new brands, or change the name that they’re using for their business name.
DBAs are not a business structure and are not separate legal business entities. They also don’t provide asset protection or liability protection to informal business structures. And if you file a DBA for an LLC, the LLC will still be responsible for any losses of the DBA. For state-specific instructions on how to file a DBA, check out the page’s links below at StartupSavant.com.
In the next video in the course, we’ll be taking a look at what you should be considering when selecting a domain name for your business.
This video is part of a step-by-step course that provides business owners all of the essential information for starting and operating their business. We provided a link below this video for you to get access to all of the free and discounted business tools that we mention in this course.
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