Once you've decided that you want to start a business and chosen a business type, it's time to figure out how you want to present your business to the public. Most people do that through their business name. But this isn't just for branding purposes. When you register a business, you must choose a "doing business as" name, or DBA. Some people choose to use their own name for this, but if you choose to give your business a unique name, without registering as a corporation, you'll need to register your alternative business name with the right people.
Having a DBA "means that the person or business entity intends to use that name to identify itself to the public," said Kimberly Hanlon, attorney at Lucēre Legal LLC. "The legal name remains the person's name (if an unregistered sole proprietorship) or the business entity (if a corporation or a limited liability company), but the name that the public knows the business as is the DBA name."
Who needs to register a DBA?
The Small Business Administration is a great resource for those who aren't sure if they need to register a DBA, but if you plan on using a business name that differs from your given name or your business partner's name, you'll need to register one. Other reasons could be if your bank requires it to open a business account, if a prospective client requires a DBA to award your company a job, if your company is entering a new business area not reflected in your current name, or if your company operates more than one business or website.
It's important to note, though, that registering a DBA doesn't constitute a business in itself.
"It doesn't set up a business entity, like a limited liability company or a corporation," Hanlon said. "It simply identifies a name and notifies the public who is behind that name. A person or business entity could conceivably have many DBAs, each with a different product or service market."
While a person can register as many DBAs as they're willing to pay for, two LLCs cannot have the same DBA.
"A DBA, like any other business name that is registered, can only be registered once and only has one owner," Hanlon said. "That said, there could be multiple LLCs who are all owners of the company that registered for the DBA. For instance, North LLC and West LLC are each owners of Northwest LLC, and Northwest LLC has a DBA of Compass Point Consulting."
Writing a DBA is simple; you would just write it out as the name you've chosen to do business as.
"A sole proprietor would not have business cards saying, 'Jim Smith DBA Jim's Gutter Repair,'" said Anthony Babbitt of Babbitt Consulting. "Instead, the business cards would read, 'Jim's Gutter Repair.' DBAs are typically only spelled out on legal documents, such as lawsuits, bank statements and contracts."
If your business is an LLC, no DBA is needed. "If the limited liability company was named Jim's Gutter Repair LLC, then this would be the correct way to list the name on business cards," Babbitt said. "Each state has its own laws designating how sole proprietors, limited liability companies and corporations must note the legal entity from which they operate. If an owner created an LLC and wanted to drop the 'limited liability company' part of the name, then he would need to register a DBA. The same holds true for a corporation or partnership."
How much does registering a DBA cost?
The most common answer to how many DBAs a person can register is "how big is their wallet?" This is because, while there's no numerical limit on how many a person can register, it can get expensive if you start to register multiple names.
"The fee will vary by state, but it is typically between $5 and $50 (but closer to $20 on average)," Babbitt said, although some states can be up to $100. "While the cost to register is insignificant, the penalties and fees for failing to register can be several thousand dollars. This is a function of consumer protection. The state wants to know who to contact when a consumer complains. While this is usually handled when obtaining a business license, some states do not require business licenses. Almost every state requires DBAs to be registered."
Alabama, Arizona, Nebraska, Oklahoma and Rhode Island are the only states that don't require everyone operating under a DBA to register, but it's best to check with your state about the local requirements. Despite the cost, setting up a DBA really is the cheapest way to set up a business structure.
What's the point of having a DBA?
A DBA can accomplish several things for a business owner. "If a business wishes to rebrand itself without forming a new limited liability company or corporation, they can simply register a DBA instead," Babbitt said. "If the business receives bad publicity, they may register a DBA to mislead the public into thinking the business is different."
There are some less obvious reasons to register more than DBA, too. For example, there's a scene in Parks and Recreation where Tom and Ben are looking for a tent for an event. The deal falls through with one tent company, so they call another one, only to find that it's owned by the same person. In fact, that same person owns all the tent rental companies in a certain mile radius. Babbitt says that this actually happens.
"Some businesses will create multiple DBAs to create the illusion of competition," he said. "For instance, four taxis could all have separate DBAs even though they are all owned by the same person."
How do you file a DBA?
There is specific paperwork that needs to be filled out, as well as a filing fee. You can do all of this with a local or county agency, but some states require you to file with a state agency instead of, or in addition to, the county. Some states and counties might also require you to publish it with a local newspaper, giving the public notice that you have filed a DBA.
For example, in New York, sole proprietorships and general partnerships must file a business certificate listing their assumed names with the county clerk's offices. Corporations, LLCs, LLPs and limited partnerships, on the other hand, must file assumed names with the New York Department of State. In contrast, the state of Kansas has no requirements for businesses to register fictitious names. [Read related article: How to Choose the Best Legal Structure for Your Business]
What happens after you file a DBA?
Once you've chosen your business's fictitious name and registered it locally, you might want to consider filing for a trademark with the U.S. Patent and Trademark Office to protect your intellectual property. Trademarks protect words, names, symbols, sounds or colors that distinguish goods and services.
If the paperwork and filing process seems like too much to comprehend, you can contract a business lawyer to complete all the necessary filings to secure your DBA name. Reputable business lawyers are listed by the American Bar Association.
Additional reporting by Michael Keller.