What does it mean to have a DBA under LLC?
Why should you register a fictitious name for your LLC?
What are some DBA name examples?
In this article, we will break down the notion of DBA under LLC so you know all there is to know about it.
We will define what DBA means, look at how it is abbreviated, why people use DBA’s, who can set up a DBA, the advantages and disadvantages of filing a DBA and more.
You are ready to find out?
Let’s get started…
What is a DBA?
DBA is an acronym for Doing Business As.
A business can register a DBA and formally use it to conduct its business.
Consider a DBA like a nickname to your business.
According to Dictionary.com, DBA is defined as:
“DBA often precedes the name under which a business operates that is not the legal name of the business. Individuals who have not incorporated can also use such a name to carry out business activities.”
A DBA is also known as:
- Fictitious name
- Fictitious business name
- Trade name
- Doing Business As
- Trading As
- Assumed Name
Doing business as can be abbreviated as follows:
DBA vs LLC
An LLC is a legal entity lawfully authorized to conduct business.
A limited liability company has the power to enter into contracts, hire people, borrow money from the bank and exercise legal rights before the courts.
Having a separate legal entity also means that an LLC gives its shareholders limited liability protections.
When you register an LLC, you give your limited liability company a name.
That name is your LLC’s official name it will use to conduct is business.
In some cases, you may want to run your LLC using another name.
At the same time, you want to ensure you are binding the LLC in such a way that you continue benefiting from the limited liability protection offered by running a business under an LLC.
That’s when you may need to register a DBA also known as “fictitious name” or “trade name”.
The DBA is like giving your LLC a “nickname”.
The DBA is not a separate legal entity from your LLC but sits on top of it.
Even though you register a different business name, the DBA works as part of your LLC.
The DBA will not have its own bank account or separately enter into contracts.
All business operations under the DBA will fall under the LLC.
Why use a DBA?
One important question to answer here is why use a DBA or does an LLC need a DBA?
If an LLC already has its official name, why bother registering another fictitious name?
Technically, an LLC does not need a DBA.
A limited liability company can operate its business using its legal name as it was registered.
However, in some cases, LLC’s may want to use a different name for marketing purposes or other commercially important reason.
Let’s look at a few reasons why an LLC may want to use a DBA.
One reason why an LLC may use a DBA is to implement a specific marketing strategy.
For example, your company name may be long, difficult to write or to pronounce.
As a result, you may want a shorter trade name that is catchy and easy to remember.
You may want to set up a DBA per product line.
In some cases, your official company name may not be memorable enough to be easily associated with each of your products.
As a result, you may want a DBA for your LLC so you can engage with your customers using a unique name per product line.
Sometimes, your LLC may operate multiple businesses.
As such, it only makes sense to have each line of business operate under its own DBA.
For example, if you have a coffee shop called Fresh Coffee LLC and you start a bakery line of business, it would not make sense to use Fresh Coffee LLC for that.
You may want to keep your LLC name for your coffee shop operations but file the name Baker’s Dream for your bakery line of business.
Sole proprietors tend to use DBA’s to operate a business under their personal name.
By registering a fictitious name, the sole proprietor can keep his or her personal documents separate from the business.
It also gives their business some identity if they do not want to brand them business under their own name.
Instead of doing business in your name such as Helen Smith, you may want to register a DBA such as Walk My Dog Services.
It gives your business operations a better identity.
Who can use a DBA?
Any type of business can register a DBA.
You can be an incorporated business, a limited liability company, a partnership or even a sole proprietor.
Here are examples of who can use a DBA:
- S corp
- C corp
- Limited partnership
- General partnership
- Incorporated business
- Sole proprietors
Can an LLC use a DBA?
An LLC can use a DBA just like any other company.
It is not mandatory to use a DBA.
It really comes down to a business or strategic decision whether to use a DBA or not.
If you are operating an LLC but the name is not relevant to all aspects of your business, the DBA option may be a good one.
For example, if your LLC is called Best Family Pets LLC and your main operation is running a pet shop, you may not want to use this name if your business starts producing pet food.
You may want to use John’s Chewy Pet Snacks for your pet food operation and keep Best Family Pets LLC for your general pet shop operations.
How many DBA’s can an LLC have?
A business can register multiple fictitious or assumed names.
An LLC may decide to register a different DBA per line of business.
For example, imagine an LLC operating a real estate brokerage firm under the name Top Star Real Estate Brokers LLC.
If the company wishes to offer consulting services and start investing in real estate, the LLC may want to register a DBA per line of business.
They can register Top Stars Consulting for the consulting services and Top Stars Investing for the real estate investment operations.
How to add a DBA to an LLC?
Filing for a DBA is as simple as filing the necessary application and forms with your corporate registry.
In some states, you file for a fictitious business name through the Office of the Secretary of State and in some others, you’ll go through the County Clerk’s Office.
Business name search
Before registering a trade name, you must ensure that your trade name is not identical or very similar to that of another business.
Whatever trade name you have in mind, perform a business name search to ensure that the name is available for registration.
Complete DBA registration form
Once you’ve validated that the business name is available for registration, the next step is to complete the applicable DBA forms.
On the DBA form, you’ll need to outline:
- Your DBA name
- Your LLC’s official name
- Your name
- Your address
- Your business address
Each state may have forms that may slightly vary but the base information requested is the same.
There are over 900 jurisdictions where DBA’s can be filed in the United States.
Some are at the county level, others at the state level.
It’s important to verify where you must file your DBA.
To complete the filing of your DBA, you’ll need to pay the registration fees.
Typically, your DBA registration will be valid for several years before you are required to renew or refile DBA forms.
You can verify with your state to see for how long a DBA is valid.
Advantages of LLC DBA
An advantage of setting up a DBA is that you will have less paperwork to file and less administration to do than owning multiple LLC’s.
Imagine you have an LLC operating a seasonal business.
For example, your company is called John’s Landscaping LLC but you wanted to market yourself as Speedy Lawn Mower for your summer operations and Snow Be Gone for your winter operations.
If you were to register an LLC for each of these lines of business, you’ll have 3 legal entities to deal with, three revenues to account for, three taxes to pay, three filings to maintain and so on.
On the other hand, you can keep your LLC and register two DBA’s.
This way, your entire business operations will remain under John’s Landscaping LLC.
Disadvantages of a DBA for LLC?
Using a DBA under a limited liability company can come with some risks and disadvantages.
Let’s look at some of them to better understand the ramifications of a DBA.
Limited liability protection
Registering a DBA does not create a new legal entity or allow you to benefit from additional limited liability protection.
If a sole proprietary operates a business under a DBA, he or she does not benefit from the limited liability protection offered by a corporate entity.
In other words, a DBA does not provide you with a corporate shield against the company’s debts and liabilities.
To benefit from the legal protections offered by a legal entity, you must not merely register a DBA but rather register a limited liability company.
What’s important to know is that a DBA does not protect your business name.
Registering a DBA is merely allowing your business to refer to a fictitious name or trade name to conduct business.
As a result, you do not acquire official rights on the business name.
For instance, if you have been operating your business under a DBA for many years, another person can decide to file incorporation papers or register a legal entity under the same name and take your DBA.
The DBA does not give you permanent rights on the name.
Another important consideration when using a DBA is with respect to the territorial protection of your trade name.
If your DBA was registered at the county level, then another person cannot use the same DBA in the same county.
A DBA does not protect your name outside of the jurisdiction in which it was registered.
Your business name may not be protected outside of your county.
Keep in mind that anyone, including someone in your own county, can register a company using the same DBA as yours.
DBA name examples
There are many examples of a business using DBAs.
DBA for marketing
For example, if you have a catering business called Top Chef Catering LLC but you wanted to market yourself as Catering Delight for a specific target market, you can register a DBA.
In this example, Top Chef Catering LLC is your LLC’s official name while Catering Delight is your LLC’s trade name or DBA.
DBA for multiple businesses
You can have one LLC running multiple businesses.
In that case, you can keep all businesses under your LLC and register a DBA per business.
For example, you can have Best Handyman LLC as your main company.
You may want to register a DBA if you start construction projects or get into plumbing services such as Top Notch Construction or and Top Notch Plumbing.
DBA for franchise business
To operate a franchised business, you’ll need to register a DBA.
In many cases, franchisees will register an LLC to enter into a franchising agreement.
Imagine you incorporated Suzy & Sister LLC to enter into a franchise relationship with Pizza Pizza.
In that case, you’ll need to register the trade name “Pizza Pizza” under your LLC to have the right to conduct business under that name.
To register a DBA under a franchisor’s trade name, you must be authorized to do so.
DBA for sole proprietors
In many cases, sole proprietors will use a DBA to operate a business without going through the complexity of registering an LLC.
For example, Helen Smith is an accountant and works for an accounting firm, but on the side, she helps people file their taxes every year.
She may register a DBA under Big Returns With Helen.
DBA Under LLC FAQ’s
Can I use a DBA with an LLC?
Yes, you can use a DBA with an LLC.
If you want to operate certain parts of your business under a different name, then you can register a DBA.
For example, you own Pet Shop LLC and you wan to offer dog walking services under Walk My Dog.
How many DBA can you have under an LLC?
You can register the number of DBA’s as relevant for your business.
However, you should note that a DBA does not protect the assumed name or trade name registered.
Also, if the names are important to your business, a DBA registration may not protect the name as well as you might think.
Is DBA the same as an LLC?
The DBA is not the same as an LLC.
In fact, you can register a fictitious name no matter what type of legal entity you own.
For example, if you have a C corporation, you can use a DBA.
Similarly, if you operate a general partnership, you can register a DBA.
DBA’s can also be registered by sole proprietors.
DBA means “doing business as” while LLC means “limited liability company”.
Although you can register a DBA using an LLC, the DBA does not grant additional limited liability protection.
Your LLC will remain legally responsible for the use of your DBA.
As such, the DBA does not create a separate legal entity from your LLC.
Do I need a DBA if I don’t use “LLC” when using my company name?
When you register a limited liability company, you must register your company’s name.
When using your company name, you must use the LLC abbreviation.
For example, if you own Divine Bagels LLC, you must use “LLC” to bind your company in contracts, loan agreements or to exercise legal rights.
You cannot use Divine Bagels without the LLC.
If you want to use Divine Bagels without writing LLC, you must register a DBA.
This way, you can legally use Divine Bagels and bind your LLC.