Doing business in New York is an increasingly popular venture, with many entrepreneurs seeking to make their mark by establishing small businesses across various communities throughout the city. When it comes to selecting your business structure, many individuals are incredibly familiar with the basics but lack comprehensive insight on the more complex nuances that exist between two of the most popular business structures: the DBA (or Doing Business As) and the LLC (or Limited Liability Company).

Having an attorney who is well-versed in the laws that operate within the state of New York is essential for any entrepreneur attempting to separate their personal assets from their business liabilities. With the help of UpCounsel, businesses can find the assurance they need to properly navigate the DBA vs. LLC conundrum.

The purpose of this article is to help business lawyers in New York understand the key distinctions between these two business structures. From the overall responsibilities of each entity and the potential benefits, to considerations for taxes and multiple LLCs, this article will provide business lawyers with the information they need to offer sound counsel.

Why Select Between DBA and LLC?

At their core, both the DBA and LLC share a common goal: to offer protection to business owners by providing them the ability to adequately separate their personal liabilities from that of the business. Though certain elements may differ between the two entities, the legal understanding of a business is that it is a separate person, with its own rights and limitations that are wholly distinct from the individual responsible for its inception and operation.

It is important to understand that DBAs and LLCs are not companies on their own; rather, they are business structure options which provide protection from debt and other liabilities, and serve as guidelines for operating a business.

Definition of a Doing Business As (DBA)

The most basic and fundamental business structure is the DBA, otherwise known as a fictitious business name. This business structure has existed in America since the 1800s as a way for those who wished to operate independently from another business to form a separate name.

A DBA is a legal way of presenting a business name that differs from the real name of the business owner or owners. This structure works for sole proprietors or trade businesses, such as those offering retail services, supplies, or consulting services, and offers the owner the privilege of legally identifying the business under its own adopted entity name. In essence, a DBA structure is a way for the taxpayer to “do a business as” without the complexity inherent in forming an LLC.

Though there are certain initial expenses associated with forming a DBA, the costs are considerably lower than those associated with an LLC structure. Additionally, DBAs are simpler to manage from the onset, especially without the assistance of a lawyer who can directly take the necessary steps to quickly form your business.

Definition of a Limited Liability Company (LLC)

In certain circumstances, DBAs may not be your ideal solution, and owning an LLC may be more beneficial in the long run. LLCs are formed by registering with the state, and subsequently offer owners the flexibility and liability protection that accompany incorporation.

From an ownership perspective, the members of an LLC can consist of multiple entities, and profits will be divided between each member according to their respective percentage. In addition to offering certain tax advantages that are unavailable to other business structures, the LLC provides business owners with the protection of limited liability which threatens to bar creditors from coming after personal assets.

Selecting the Best Structure for Your Business

The key to determining which company structure works best for your business lies in understanding the needs and goals of your organization. Factors such as the estimated longevity of your venture, the number of owners, and the type of services or products offered by the company can enable you to ascertain the most advantageous structure for your causes.

That being said, whether your business is a partnership, corporation, or sole-proprietorship, understanding the legalities between DBA’s and LLCs can help business owners in New York to make the right decision that best understands their current objectives.

At the end of the day, the selection of your business structure can determine the success or failure of a venture, and having a qualified legal counsel to help one make the right election is essential. The good news is that UpCounsel offers entrepreneurs access to experienced attorneys who are specialized in helping business owners understand the implications of operating a DBA relative to an LLC.