What is a DBA?
A company or business will often use a doing business as ("DBA") when the name the business operates under is different from its legal, registered name. Your business will need a DBA if you are a person or entity operating under a name other than the business's legal name. There are also a variety of other reasons why one would consider using DBA to run their business.
A properly formed DBA allows the public know who the real owner(s) of a business is/are. A DBA is sometimes referred to as a fictitious business name ("FBN") or assumed business name ("ABN"), but they all refer to the same thing. DBAs started as a form of consumer protection, so dishonest business owners wouldn't try to avoid legal trouble by operating under a different name. This works because by law, all DBAs must be filed and the DBA must be circulated in a local newspaper for four weeks to put the public "on notice."
Why would you need a DBA?
As mentioned above, if you are a sole proprietor and are operating a business under a name other than your legal name, you will need a DBA. Similarly, if you are an entity operating under a name other than your business's legally registered name, you will need a DBA.
Further, a DBA will allow you to "re-brand" your business and allow it to engage in business under a different name in different geographical regions. A common example of using a DBA to re-brand is Verizon, whose legal registered name is actually "Cellco Partnership." Certainly, using a DBA to call itself Verizon is a better way of marketing itself by using a more catchy name like Verizon.
Another reason to use a DBA is to be able to drop the mandatory legal suffixes such as "Inc." or "Corporation". For example, Tesla's full legal name is Telsa, Inc. but a DBA allows it to simply go by Tesla.
However, as mentioned above, not everyone needs a DBA. If your business name uses your legal name, but also tacks on a description, you do not need to (but may still prefer to) get a DBA. For example, many lawyers use a traditional business name such as "The Law Office of John Smith." In that case, our hypothetical John Smith would not need to use a DBA since he is already using his legal registered name.
Also, if you are a corporation or an LLC, you can still use your legally registered business name to conduct business.
While you can use a DBA to re-brand your business, do not expect it to offer any limited liability protections. A DBA owner's personal assets will not be protected from lawsuits like they are with other legal business structures which offer limited liability protection, like an LLC or corporation.
A DBA can be an beneficial part of your business strategy. While DBAs don't offer liability protections like an LLC or corporation would, there are still many advantages to setting up a DBA for your business. Many reasons were already discussed above. A DBA can be used to re-brand a business, avoid complicated legal suffixes after your business name, allow you to operate your business in different geographical regions, operate multiple business, etc.
Another reason to set-up a DBA is that it is the simplest way to register your name. Filing for a DBA is the easiest and least expensive way to use a business name. You can create a separate professional business identity without having to form an LLC or corporation both of which are significantly more expensive and complicated.
This post is intended to provide you with a brief and simply overview and understanding of DBAs. Should you have any questions or concerns or if you would like set-up a DBA for your business, please do not hesitate to contact us.