Key Takeaways

  • An LLC (Limited Liability Company) is a separate legal entity offering liability protection, while a DBA (Doing Business As) is simply a registered trade name.
  • The primary purpose of a DBA is to allow an LLC to operate under a name different from its legal business name.
  • Registering a DBA does not provide liability protection or legal separation like an LLC.
  • An LLC can operate multiple DBAs, allowing brand flexibility without creating separate legal entities.
  • Filing requirements for DBAs vary by state and often include registration at the county or state level.
  • Using an unregistered DBA can lead to fines, legal action, or loss of name rights.
  • DBAs must be renewed periodically according to state or local regulations.

What Is an LLC?

LLC DBA is a limited liability company that does business under a name other than the legally registered name of the business. An LLC is a business structure in which the company is a separate legal entity from its owners. DBA, which stands for doing business as, is not considered an independent legal entity. 

When the terms LLC and DBA are used together, it's important to take additional measures to prevent personal liability. 

  • Consult your state's naming requirements for an LLC.
  • In most states, you must choose a legal name that is different from the names of all other businesses in the state, and you must amend the name with "limited liability company" or LLC.
  • When you register your LLC with the state, the name specified in your paperwork is the legal name of the LLC. This name must be used on all tax filings, licenses, legal documents, and loans for the business.
  • In addition to the legal name, the LLC can publicly operate under a different name (DBA).

Laws for LLC formation vary by state. In general, the owner of the LLC must file articles of organization with the secretary of state office in the state where they will operate. An annual report must be filed to confirm the company's key information and report changes in address, members, or registered agent. The owner of the LLC can opt for the business to be taxed as a partnership, corporation, or sole proprietorship. Establishing an LLC makes it easier to seek funding, expand operations, and sell the business.

What Is a DBA?

DBA is an assumed name that identifies the products or services provided by a specific business. It is sometimes called a fictitious or assumed business name or a trade name. A DBA must be registered by the business owner according to applicable state laws, regardless of whether he or she operates a sole proprietorship or an LLC. Establishing several DBAs allows an entrepreneur to operate more than one business under the same LLC, provided these fictitious names are legally registered.

Using a nonregistered business name is cause for legal action, which can include fines, imprisonment, and lawsuits. The DBA must be registered in each state and/or municipality where it is used. 

A sole proprietor who is doing business under an assumed name can later incorporate and make the DBA a legal business name. Operating a DBA is much less expensive than operating an LLC. You must pay an initial registration fee for a registered DBA and a renewal fee every five years. It also allows a sole proprietor to brand the name without being subject to administrative LLC requirements. DBAs do not generally require formal agreements, reports, or bylaws. 

Why Use a DBA for Your LLC?

There are several reasons an LLC might choose to operate under a DBA rather than solely using its legal name:

  • Brand Differentiation: A DBA allows an LLC to market different products or services under distinct brand names while maintaining one legal entity.
  • Geographic Expansion: If the LLC's legal name is already in use in another region, a DBA may allow the business to operate in that area without legal conflict.
  • Professional Presentation: Certain business names may better appeal to target audiences or better reflect specific services offered.
  • Business Diversification: An LLC may operate various business lines under separate DBAs without forming new LLCs for each venture.

Maintaining LLCs and DBAs

Most states require an LLC to file annual or biennial reports. Failure to do so can result in fines and suspension of the LLC. DBA registration renewal periods are governed by the laws of each state. If you fail to renew in time, another business may be able to claim the right to your name.

Steps to Register a DBA for Your LLC

To properly register a DBA for your LLC and comply with state laws:

  1. Conduct a Name Search: Ensure your desired DBA name isn’t already in use by another business in your state or locality.
  2. Check State and Local Requirements: Some states require DBA registration at the state level, others at the county or city level.
  3. File the Appropriate Forms: Submit a DBA registration form with the required fee to the appropriate agency (such as the county clerk or secretary of state).
  4. Publish a Notice (if required): Some jurisdictions require that you publish a notice of your DBA filing in a local newspaper.
  5. Renew as Needed: Stay compliant by renewing your DBA registration as required by your state or municipality. Failing to renew could result in losing the rights to the name.

Problems When Using DBA

LLCs who have registered a DBA can legally do business using either the fictitious name or the legal name. However, if an LLC plans to do business in another state, the owner must request to do so through that state's registrar. A business name check is required to receive permission. An LLC with a legal name that is too similar to the name of an already existing business in that state will be required to use only the DBA when doing business in the state in question. You can get penalties for ignoring this directive. For official written business, the name should be written as the legal name followed by "d/b/a" and the DBA name. That's because legal documents can't be signed by an alias.

DBA vs. LLC: Key Differences

While both a DBA and LLC relate to business naming, they serve different purposes:

Feature LLC DBA
Legal Entity Yes No
Liability Protection Yes No
Purpose Structure and liability shield Alternate business name only
Tax Implications Can choose tax treatment (S Corp, etc.) None (taxed through the LLC)
Cost Higher (formation fees, annual reports) Lower (registration and renewal fees)

An LLC provides the legal foundation and liability protection, whereas a DBA simply offers branding flexibility.

Protections

The main reason to form an LLC is to protect personal assets from business obligations and liabilities. When using a DBA along with an LLC, you must understand when and how to use each business name. If you sign a legal document such as a contract or lease using a DBA, you may be found personally responsible for the debts in question.

How a DBA Affects Your LLC’s Liability Protection

Using a DBA does not change the liability protection status of your LLC. However, it’s crucial to:

  • Always indicate that the business is an LLC in contracts and official documents, even when using a DBA (e.g., "XYZ LLC, doing business as ABC Consulting").
  • Keep your LLC in good standing by meeting all state filing requirements.
  • Understand that DBAs do not shield personal assets from liability. Only the LLC structure provides that protection.

If these steps aren’t followed, courts may find you personally liable, potentially "piercing the corporate veil."

Frequently Asked Questions

  1. What is the difference between an LLC and a DBA?
    An LLC is a legal business structure that provides liability protection. A DBA is a registered name under which a business operates but does not offer liability protection.
  2. Does a DBA protect my personal assets?
    No, a DBA does not provide personal liability protection. Only an LLC or similar entity offers that safeguard.
  3. Can an LLC have more than one DBA?
    Yes, an LLC can operate under multiple DBAs, provided each name is properly registered in the relevant jurisdictions.
  4. Do I need to register a DBA in every state where I operate?
    Yes, you typically need to register your DBA in each state, county, or city where you plan to use the name, depending on local regulations.
  5. How long does a DBA registration last?
    The renewal period varies by state, commonly ranging from one to five years. Be sure to check your local requirements to maintain compliance.

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