(Newswire.net — September 20, 2021) — DBAs are perfect for business owners who would prefer not to use their real name or for businesses who would prefer not to use their registered business name. New business statistics from the United States Census Bureau show that in August 2021 alone, more than 427,842 new business applications were filed in the US. Obtaining a DBA would ensure that a new business stands out from the crowd.
Most states require businesses to register a DBA, and luckily the registration and filing process is simple across all 50 states. For entrepreneurs looking for more information about the filing processing in their specific state, Incorporation Rocket is able to offer more information here. This article will explore the aspects of a DBA and its benefits.
What is a DBA?
A DBA, which stands for “doing business as”, is a business form often used by sole proprietors who would like to use a business name different to their individual name. The process of filing for a DBA allows the startup process of the business to be simple and it reduces costs. It prevents the need of record-keeping requirements, which LLCs and corporations require for formalities and maintenance. But, DBA owners do have the option of converting their business into a LLC or corporation once the business is established and is producing profits. Cofounders of partnerships also choose to use this business form. It offers the business a marketing identity separate from the owners’ names.
Corporations and LLCs are also able to use this business form. If the corporation or LLC, which is already incorporated, would like to use a different business name, they would be able to register a fictitious business name. Corporations and LLCs may choose to do this if they operate in multiple states and want to use those states as part of their business name. In most states, using a DBA allows the business owner to use a fictitious name. But by using this business form, business owners need to keep in mind that it is not the same as a corporate structure legally. DBAs do not offer the limited liability or legal protections which LLCs and other types of business structures offer businesses.
Benefits
-
DBAs offer flexibility
A DBA allows established businesses to expand their business into other areas. The expansion may be regarding geographical expansion or expanding into a new line of business. For example, if the business is named “Clothing Incorporated LLC”, obtaining a DBA will allow the owner to open several other branches, all under a different name. If the business plans to expand into a state or region where another business already has the same, registered, business name, obtaining a DBA would allow the business owner to register a different name in that area and operate under that alias.
-
DBAs offer privacy protection
Obtaining a DBA allows the owner, whether they are involved in a sole proprietorship or partnership, to protect their privacy. When business owners advertise their business with their name attached, individuals and businesses will tend to directly contact the owner trying to sell something that their business needs. Obtaining a DBA would prevent this. Business individuals, such as real estate agents or motivational speakers would not be wise to obtain a DBA, seeing that their name should be the first thing clients and customers see.
-
DBAs offer targeted branding
Obtaining DBAs allow business owners to brand in different target markets. Businesses which have different lines of business are able to use DBAs to create multiple brand names to target their specific markets. For example, a business owner who has a clothing store named “Joe’s Clothing” would likely prefer to have a different name for their new furniture business.
DBAs are also beneficial to individuals in a sole proprietorship or partnership seeing that the names of individuals do not hold much marketing power unless they belong to famous persons. Using a DBA allows individuals to create a business name which may prove to be more appealing than their names to clients.
-
DBAs offer easy legal compliance
Although DBAs are not required in every state, many states do require them. If a business operates under a fictitious name without having set up a DBA, they could face a lawsuit that would incriminate them for fraud.
Obtaining a DBA is simple. Business owners would have to contact their local clerk’s office, or the recorder’s office, to obtain a DBA certificate. In some jurisdictions, the county recorder’s office may call the DBA registered a “fictitious name filing,” “fictitious name registration,” or an “assumed name certificate.” Although DBA filing requirements vary by state, they remain simple and available to be done online.
The takeaway
Acquiring a DBA proves to be beneficial for businesses, but not for all types of businesses. Before business owners decide to obtain a DBA they need to factor in what type of business they own and what the long-term goals are. Business owners need to keep in mind that although DBAs allow branding strengthening and the prevention of market confusion, DBAs do not prevent other businesses from also using that name. Therefore businesses would have to register a trademark for every new name if they would want it unique to their business.