What is a DBA? Should your business file for one?

Making the right decisions for your business involves a lot of research, debating, and decision making. To make it easier, here are some common FAQs about what filing for a DBA entails and what it can do for your business.

What does a DBA allow you to do?

A DBA (stands for “doing business as”), also known as a trade name, fictional name, or assumed name, allows you to do business under a different name than your legal business name. It is sometimes used by sole proprietors, partnerships, LLCs, and corporations for branding purposes. There are mainly only two reasons why you would need one:

1. You have a formal business entity that wants to expand into new products, services, or brands, or simply rebrand.
2. You have an unregistered company, such as a sole proprietorship or partnership, and you want to use a different name than your own. Only companies with very low profit and risk can use this option.

What is the benefit of a DBA?

As the acronym suggests, DBAs give sole proprietorships the power to operate under a name other than the owner’s legal name, giving the business a more professional appearance. They are also useful when a company wants to introduce a new product or line of business under a different name without creating a new legal entity.

How do I get it?

The filing process differs state to state. In some states, companies file for DBAs at the state level, while in other states, companies must file with the cities or counties they operate in. To learn how to form a DBA in your state, check out the state-specific registration.

Does a DBA have to file taxes?

Since a DBA is not a separate legal entity, it does not require you to file separate taxes. It is important to note, for tax purposes, that all business conducted under a DBA is part of the legal entity.

How much does it cost?

The cost of filing is typically between $10-$100, however the price varies state by state.

What is better, a DBA or LLC?

Whether you should get a DBA for your sole proprietorship/partnership or form an LLC depends on your company’s specific situation and requirements. In the short term, operating a sole proprietorship under a DBA name is a simpler and more cost-effective alternative, but an LLC provides VERY important benefits such as personal liability protection.