Is a DBA Necessary: Everything You Need to Know
Is a DBA necessary? A DBA is necessary if you are an unregistered business with the intention of operating under a name other than your legal name.3 min read updated on February 01, 2023
Is a DBA necessary? A DBA is necessary if you are an unregistered business with the intention of operating under a name other than your legal name. A DBA is also necessary for a registered business that is rebranding or expanding its product/service line.
About a DBA
DBA stands for "doing business as" and is not necessary when forming a limited liability company (LLC). A DBA allows the business owner to conduct business under another name as opposed to your own name. This is also referred to as:
- An assumed name.
- A trade name.
- A fictitious name.
The most common filers of a DBA are partnerships, limited liabilities companies, and sole proprietorships. For sole proprietorships, using a DBA allows the person to register the name and accept payments under that business name. For example, John Smith registers the name "Best Cut Flowers" and accept payments under that name. If not registered as a DBA, payments could only be accepted using his legal name of John Smith.
For established partnerships and LLCs, using a DBA allows the company to expand into other areas under a separate name. For example, "Hammer Hardware" wants to expand into plumbing fixtures. The company would file for the fictitious name of "Hammer Faucets," allowing the company to operate and accept payments under the DBA name.
The filing process for registering a DBA varies from state to state, but overall, it is relatively simple to do. For example, in Texas, sole proprietorships are allowed to operate a business legally under the owner's legal name and can do so without registering a DBA. A sole proprietorship is only required to register a DBA when the business uses an assumed name. Registration of an assumed name ensures the business is in compliance with a state's requirements.
Also, in Texas, failure to follow the DBA requirements of the state make sole proprietorships subject to civil and criminal penalties. This may include a Class A misdemeanor charge and additional fines and penalties.
Filing usually involves applying through the county clerk's office, paying a filing fee that ranges from $10 to $100, and publishing a notice of the DBA in your local newspaper or other authorized publication. The form generally used to register a DBA is the Assumed Name Records Certificate of Ownership for Unincorporated Business or Profession.
The registration application requires that the address of the business headquarters be listed. In some cases, a sole proprietorship may not have a business headquarters, or the business may operate in more than one county within the state. If this is the case, registration of the DBA must be completed in each county where the business operates and maintains customers.
In the event that the sole proprietorship disbands or the business discontinues operating under the assumed name, the county or counties where the name is registered must be notified. This is accomplished by the business owner filing a Statement of Abandonment of Use of a Business or Professional Name form. There may or may not be a filing fee.
For any company, name recognition goes a long way to achieving success. With this in mind, choosing the right name and following up with an official registration is an important step. As the name chosen for your DBA is acknowledged through advertising, sales, money transactions, and marketing, it achieves on-going recognition. Using your legal name will not have the same effect in recognition to establish the type of goods your business sells or the services it provides.
Reasons to Register a DBA
Unless your business is operating as a limited liability company or a corporation, receiving money or opening a business bank account is not possible until you have filed and published the DBA according to the rules for your state. Along with opening a bank account and accepting payments, a DBA is necessary for you to legally advertise your business.
Registering a DBA helps protect a business from fraud, which is one reason why most states require the DBA process of filing. Even if you use your name as part of the business, such as "Diana Doe's Spa Supplies," you would need to register for a DBA. "Diana Doe" only would not require registering.
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