S Corp DBA: Everything You Need to Know
An s corp DBA with a special tax filing is granted when a corporation meets specific Internal Revenue Service requirements.3 min read
2. What Are the Requirements for Getting a DBA?
3. What Are the Benefits of a DBA?
4. Steps to Create a DBA
An s corp DBA with a special tax filing is granted when a corporation meets specific Internal Revenue Service requirements. This means the profits and losses, along with any deductions, are all passed directly to shareholders. Without a registered DBA name, most states require an S corporation to operate under the exact name stated on its articles of incorporation.
What Is a DBA?
A DBA can be used by any business owner, including an S corporation, and is an acronym for “doing business as.” Trade names, made-up names, or assumed names are often referred to as a DBA. This is most often done to make a distinction between an owner and competitor's products.
What Are the Requirements for Getting a DBA?
The requirements for adding a DBA to your S corp will vary from state to state. The state laws in which your S corp was formed will determine whether you have to register your DBA with a government agency or place a publication of the DBA in an approved newspaper, or both.
Like other incorporated businesses, S corps are required to register DBAs in most states. An S corporation may choose to place all or part of its operation under a DBA for the purpose of distinguishing the business from others. For example, a restaurant may add the specific cuisine in the name to reflect what its specialty is.
There are times that an S corporation is required to use a DBA. For example, if the business name duplicates another business name already in use in the same state, a DBA would need to be acquired. State laws allow a corporation to use a registered business alias for a legitimate business purpose, but require it to conduct business under its legal name.
All states require corporations to conduct business under the legal name listed in their articles of incorporation, but the rules on how to form and operate a corporation will vary from state to state. Operating under the legal name ensures the identity of the entity behind commercial transactions and also protects a business's reputation that is formed in the marketplace under the specific name.
What Are the Benefits of a DBA?
Most states allow S corporations to use an alias for business purposes. Reasons to use a DBA include:
- Building up a brand name in a particular market
- To distinguish a division or develop a new product category, especially if the corporation doesn't want consumers to associate the product with the corporation's legal name
- Make it easier to sell off a product line and not lose the rights to the corporation's legal name
In circumstances when you want to expand your S corporation into a state and your business's legal name is being used, you would be required to use a DBA. You would have to obtain permission to do business there, and the state would most likely require you to register a DBA. In addition, it would probably require your S corporation to refer to itself by the DBA only in that particular state.
With a federally-trademarked legal name, the S corporation could expand anywhere in the entire United States. If the S corporation learns that another corporation is using the mark, it could demand the infringing company to stop using the name.
Steps to Create a DBA
When creating a DBA for your business, there are several steps you will need to take. For starters, choose the name you want. To do this, hold a meeting with your senior-level employees and determine what the best name to use is. Next, you will verify that the name is not already being used. You don't want to choose a name of an existing company, because it will limit your ability to expand brand awareness.
Once you have chosen a name and verified that it is not being used by another company, you will then need to file a DBA registration form. The form requires your company's legal name, its address, and the new name you want to operate under. You'll also provide a brief description of your company, including an overview of your business activities.
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