How Many DBAs Can an LLC Have: Everything You Need to Know
If you've ever asked, "how many DBAs can an LLC have," the answer depends on various factors, including state laws.3 min read
How Many DBAs Can an LLC Have?
If you've ever asked, "how many DBAs can an LLC have," the answer depends on various factors, including state laws. If you would like to operate your business under a name that differs from your legal name, it is important to take the right steps.
Overview of LLCs and DBAs
In order to run a successful business, you must have a clear understanding the of the marketplace. When you are in the early stages of operation, for instance, you will want to determine the best name and business structure for your company.
When forming a limited liability company, this will allow you to enjoy pass-through taxation. You will also avoid personal liability in relation to company debts. State laws require that LLCs operate under the legal name as stated in the company's articles of organization. However, a name may no longer reflect the brand's values or objectives. This is particularly the case when an LLC decides to offer products or services that no longer align with their name.
If this sounds like you, know that you can register one or more "doing business as" names with the state.
A "doing business name" or "DBA" is an assumed name that a company uses, which differs from its legal name. Governed by state law, some states will not allow two businesses to use the same DBA. This is why LLCs need to submit a DBA application. Although most businesses register a single DBA, there are instances where multiple DBAs may be the most beneficial option.
Registration of DBAs
Once the members of an LLC agree on a name and conduct a name search, registration is the next step.
The main purpose of registration is to inform the local government and public as to what entity owns the company associated with that name. This also helps to ensure that all operations of that business name can be traced back to the rightful owners. If you go ahead and use a DBA without registering it, this could lead to penalties at both the local and state-level.
Multiple DBAs Are Allowed
Registering a DBA name with the state is typically straightforward. To complete this process, you will need to complete a form and pay the filing fee. Although there is technically no DBA name limit, each name generally needs to be filed separately.
If you are considering multiple DBA names:
- Consider how your chosen name will influence your company's success in the marketplace
- Know that multiple names can be used in varying markets to push tailored products or services
- Determine whether your current name is no longer beneficial in terms of your brand image
Single DBA Application Filings
If you are a sole proprietor or partnership, you are required to file a DBA if you plan to operate under a fictitious name. Under certain circumstances, only one application is needed. In this case, the state department, county clerk's office, or a similar agency will handle the application process. As a business owner, it is your responsibility to understand what the state requires in terms of a legitimate DBA name.
Multiple DBA Application Filings
If you are currently a limited liability company or corporation, there are key benefits associated with multiple DBAs.
Multiple DBAs can:
- Help your business segment markets, increasing brand control and market research
- Allow specific departments or branches to operate under its own name
Although you are welcome to register numerous DBAs, there are associated filing costs. In that sense, filing multiple names may be unnecessary based on your company's needs. In addition, when a business has two open DBAs, this can make bookkeeping more challenging. Since each DBA is not a separate business, the IRS will view both DBAs as a single entity. It is not possible to separate revenues during tax time. This can make it difficult to claim losses for one DBA when the other DBA is making money.
Not only can tax time become more complex, but multiple DBAs can increase liability concerns. For example, a major loss within one DBA could be catastrophic for the other. Worst case, if an LLC operates as two DBAs, failure of one could result in the company loses both businesses.
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