Key Takeaways:

  • A DBA (Doing Business As) allows a business to operate under a name different from its legal entity.
  • Sole proprietors and general partnerships often require a DBA if they use a business name that doesn’t include the owner’s legal name.
  • LLCs and corporations need a DBA if they want to operate under a different name than their registered name.
  • Transferring a DBA to an LLC in Texas requires filing an assumed name certificate with the county and state.
  • DBA vs. LLC: A DBA does not offer legal protections, while an LLC provides liability protection and tax advantages.
  • Steps to transfer a DBA to an LLC in Texas include forming the LLC, obtaining an EIN, updating business licenses, and notifying financial institutions.
  • UpCounsel can help you connect with experienced business attorneys to guide you through the transfer process.

To transfer DBA to LLC Texas will require an authorized party to file a new assumed name certificate with the state of Texas and local offices within 60 days of the transfer. This will update the business ownership information to the new party.

What Is a DBA?

"Doing Business As" (DBA) informs the public of who the real owner of a business is. The DBA may also be referred to as the Assumed Business Name or Fictitious Business Name. The concept of DBA was created as a form of consumer protection, preventing untrustworthy business owners from operating under a fictitious name. Parties that have filed a DBA will need to publish the name in the classified section of the local newspaper. This step informs the public of exactly who is running a business in their community.

Do You Need a DBA?

Sole proprietors will have to file for a DBA for their business if the company's name is different from the owner's name. For example, EZ Autos would need to file for a DBA for EZ Autos.

Sole proprietorships: Sole proprietors using a combination of their personal name and a description of their service or product will not need to file for a DBA. To clarify, Jim Ryan's Auto Shop may not need a DBA, but Jim's Auto Shop would require a DBA. It's recommended to verify with the local clerk's office to see if a DBA is required for your business.

LLCs and Corporations: LLCs and corporations that have registered their businesses don't need to file for a DBA. If a business is planning on operating under a different name (other than the registered name), then a DBA is required. For example, if Jim Ryan's Auto Shop is incorporated as JR's Auto Shop Inc. and would like to operate under JRAutoShop.com or JR's Auto, then a DBA will be required for both. In other words, a company will need a DBA to conduct business with any kind of alteration to the original company name.

The Importance of a DBA

As a sole proprietor, the easiest and least expensive way to register a business name is by filing for a DBA. An independent business name can be created this way without having to form a corporation or LLC. Also, a DBA is required when opening up a business bank account.

A DBA allows corporations and LLCs to operate numerous businesses without the need to form a separate corporation or LLC for each entity. For example, if a business would like to expand into multiple stores, websites, services, restaurants, etc., they can become incorporated with a generic name and use a DBA for all of the other individual entities. This helps decrease expenses and paperwork when operating a number of business-related projects.

A DBA ensures that corporations and LLCs are legally compliant, and therefore, are able to benefit from specific legal protections. Many legal protections may be impaired if a business is caught operating under a different name and never filed for a DBA. For example, if JR's Auto Shop Inc. signs a legally binding contract under Jim Ryan's Auto Shop (or some variation), the contract will most likely not hold up in court.

Filing a DBA

The requirements, fees, forms, and rules affiliated with filing a DBA will vary by county and state. The U.S. Small Business Administration maintains a chart detailing out the DBA filings by state. A legal document filing service may be able to assist in the process by making sure all state and county requirements are achieved. This should make sure that the business is not operating outside of the law.

DBA vs. LLC: Understanding the Differences

When considering whether to transfer a DBA to an LLC, it's important to understand the key differences between the two business structures:

  • Liability Protection:
    • A DBA offers no legal protection—it is simply a registered alias for an individual or business.
    • An LLC (Limited Liability Company) protects personal assets by separating them from business liabilities.
  • Taxation:
    • With a DBA, income is taxed as personal income for sole proprietors and general partners.
    • An LLC provides flexible tax options, allowing businesses to be taxed as a sole proprietorship, partnership, or corporation.
  • Business Credibility:
    • An LLC can improve credibility with customers and vendors, while a DBA does not establish a separate legal entity.
  • Compliance Requirements:
    • LLCs require state filings and annual reports, whereas DBA requirements are simpler but vary by state and county.

For business owners who want liability protection and tax flexibility, transitioning from a DBA to an LLC is a logical step.

How to Transfer a DBA to a New Entity in Texas

The state of Texas allows companies to operate under a DBA or assumed name, as long as the name is uniquely identified and properly registered with the state. DBAs are registered at the county or state level, depending on where the business will be operating and the type of entity that'll be using the name.

By law, a business that is transferring a DBA to another entity will have to file an assumed name certificate with the local and state offices within 60 days of the transfer. Once the assumed name certificate is processed, the business ownership information will be completely updated.

Step-by-Step Process to Transfer a DBA to an LLC in Texas

Transferring a DBA to an LLC in Texas requires several steps to ensure legal compliance. Here’s how to do it:

1. Form Your LLC

  • Choose a unique business name that complies with Texas LLC naming requirements.
  • File a Certificate of Formation (Form 205) with the Texas Secretary of State.
  • Designate a registered agent for your LLC.

2. Obtain an EIN (Employer Identification Number)

  • Apply for an EIN through the IRS website to use for tax and banking purposes.

3. Transfer Your DBA to the LLC

  • File an Assumed Name Certificate (DBA registration) with the county clerk where your business operates.
  • If the DBA was originally filed at the state level, submit the updated Assumed Name Certificate to the Texas Secretary of State.
  • Some counties require DBA cancellation for the sole proprietorship before transferring to the LLC.

4. Update Business Licenses and Permits

  • Inform relevant agencies of the business structure change.
  • Update any state or local business licenses and permits under the new LLC.

5. Notify Banks, Vendors, and Customers

  • Update your business bank accounts with the LLC’s EIN and operating name.
  • Inform vendors and clients of the transition to ensure contract compliance.

Following these steps will ensure a smooth transition from a DBA to an LLC in Texas.

Common Mistakes to Avoid When Transferring a DBA to an LLC

Many business owners make mistakes when transferring a DBA to an LLC, which can lead to delays and legal complications. Here are some common errors to avoid:

  • Failing to Form the LLC Properly:
    • Ensure you file the correct documents with the Texas Secretary of State.
  • Not Updating Business Licenses:
    • Business licenses must be transferred or reissued under the LLC name.
  • Overlooking EIN Registration:
    • The IRS requires LLCs to have a new Employer Identification Number (EIN), even if the DBA already had one.
  • Ignoring Tax Implications:
    • Consult an accountant to understand how LLC taxation affects your business.
  • Not Closing the Sole Proprietorship Properly:
    • If the DBA was used under a sole proprietorship, cancel the old DBA if required by your county.

By avoiding these mistakes, you can ensure a legally compliant transition.

Frequently Asked Questions

1. Can I transfer my DBA to an LLC without reapplying?

No, you must file a new Assumed Name Certificate under the LLC. The DBA is not automatically transferred when you form an LLC.

2. Do I need to close my sole proprietorship before forming an LLC?

Not necessarily. You can form the LLC and then transfer the DBA, but some counties require you to cancel the original DBA before re-registering it under the LLC.

3. How long does it take to transfer a DBA to an LLC in Texas?

Processing times vary by county but typically take 1–2 weeks for local filings and 3–5 business days for state filings.

4. Do I need a new EIN for my LLC if I already have one for my DBA?

Yes, when switching from a sole proprietorship to an LLC, the IRS requires you to obtain a new EIN.

5. Can I operate multiple businesses under one LLC using different DBAs?

Yes, an LLC can register multiple DBAs, allowing it to operate different business ventures under the same legal entity.

If you need help transferring a DBA to an LLC in Texas, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.