What is a DBA and does your business need one?

Choosing a name for your business is among the first decisions you’ll make when starting one. After you’ve come up with a legal name—as every business does—you might decide to operate under a different name for a variety of reasons. This is called a doing business as (DBA) name. 

Some types of businesses might need to use a DBA, and having one carries a few advantages. Read on to learn more about what a DBA means in business, how it’s different from a legal name, and how to register for a DBA. 

What you’ll learn:

• A DBA is different from a business’s legal name. The term DBA name can be used interchangeably with assumed name, trade name or fictitious name. 

• The advantages of filing a DBA include keeping business and personal information separate, creating a distinct brand, allowing for future expansion and more. 

• Some types of businesses—such as sole proprietorships and general partnerships—can benefit from having a DBA, but it doesn’t offer the same liability protection as an LLC.

• To file a DBA, business owners should first make sure the name they’ve chosen is available, then check their state’s specific requirements to get started.

When a company chooses a doing business as, or DBA, name, it’s operating under a name that’s different from its legal or registered one. A DBA name might also be referred to as an assumed name, a trade name or a fictitious business name.

Having a DBA isn’t required, but certain businesses may find one useful. For instance, you might use one for branding or marketing purposes. If Joe Smith starts a new business by opening an auto repair shop, he may choose to file a DBA to name his company Joe’s Auto Repair so it’s clear what services he offers. And the DBA can also help keep his identity private.

Keep in mind that having a DBA doesn’t mean registering your business as a separate legal entity. So your company wouldn’t have the same liability protections that forming a business structure like an LLC provides. However, filing a DBA is often cheaper, quicker and easier.

Although costs can vary depending on your location, the cost to file a DBA is generally in the range of $10-$100, but it can be as high as $200. And once you’ve registered your business with your state or county as a DBA, you’ll usually need to renew your DBA every so often—with the length of time likely set by your state.

Filing a DBA is an easy way to establish your business under a name different from your personal name. This can help keep your personal name private when conducting business transactions.

A DBA provides a straightforward way for you to brand your business, allowing you to solidify a distinct brand identity. And once you have a brand, it can be easier to market your specific products or services and differentiate your company from top competitors.

Once you have a DBA, opportunities to expand your business can open up. For example, Joe Smith’s business plan might include opening a new location across town that, instead of offering general auto repair, specializes in comprehensive services for tires and braking systems. Joe can brand that business as Joe’s Brake and Tire Repair to differentiate it from the original location.

Before you can open a business bank account under your business name, banks often require that you file a DBA. While you don’t necessarily need a DBA to get an Employer Identification Number (EIN), having one can make it easier for a non-LLC business to open accounts under its business name. 

Having a separate bank account for your business offers its own advantages, like streamlining your accounting and tax processes, increasing your purchasing power and providing access to tools designed specifically for businesses.

Whether you need a DBA depends on your business structure. For example, sole proprietorships and general partnerships typically use the business owner’s legal name unless they file for a DBA to use a different name. Although they still need the necessary licenses and permits to run the business, they’re usually not required to register their business name with the state—unless they want to use a different name and file a DBA.

Businesses like corporations and LLCs don’t need to file a DBA if they’re operating under their registered business name. That’s because they’ve already taken the steps to register the business name when setting up their business.

A DBA is different from your business’s legal name. Try thinking of it as more like a nickname. It’s the name you choose to do business under, not a separate legal entity. A DBA relates only to the name your business uses.

Your legal business name is the one you registered with the IRS or your state. If you’re a sole proprietorship, that typically will be your personal name. While a DBA is a good way to differentiate your personal name from your business name, keep in mind that it doesn’t offer the same legal protections as forming an LLC or corporation. That means your personal assets could be at risk if your company ever faces a lawsuit. Forming an LLC helps protect your personal assets—like your home, car and bank accounts—from being treated as business liabilities. 

Additionally, having a DBA doesn’t prevent another company from operating under the same name. If you want exclusive rights to your DBA name, you’ll need to register a trademark to protect your business’s branding.

Filing a DBA takes just a few simple steps. It’s generally an easy process that requires fewer complex legal forms than registering another business type. In fact, you can often file or renew a DBA online.

But the steps do vary based on your state and the type of business you’re running. Here’s how to get started:

1. Check that the name you’re choosing is available. The first step in filing your DBA is to make sure the business name you’ve selected is unique within your state. You can check your Secretary of State’s website to search for the name. Keep in mind that the name you choose can’t closely mirror a well-known national brand, and it also shouldn’t be too similar to other business names in your area. 

2. Review and gather the required information for your state. Once you’ve confirmed that the name you’ve chosen is available, review the information your state or county requires for DBA registration. Some states may have additional rules, such as a requirement for your business to be in operation for a specific amount of time before you file. After confirming you’ve met the requirements, you’ll typically need to provide information like your business’s legal name (or your own name if you’re a sole proprietor), your Social Security number (SSN) or EIN and the name you’ve chosen for your DBA.

3. File for your DBA. Now you’re ready to register your DBA. You can usually complete the application online. However, in some cases, you can mail in the form. You’ll also need to pay the registration filing fee. After submitting your application, you should receive a notification about the processing time. Typically, you’ll know within a week or two if your DBA is approved. 

4. Use your DBA in your business operations. After your DBA is approved, you can start operating under that name. This includes opening a business bank account, putting the DBA on your business cards and using it on official documents, like contracts. 

5. Renew your DBA as required by your state. Check your state’s requirements to determine if and when you’ll need to renew your DBA. In some states, you might need to renew it every year, while other states have longer renewal periods—or none at all. If you decide not to renew your DBA, be sure you understand the steps required to cancel it.

A DBA in business is the name a company uses that’s not the same as its legal name. While you don’t need a DBA to start and conduct your business, having one can help with branding and privacy. Sole proprietors and partnerships often use DBAs when they want to operate under a name that’s different from their own. But keep in mind that a DBA doesn’t create a new legal entity, which means it doesn’t provide liability protection like an LLC or corporation does. 

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