Structuring your business and selecting the best legal entity is one of the most important steps you'll take when getting your small business up and running. Deciding between a DBA (“Doing Business As”) or LLC (“Limited Liability Company”) can be complicated and overwhelming for many entrepreneurs. In order to troubleshoot this problem, below are all the differences between the two and tips on how to select the right legal entity for your business or venture in New York.

So, what’s the difference between a DBA vs LLC? A DBA is an informal business structure that "does business as" or operates under a different name other than its legal name. This means that, while the business has the same owners and continues to operate as a singular entity, the DBA can operate under an alias or slightly different name. The more popular aliases include “Fictitious Business Name” or “Assumed Business Name.” On the other hand, a LLC is a state-established legal entity that is separate from its owners, or the individuals operating the business. While, both provide limited liability protection, there are a few major differences when it comes to taxation, privacy and ease of use.

In New York, both DBAs and LLCs require registration with the state, although LLCs are governed by much more rigorous rules and regulations. When starting a business in New York, most entrepreneurs are required to file a DBA designating their business name with the Accounts Receivable Department and the local county clerk or its equivalent. On the other hand, registering a LLC requires more filings with the Secretary of State and the payment of additional fees. However, establishing a LLC also offers many advantages that a DBA does not.

First, while forming a LLC can be more expensive than filing for a DBA, it also offers limited liability protections that can help protect your personal assets if your business ever gets sued. With a DBA, you are still personally liable for any debts or actions taken in that name, whereas a LLC provides the business' owners with limited liability protection. This means that, in the event that a business gets sued, the individual owners’ personal assets are not at risk from the lawsuit, and the only assets at risk are those of the individual’s company.

Furthermore, the taxation of DBAs and LLCs are different. DBAs are taxed on the owner’s personal tax return and are not required to file corporate tax returns. On the other hand, LLCs are treated as their own taxpaying entity, and the profits and losses of the business are reported on the corporate tax return. With a LLC in New York, business owners can also benefit from certain tax deductions that DBAs cannot.

The biggest difference between the two, however, is in the area of privacy. With a DBA, the names of the owners are public record, which may not be desirable for certain business operations. As a result, many businesses opt for a LLC in order to keep the owners’ names and information out of the public record.

At the end of the day, it is important to understand the differences between a DBA vs LLC in New York. Deciding what type of structure is best for your venture depends on what type of liability, taxation and privacy you’re looking to achieve. However, no matter what type of business entity you select, it is recommended to consult with a local lawyer in order to understand the specific regulations and laws that are applicable in New York.



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