In general, a DBA (Doing Business As) refers to a name under which a business operates and is different from its legal name or the names of its owners. A DBA is typically associated with a sole proprietorship or a partnership, rather than a business entity like a corporation or a limited liability company (LLC).
In some cases, a DBA can have more than one owner, but it depends on the business structure. Read on to learn how it works.
What Is a DBA?
Every business has a “legal” or “official” name. In the case of a sole proprietorship or partnership, the legal name is usually the name of the person who owns the business or the names of the people involved in the partnership. For corporations, limited liability companies (LLCs), or other types of business entities, the legal name is the one mentioned in the documents that establish the entity, like articles of incorporation or articles of organization.
Now, a DBA (which stands for “doing business as”) is when a person or company decides to operate under a different name than their legal name. You might also hear it being called an “assumed name,” “fictitious business name,” or “trade name.” It’s like having a nickname for the business. Using a DBA allows the business to have a separate identity in the market, even though legally it is still connected to the individual owner or the business entity.
To sum it up, a DBA name is when a business chooses to operate under a different name than its legal name. It’s a way to have a unique identity while still being linked to the owner or business entity in terms of legal matters.
Understanding How a DBA Works
When it comes to DBA ownership, how it works depends on the type of business structure involved. Let’s have a look at them below:
DBAs and Sole Proprietorships
In the case of a sole proprietorship, which is the most common structure for individuals using a DBA, the business and the DBA are essentially an extension of the individual owner. For example, let’s say Mary Sue is a graphic designer operating as a sole proprietor, and she decides to use the DBA “Mary Sue Designs.” In this scenario, the DBA represents Mary Sue herself, and she retains sole ownership and responsibility for the business.
DBAs and LLCs, Partnerships, and Corporations
On the other hand, if the business is structured as an LLC, a partnership, or a corporation, the company and the DBA are treated as separate legal entities distinct from the individuals who own them. While the DBA may be associated with the company, the ownership of the business is held by the individuals who own the LLC, partnership, or corporation. In this case, there may be additional individuals listed as authorized signers on the bank account, but they wouldn’t be considered owners of the account or the DBA itself.
How to File a DBA for Your Business?
Filing a DBA can be a straightforward process, provided you follow the necessary steps and comply with your jurisdiction’s requirements. We’ll walk you through the process of filing a DBA for your business.
Step 1: Research DBA Requirements
Start by researching the specific DBA requirements in your state or jurisdiction. Visit the official website of your Secretary of State or local county clerk’s office to gather information on the necessary forms, fees, and any additional documentation needed.
Step 2: Choose a DBA Name
Select a suitable DBA name that aligns with your business and complies with the naming rules in your area. Ensure the name is unique and not already in use by another business. It’s advisable to perform a thorough search of existing DBA names and trademarks to avoid conflicts down the line.
Step 3: Verify Trademark Availability
To further protect your business, consider conducting a trademark search to ensure your chosen DBA name doesn’t infringe upon existing trademarks. This step helps prevent potential legal issues and allows you to secure exclusive rights to your DBA name.
Step 4: Complete Required Forms
Obtain the necessary DBA registration forms from the appropriate authority, such as the Secretary of State or county clerk’s office. Fill out the forms accurately and provide the required information, including your legal business name, the chosen DBA name, and your contact details. Be prepared to pay any associated filing fees, which vary by jurisdiction.
Step 5: Notarize and Submit Forms
Some jurisdictions may require the notarization of DBA registration forms. Locate a certified notary public in your area, sign the forms in their presence, and have them notarize the documents. Submit the completed forms, along with any applicable fees, to the appropriate filing office as instructed by your jurisdiction.
Step 6: Publish a DBA Announcement (if required)
In certain jurisdictions, it may be mandatory to publish a notice or announcement of your new DBA name in local newspapers or publications. Check the specific requirements in your area and ensure compliance by publishing the announcement within the designated timeframe.
Step 7: Obtain Required Licenses and Permits
While filing a DBA allows you to operate under a different name, it doesn’t exempt you from obtaining any necessary licenses or permits for your business activities. Review the licensing requirements applicable to your industry and ensure proper compliance to avoid legal complications.
Important Factors to Consider When Filing a DBA
When filing a DBA (Doing Business As) for your business, there are several important factors to keep in mind to ensure a smooth and compliant process. Let’s explore these factors in more detail:
You Can’t Use Inc. or Corp.
It’s important to note that you cannot include terms like “Inc.” or “Corp.” at the end of your DBA name. These suffixes are reserved for formal business entities, such as corporations or limited liability companies (LLCs). A DBA is intended for sole proprietorships or partnerships, so using such suffixes would create confusion about your business structure.
Provide Proof of Good Standing
When filing a DBA, you may be required to provide a certificate of good standing or a similar document. This proof confirms your business is in compliance with all applicable regulations, taxes, and fees. It assures the authorities that you’re operating responsibly and that you’re in good standing within your jurisdiction.
You May Be Requested to Announce Your DBA
In some jurisdictions, you may need to announce or publish your DBA name through local newspapers, publications, or other specified channels. This requirement aims to provide public notice of your business name change and helps prevent potential conflicts with existing businesses using similar names. Make sure to check the specific requirements in your area to comply with any necessary announcements.
Business Changes Impact Your DBA
If there are any significant changes to your business, such as a change in business entity type, ownership structure, or location, it may impact your DBA. You’ll likely be required to revise and update your DBA accordingly. Notify the appropriate authorities promptly to ensure your DBA remains accurate and up to date.
Payment and Filing Methods Differ in Each State
Keep in mind that the payment methods, filing procedures, and associated fees for DBA registration can vary from state to state. It’s essential to research and familiarize yourself with the requirements specific to your jurisdiction. Visit your Secretary of State or county clerk’s office website for detailed instructions, downloadable forms, and information on acceptable payment methods.
You Need to Renew Your DBA
A DBA registration typically has an expiration date, and you will need to renew it periodically. The renewal frequency varies by jurisdiction, ranging from annual to every few years. Missing the renewal deadline could result in the loss of your DBA name. Stay organized and ensure you renew your DBA on time to maintain your chosen business name.
Doola Can Help With DBA Ownership
The likelihood for a DBA to have two owners depends on the business structure. In a sole proprietorship or partnership, the DBA represents the individual owner(s), allowing both owners to be associated with the DBA. However, for a corporation, LLC, or any other statutory entity, the DBA is tied to the legal entity itself, separate from individual owners. This means that the DBA is associated with the business as a whole, rather than specific individuals who own it.
Navigating the complexities of business ownership, including DBA registration and financial management, can be challenging. This is where doola can provide valuable assistance. Doola specializes in comprehensive bookkeeping services and can help businesses manage their finances effectively.
Is co-ownership recommended for one DBA?
Co-ownership of a DBA can be a viable option, especially for partnerships or businesses with shared responsibilities and resources.
What are the advantages of having two owners under one DBA?
Having two owners under one DBA can bring complementary skills, increased financial resources, shared decision-making, and a broader network, which can enhance the overall success and growth potential of the business.
What are the risks of two owners running one DBA?
Risks of having two owners running one DBA include potential conflicts in decision-making, differences in business vision or direction, disagreements on financial matters, and challenges in maintaining effective communication and coordination.
Can there be two owners in a sole proprietorship?
No, a sole proprietorship is owned by a single individual, which means there can’t be two owners in a sole proprietorship.
Can one person have two sole proprietorships?
Yes, an individual can operate multiple sole proprietorships simultaneously, as long as they can effectively manage the responsibilities and demands of each business separately.