If you want to create a new assumed name for your business, the doing business as (DBA) name is an option that can help you accomplish this goal.
However, the DBA is just one of several different options you have when it comes to adding new names to a company, and it’s important that you understand which of these options is the best one for you.
Should you register a DBA? Or perhaps you could form a limited liability company (LLC) or corporation? What are the differences between these options? In this guide, we’ll break down exactly what the DBA is, so that you can easily decide if it’s the right option for you.
Select a state below to learn how to get a DBA and the pros/cons of doing so. We'll outline the important details and what paperwork is required.
What a DBA Is
DBA is short for “doing business as,” and it allows a company to conduct business under a name that is different from its legal name. Depending on where you’re located, the DBA can also be called a trade name, an assumed name, or a fictitious name.
For example: If Laura Jenkins runs a sole proprietorship selling hand-crafted blankets, her business name is also “Laura Jenkins,” the same as her own personal name. But if she wants to operate under the title Best Blankets while still maintaining her sole proprietorship business structure, she needs to file for a DBA. By filing the name, she makes the public and the state fully aware of who’s behind the business.
Having a DBA is especially helpful for an unincorporated business like Laura’s. The business name sounds more official, and it allows you to get a business bank account. Furthermore, it’s easier to accomplish effective branding when you have a true business name.
That said, unincorporated entities aren’t the only ones to use DBAs. Sometimes an LLC or corporation might decide to add a DBA, which can be helpful as a business grows. For example, if a plumbing LLC has expanded to include appliance repair, it may want to add a DBA to give the appliance repair section its own name.
What a DBA Isn’t
There are a few misunderstandings surrounding DBAs, so we want to make sure you’re fully informed. For one thing, a DBA is not a way to protect your name for your exclusive use, because only the legal names of incorporated entities are protected and exclusive.
In theory, an incorporated business could come along and claim your DBA name for themselves. Because the DBA provides no exclusivity, another entrepreneur could actually form an LLC or corporation using your DBA name. If this happened, there would be nothing you could do about it, and you would have to establish an alternate name.
In addition, a DBA is not a means of obtaining limited liability protection for your business. Limited liability protection is a result of the corporate veil, which is a privilege reserved for incorporated entities. All a DBA accomplishes is giving you an alternate name to operate under.
Should You Get a DBA?
While getting a DBA is a popular choice in the American business landscape, to be perfectly honest we almost never recommend doing business as names to our readers. Simply put, there are better ways to go about registering an assumed name for your business.
If you operate a sole proprietorship or general partnership, we recommend forming a limited liability company (LLC) instead of registering a DBA. There are many reasons why this is the preferred option, but the most important reasons are the personal asset protection you’ll receive, and the exclusivity of your business name.
If you operate an LLC, we recommend simply forming an additional LLC if you want an alternate business name. For corporations, you can form subsidiary corporations to accomplish this same goal. The reason for this obviously starts with the exclusivity you’ll gain for your new name, but there’s more to it than just that.
Registering a DBA to separate different segments of your company does not shield each portion of the company from the liability of the other segments. While you can keep the different portions of your company separate for accounting purposes using DBAs, liability is still shared among them.
If you form an additional LLC or subsidiary corporation, you can isolate each portion of your company from the others for liability purposes.
How to Get a DBA
In terms of business filings, the process to get a DBA is fairly simple. Nearly all states require you to register a DBA when you intend to use one.
13 states, however, require you to instead register a DBA at the local level rather than with the state:
For state-level registrations, you’ll typically file with the Secretary of State, and for most of the 13 states listed above, you can obtain a DBA from your county clerk.
The next step is to complete the DBA application. Usually, the form is only one page long, so filling it out won’t take much of your time. To complete your application, you’ll also need to pay the filing fee. Usually, these fees range from $10-100 with most being in the sub-$30 range. All in all, it’s a fairly affordable application.
You’ll also need to renew your DBA as needed. Most DBA registrations are good for 1-10 years, depending on your state, and some do not expire at all. You should consult with your state’s government or your county clerk’s office to learn what requirements exist for renewals.
Advantages of a DBA
The first advantage of getting a DBA is that you can get a business bank account under that name. If you operate your business as a sole proprietorship or general partnership, banks will actually require you to have a DBA in order to get a business account.
For example: A bank won’t give a business account to Joe Stevens to use as a sole proprietor at his coffee stand ― instead, he would only be able to apply for personal accounts. But if Joe Stevens has a DBA, the bank will issue an account for “Joe’s Java.”
Secondly, a DBA also adds some privacy to an informal business entity. Because a DBA allows you to operate under a different name, you don’t have to use your own personal name publicly nearly as often. Continuing our coffee stand example, with his DBA, Joe can publish “Joe’s Java” on his website, his signage, and his business cards instead of “Joe Stevens.” If you’re hesitant to put your real name out there, a DBA can give you a little more anonymity.
Similarly, a DBA helps a sole proprietorship or general partnership sound more like an official business, and this new name actually instills some confidence in your customers as well. Consumers are usually more willing to write a check to Joe’s Java than to an individual Joe Stevens (especially if it’s a large check). The DBA doesn’t change the company’s legal status, but it does change how the business is perceived.
Finally, a DBA offers unique branding opportunities to formal business entities. An LLC or a corporation already has a business name that’s different from its owner’s name, but a DBA does let these businesses use additional names — as many as it wants, in fact. For example, let’s say a corporation is growing rapidly, and it wants to introduce new product lines without the hassle of establishing a subsidiary corporation. A DBA can help the business accomplish just that.
Along these same lines, an LLC or corporation can use DBAs for accounting purposes. If there are several different aspects of the business that the company would like to keep separated in order to make accounting easier, they can get a DBA for each branch of the business. That way, they can organize their accounting under several different official names, creating an easy distinction between segments of the business.
Disadvantages of a DBA
There are plenty of benefits to filing a DBA, but there are also several drawbacks. We’ll discuss them here so you have a full understanding of the DBA before you register one.
First and foremost, getting a DBA does not establish personal asset protection for your business, because your entity status does not change. This means that if your sole proprietorship or general partnership is sued, your creditors can pursue your personal assets and your business assets. On the other hand, if you form an LLC or corporation, these business structures limit your personal liability, and creditors will only be able to come after the assets owned by your company.
Another crucial point to make is that ― unlike forming an LLC or corporation ― registering your DBA does not protect your name for exclusive use. While you do have to avoid registering a name that’s already in use when acquiring your DBA, it doesn’t work the other way around.
This means that if you register a DBA, there’s nothing stopping other businesses from using your new assumed name as their own. In fact, if you have a DBA filed with the state and someone decides to form a formal business entity under that name, you’ll actually have to choose another name, because the business formation process would reserve the name for that other company.
We discussed how an LLC can use DBA names to separate segments of the company for accounting purposes, but the issue with this is that DBAs do not shield the different branches from each other’s liability. Therefore, if there’s a lawsuit filed against one small portion of your business, the liability is shared across the board ― there is no liability shield provided for each branch of your company.
If you do want each segment of your company to be isolated from the liabilities of the other segments, you should form a series LLC, or perhaps a corporation with subsidiaries. With these options, a lawsuit against one branch of your business will not affect the others.
Finally, in most states, you have to file a renewal of your DBA on occasion. This process isn’t particularly difficult, but it’s worth noting that there are some maintenance requirements involved with a DBA ― we find that some entrepreneurs think you only have to file for a DBA once, and that’s it.
In most cases, your renewal is due every year, but there are a few states where the renewal comes every five to ten years instead. You should consult your Secretary of State to learn more about DBA renewals in your location.
Filing a doing business as (DBA) name for your company is a popular way to register a business name for your entity. However, there are so many disadvantages to registering a DBA that they far outweigh the advantages, in our opinion.
The lack of personal asset protection provided by DBAs, along with the registration’s lack of exclusivity regarding your business name, make the DBA difficult to recommend. We would much rather form an LLC or corporation because these entities do not have those problems.