How Many DBAs Can a Sole Proprietor Have?
You cannot create more than one DBA per state. However, if you want to create a DBA in another state, you can do so by filling out an application.4 min read
How many DBAs can a sole proprietor have is something that you should be mindful of before doing business as a sole proprietor. If you are an entrepreneur and you’re ready to formally establish a business on your own, then you might want to form a sole proprietorship. When forming this type of business, you really don’t have to do much except begin conducting business.
Unlike the Limited Liability Company (LLC), Corporation, and Partnership, the sole proprietorship doesn’t require paperwork or fees to officially do business. Rather, if you begin offering services or products to the public, then you are said to be operating a sole proprietorship.
Doing Business As: How Many Can I Have?
A DBA, or doing business as, is an official name for your business. Generally, people create DBAs for their sole proprietorship, since operating this type of entity doesn’t involve creating a business name.
While you are required to choose a business name for an LLC, corporation, or partnership, you aren’t required to do so for the sole proprietorship. The reason for this is because this type of entity doesn’t operate separately and distinctly from its owner. Rather, the sole proprietorship is an extension of the owner.
However, if you want to further separate your own personal name from your work as a sole proprietor, you can create a DBA. In fact, creating an official DBA can help you in the following ways:
- Enhance your credibility
- Open a business bank account
- More easily obtain a loan
If you want to create a DBA, you’ll need to file a form with your Secretary of State’s office. Therefore, before you can begin operating under a DBA, you have to submit an application and obtain approval beforehand. Once this document is filed with the Secretary of State, you have to put the public on notice of your DBA. The requirements for obtaining a DBA vary by state, but some states require that you also publish your DBA name in the local newspaper for a period of several weeks before formally using the DBA through business means.
You cannot create more than one DBA per state. However, if you want to create a DBA in another state, you can do so by filling out an application and following the steps required to create a DBA in that particular state.
Even if you are operating a partnership, or any other type of business, you might want to formally establish a DBA to use rather than using your business’s name. For example, let’s assume that you want to incorporate as a foreign corporation in a state outside of your home state, but you notice that your business name is already in use in that other state. This means that you will need to choose a different business name. When this happens, most businesses choose to simply create a DBA to be used only in that foreign state. Therefore, your corporation can still use its name when transacting business in your home state but must use the DBA when doing business in that foreign state.
How a DBA Can Help Your Business
As previously noted, the DBA will give you greater credibility. Some sole proprietors have a difficult time in establishing their credibility, particularly if these individuals are trying to do work on their own without any prior business experience. When sole proprietors do business, they use their own personal assets, along with their own personal contacts, to do business.
When creating a formal business name through a DBA, they can now create a website and e-mail address with that business name. They might also have a better chance at opening a business bank account. Financial institutions usually require that a business have a formal business name and separate Employer Identification Number (EIN) when opening a business bank account. However, since a sole proprietor doesn’t have a separate EIN, a sole proprietor usually has a more difficult time opening a business bank account. If a proprietor creates a separate DBA, this might provide greater distance between the owner and his business, particularly if the owner makes a conscious effort to separate himself from his business.
Similarly, creating a DBA might help a sole proprietor obtain a loan from a bank. Keep in mind that even if you are able to obtain lending and open a business bank account, the sole proprietor will still need to use his own personal social security number (SSN) and signature when filling out and signing such paperwork.
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