LLC DBA: Everything You Need to Know
LLC DBA is a limited liability company that does business under a name other than the legally registered name of the business. 3 min read
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.
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.
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.
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.
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