What DBA Stands for? DBA or Trade Name? All You need to know about DBA

What DBA Stands for? DBA or Trade Name? All You need to know about DBA

April 16, 2022
8
 Min Read

What is a DBA? Why is it Needed?

Every business has an official brand name—its legal or true name. In a sole proprietorship or partnership, the legal name is the name of the business owner(s). The legal name of a corporation, limited liability company (LLC), or other legal entity is the name that appears in the formation document (e.g., articles of incorporation).

A DBA, or "Doing Business As", is a legal fiction name that allows you to do business under a name other than your own legal or true name.

If you or your company do business under another name, that is a DBA name. DBAs are also known as "assumed names", "fictitious business names", "fictitious names" or "trade names." 

For example, if you are an individual who owns a sole proprietorship called “ABC Consultancy” and you want to expand into the construction industry, you can register "ABC Construction" as a fictitious business name. This means that when people call you about building projects, they will be calling ABC Construction rather than your name. 

In many cases, DBAs are used by sole proprietorships and general partnerships. However, most states allow Corporations and LLCs to use DBAs as well. Any legal entity can use a DBA in lieu of their real names. This is mostly done by the business owners for advertising, marketing, and most importantly, signing official documents. 

Why use a DBA or fictitious name?

A DBA makes it easier to create or build a brand without having to register an entire legal entity like a corporation or LLC. If you are a sole proprietor who applies for DBA, it is the easiest and a cost-effective way to use a "company" name other than your personal name. You can create a separate professional business identity without having to form a US LLC or corporation.

People tend to judge a book by its cover. We all do this, and studies show that we assign higher credibility to a business with a DBA rather than a sole proprietorship or general partnership. The use of DBAs can give you credibility at zero extra cost since it is just about changing your name from personal to professional.

If you already have a US LLC or Corporation but you want to expand to new products, services, or brands and your existing legal name does not capture the full meaning of your business, you can use a DBA to separate the 2 businesses without having to formalize another legal entity.

Instead of getting a new legal entity, you can register the DBA with the existing LLC or Corporation. That way you get more flexibility on how you use the DBA name on business cards, on invoices, for your website, etc.

Online sales can be of great importance to any business. Instead of trying to make one website be all things to all people, you can segment your online market by registering DBAs for different subsets of products or services.

This way, you can create separate sites that specifically target customers with different needs. You can have as many fictitious names as you like (within reason), all under one business umbrella.

Can I use DBA on a Contract? 

To sign a contract, you do so by signing your name if you're an authorized signer or if you're a sole proprietor. Then you add the name "Doing business as". For example, you write "Albert Shleizer, DBA Coopersmith Security Agency" or "Helena Smith, DBA Vintage Fashion Jewelry."

It's different if you're a limited liability company or represent a corporation. To better illustrate, let's say Quantun Labs, Inc. does business under the name Quantum Leap. If you sign as Quantum Leap's representative, something goes wrong; the court might deny Quantum Leap's existence. You'd then have to pay for all the damages, not Quantum Labs, Inc. Therefore, it's best if you sign as a representative of [company you represent], DBA [DBA name], i.e. Quantum Labs Inc.

Can I have a bank account for my DBA?

Having a separate bank account for your business is very beneficial, especially to keep track of your finances. It will help you pay your contractors and clients quite easily. As the world progresses, the baking is made easy day by day and even cross border banks are now a possibility. Read our article on US Banks for Non-Residents to get a grip on this.

A DBA allows a business to open a bank account under its name. This is a welcome benefit, especially for sole proprietors. You get the benefits of a business account, for example, you don't have to carry a balance in the account. 

If you want to open a DBA sub-account under your business bank account, you'll probably need to provide proof of your DBA application. Once approved, you can easily associate the DBA designation with that account. This has the advantage of allowing you to cash the check when a customer makes it out to the DBA name instead of making it out to your name.

What DBA is not?

Many confuse DBA as a separate legal entity. What you need to know is that DBA is just a different name for conducting business. In layman terms, DBA can be attributed as a nickname to your business's Legal Name. 

Registering and conducting business under a DBA name is not the same as forming a company or business entity.

Key points to ponder over: 

● If you register a DBA as a small business owner without first forming a US LLC, corporation, or other legal entity, the state in which you operate will recognize your business as a sole proprietorship.

● As a sole proprietor, you can legally conduct business in that state under your fictitious business name, but you won’t have any limited liability protection, which means you are responsible for the business's debts and obligations.

Is DBA is a Trademark?

The short answer is NO. A DBA name can define your business, give it additional benefits, and set it apart from the competition, but you don't have exclusivity. That means other businesses can use it, too. The trademark ensures exclusivity, the DBA name doesn't. 

If you want a unique name for your business, you need to apply for trademark protection. Also, if you choose a DBA name, you must first do a name search to make sure you don't end up with a trademarked name. Read on about trademark law and intellectual property to avoid future problems.

Is DBA filing a must?

Almost all states require that a business file a DBA if it wishes to conduct business under a name that differs from the name they are currently registered under.

Some states even require companies to publish their fictitious business names in recognized legal publications or newspapers once they are approved for DBAs. Those states are:

● Florida

● Pennsylvania

● Georgia

● California

● Illinois

● Nebraska

● Minnesota.

While most states require state-level filing, some states require county-level filing and even others require city-level filing.

The good news is, there are a few states that do not require you to file a DBA if you want to operate under another fictitious name. Those states are:

● Alabama

● Alaska

● Arizona

● Hawaii

● Kansa

● Mississippi

● New Mexico

● Nebraska

● Wyoming

Even if your county or state does not require a DBA to operate under a fictitious name, you should always file one, since it may provide other benefits to your company. For example, if you need a bank account for your DBA, your bank will need to see proof that this DBA has been registered with the state.

How Much Does a DBA Registration Cost?

As with the specifics of the registration process, the DBA application fee varies by state. In most cases, it is around $50.

How to file for DBA?

Filing a DBA is a very simple process, especially compared to filing a limited liability company or a corporation.

The first step in filing a DBA is to choose a name that's easy to remember and easy to spell. Next, you must check to see if the name is available in the jurisdiction where you're filing. Furthermore, before selecting a DBA name, you should also ensure that it does not violate anyone's trademark or intellectual property rights.

When you register a DBA, you'll need to fill out certain forms and pay a filing fee. You can do all this at a local or county office, but in some states, you must file with the secretary of state in addition to or instead of the county office. In some states and counties, you may also be required to publish the filing in a local newspaper so that the public knows that you've filed a DBA. Therefore, it's important that you find out and research the DBA filing requirements of the state in which you plan to operate your business.

When should I file a DBA?

Filing varies by jurisdiction. In some places, you have a month or two (30 to 60 days) to file your DBA name when you start using your name. However, it's ideal if you file before using the name for the first time.

How long does it take to file a DBA?

It usually takes around one to four weeks (with some exceptions); it varies by jurisdiction.

Can I have multiple DBAs?

It's possible and legal for a company to have more than one DBA. You can register for multiple DBAs in the same state. Some businesses do this for a variety of reasons.

A good example is if a food company decides to launch a new product that doesn't perfectly match the brand of potato chip snacks it currently operates under.

To solve that problem, it would find a way to get a place in the aisle and join the competition. So a new DBA name is created for the new product. They come from the same company, with the same pool of executives, with the same capital; they're all the same. The creation of the DBA is what will differentiate them from each other.

Do I need to trademark my DBA?

While it's not required, sometimes the DBA name needs to be trademarked. This is especially important if your DBA is also your brand name. You can apply for intellectual property protection to avoid confusion with other trademarks. This way, you can prevent competing brands from using your name and taking away potential business partners. Note that DBA protection is limited to the state level. This isn't a problem if you want to keep your business small and focus only on a specific territory. In this case, a common law trademark is sufficient for DBA. However, if you want to expand or go online, you'll need to register with the USPTO instead so that your protection extends to the national level. 

DBA protection only applies to the name. If you want better protection for the other aspects of your business, such as your logo, you'll need to register a trademark. 

A trademark is more expensive than a DBA, as the latter costs about $10 to $100, while the former can cost several hundred dollars, but it offers better protection. If you want to protect your trademark in the long run and better, it often requires a one-time costly investment.

These are the two qualities of trademark names that the USPTO usually approves:

1. Arbitrary names - real names that are not necessarily related to your brand or may not have the least connection

2. Fanciful names - totally made up from the figment of your imagination that shows no relationship with your product

Does a DBA have a Separate Tax ID?

No, you don’t need a separate tax number ID for your DBA because it’s associated with the legal name of your business or true name.

Generally, you will apply for a federal taxpayer identification number under your business’ formal name. For a sole proprietorship, this is the legal name of the owner.
For a limited partnership, corporation, or limited liability company, it is the name on the formation documents you filed with the state.

Because your company is the entity that pays taxes, you need an EIN. DBAs are simply your business nicknames, so they don’t need their own EIN.

Other Articles in this Guide

We are glad you have made it this far, but this is just the beginning of your journey to building your online empire with a US LLC. If you have any questions and want to register a US company, please follow the rest of the articles in this guide or contact us at hello@startfleet.io.


Need Help Setting up your US Company?  

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