Key Takeaways

  • A DBA ("doing business as") is a trade name that doesn't create a separate legal entity.
  • An LLC (Limited Liability Company) is a legal entity that provides liability protection for its owners.
  • LLCs require more paperwork and fees but offer legal and tax advantages.
  • DBAs are simpler and more affordable but don’t offer personal liability protection.
  • Only LLCs can choose how they want to be taxed (e.g., as an S-corp or partnership).
  • A DBA can be used by LLCs to operate under a different brand name.
  • Entrepreneurs often use both: form an LLC and file a DBA for branding flexibility.
  • Choosing between a DBA and LLC depends on your business goals, budget, and risk tolerance.
  • UpCounsel can connect you with experienced attorneys to help you decide between a DBA vs LLC.

Reviewing LLC vs. DBA pros and cons before making a decision about what type of business you want is essential. You should first understand the definition of each type.

An LLC (limited liability company) formed with the state exists separately from its owners. This offers numerous benefits and greater protection and is often recommended if liability may be a concern or if owners plan to hire employees in the future. LLCs are often easier to expand and sell. 

A DBA (doing business as) is an LLC, corporation or partnership operating under an assumed name. Since this option is not a separate legal entity, owners become liable for all company debts and operations. A DBA is often an attractive option for website owners who would like to conduct business under their domain. Though you will form your LLC under a legal business name, you may wish to do business under a DBA.

What Is a DBA?

DBA stands for "doing business as" — which is represented by a fictitious or assumed name. Whether you are running a partnership, a sole proprietorship, or an LLC, you may wish to conduct business under a name that differs from your legal name. In most states, this process can be completed by registering a DBA. 

When choosing a DBA, there are restrictions. You cannot use words that insinuate the business is anything but a DBA, such as "corporation" or "LLC." When operating under a DBA, you will be personally liable for all company debts. If there are additional owners involved, you will be classified as a general partnership.  

A DBA is NOT its own legal business entity, however, it allows owners to operate as a business based on the name chosen. A DBA will differ from a company's legal name or an owner's personal name. To complete this process, little formality is involved. 

When Should You Use a DBA?

A DBA is ideal when you're a sole proprietor or general partnership looking to use a business name other than your own legal name. It's commonly used in scenarios such as:

  • Rebranding your business without changing its legal structure.
  • Launching a new product line under a different name.
  • Expanding into a new market where your current name is already taken.
  • Avoiding the complexity or cost of forming a new entity.

While a DBA can be used by any business type, it’s often favored by freelancers, consultants, and e-commerce sellers for its simplicity and low startup cost.

What Are the Disadvantages of a DBA?

When comparing a DBA an LLC the main disadvantage is a lack of liability protection. If you are currently operating your business under an assumed name, know that you do not have personal liability protection. Overall, the disadvantages of a DBA include:

  • As an owner, you are personally liable for all debts accumulated by your business
  • As an owner, you do not exclusively own rights to your name 

DBA Legal and Administrative Requirements

Though a DBA is simpler to set up than an LLC, there are still compliance steps you must follow:

  • Registration: Filing with your county or state, depending on local laws.
  • Renewals: Some jurisdictions require periodic renewals or re-registration.
  • Publication Requirements: In some states like New York or California, you must publish your DBA in a local newspaper.
  • No Name Exclusivity: Unlike trademarks or LLC names, your DBA may be used by others if not otherwise protected.

Failing to meet these requirements can result in penalties or the inability to enforce contracts signed under your DBA name.

What Is An LLC?

When you form an LLC or "limited liability company," you will own and operate a legal entity. Offering the flexibility of a partnership with the liability perks of a corporation, this is a popular business structure. Essentially a hybrid between a corporation and partnership, owners enjoy "pass-through" taxation and flexible management. 

First created in 1977 in the state of Wyoming, LLCs are now recognized in all 50 states. This structure has grown in popularity since, due to the freedom associated with a corporation — without needing to do intensive bookkeeping. As an LLC, you can decide to manage the company yourself or designate managers to address daily operations. 

Once you have formed an LLC, you can only operate under its legal name. In most states, this will require you to check the availability of your desired name(s) prior to forming. Although operating an LLC is less formal than running a corporation, an operating agreement is still highly recommended. Outlining all of the rules for operation, this document is particularly important as your company grows. 

Advantages of an LLC Over a DBA

While a DBA offers ease of use, an LLC provides several long-term benefits that can better support business growth:

  • Limited Liability: Protects personal assets from business debts and lawsuits.
  • Tax Flexibility: LLCs can choose to be taxed as a sole proprietorship, partnership, S corporation, or C corporation.
  • Credibility: Customers and vendors may take an LLC more seriously than a DBA-only operation.
  • Continuity: LLCs continue to exist even if ownership changes, unlike sole proprietorships.
  • Access to Capital: It’s easier for an LLC to obtain financing or attract investors.

Difference Between DBA & LLC

The main difference between a DBA and LLC is whether or not you require limited liability protection. This is because an LLC is considered to be a separate legal entity. In comparison, when registering a DBA, there is no distinction between the business assets and your personal assets as an owner. Although there are fees associated with both a DBA and an LLC, overall costs are typically lower for DBAs. 

Overall, an LLC is a legal, yet flexible entity that is easy to manage. If you are simply looking to form an individual brand, a DBA may be best suited for your current needs. While focusing on the cons of an LLC, taxation can be complex and there are more requirements in comparison to a DBA. With that being said, if you are operating under a DBA, it will be easy for others to copy you because the name itself is not protected. 

If you cannot decide whether or not to register a DBA or an LLC, it is best to speak to your legal representative.  

Costs and Maintenance of DBA vs LLC

When evaluating DBA vs LLC, it’s essential to factor in setup and ongoing expenses:

  • DBA Costs:
    • Initial filing typically ranges from $10 to $100, depending on location.
    • Possible publication fees.
    • Few, if any, annual maintenance costs.
  • LLC Costs:
    • Initial formation fee typically ranges from $40 to $500 by state.
    • Annual or biennial report filing fees (varies by state).
    • Possible registered agent and legal service fees.

While a DBA is more cost-effective initially, an LLC’s benefits often justify the higher ongoing investment.

Taxes: How LLCs and DBAs Differ

Both DBAs and LLCs are pass-through entities by default, meaning profits and losses pass through to the owners’ personal tax returns. However:

  • DBAs follow the tax status of their underlying entity (e.g., sole proprietorship or partnership).
  • LLCs can choose how they are taxed: as sole proprietors, partnerships, S corps, or even C corps. This flexibility may result in tax savings.

LLCs also have the option to deduct business expenses more formally and may enjoy tax deferral benefits depending on the structure.

Can You Use a DBA With an LLC?

Yes. Many business owners use both structures together. For example, you might form an LLC to gain liability protection and then register a DBA to operate under a brand name that differs from the LLC’s legal name.

This setup is common when:

  • You want to run multiple brands under one LLC.
  • You are expanding to a new service or geographic area.
  • You want to simplify marketing by using a more customer-friendly name.

Be sure to register your DBA in the relevant jurisdictions even if your LLC is already active.

Which Is Right for Your Business?

Choosing between a DBA and LLC depends on your unique situation. Consider the following:

Choose a DBA if:

  • You want a fast and affordable way to use a business name.
  • You’re a sole proprietor testing a business idea.
  • You already have an LLC and want to expand with different branding.

Choose an LLC if:

  • You want to protect your personal assets.
  • You plan to hire employees or seek investors.
  • You need tax flexibility and enhanced credibility.

Still unsure? A qualified attorney can help you weigh your options. UpCounsel connects you with experienced legal professionals for tailored business advice.

Frequently Asked Questions

1. Can I change my DBA to an LLC later? Yes. You can form an LLC later and discontinue your DBA. In many cases, you can even convert the DBA name into the LLC's registered name.

2. Do I need a DBA if I already have an LLC? Not necessarily, but a DBA is useful if you want to operate under a different name than your LLC's legal name.

3. Is a DBA or LLC better for online businesses? An LLC offers better protection and credibility online, especially if you're handling customer payments or collecting data. A DBA can suffice for small-scale ventures or side projects.

4. What happens if I don’t register a DBA? You may be operating illegally or unable to enforce contracts, depending on your state’s laws. Fines may also apply.

5. How long does it take to set up a DBA or LLC? DBAs often take a few days to process, while LLCs may take a few days to several weeks, depending on state processing times and complexity.

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