Complete legal guide to DBAs & when you need one

Paige Hulse, our founder and lead shop attorney, has received a flood of questions about DBAs (Doing Business As) lately, so we figured it was time to pull together everything you need to know about DBAs into one post…

Complete legal guide to DBAs & when you need one

What is a DBA?

DBA stands for ‘Doing Business As’ and as the name indicates, it allows you to make use of a business name other than your own personal name. When you register a DBA, you are then able to do business under another name.

When might I want a DBA?

If you’re a sole proprietor…

Meaning you’re not incorporated and don’t have an LLC or corporate entity of some sort. Then registering a DBA is the only way to use a name other than your personal name for your business.

Say you’re running a calligraphy business and your name is Jenny Smith, if you want the business to not just be associated with you, Jenny, then it might be beneficial to have the business named something like “First Love Calligraphy.”

One way to make use of the First Love Calligraphy name would be to start an LLC with that name, but if you’re not ready for that step yet, registering a DBA allows you to use that name instead of working under the name Jenny Smith.

Now to clarify, while a DBA allows you to use a name other than your own personal name for your business activities, it doesn’t mean you own the name and can use it forever, without worrying that someone else will take the name. To do THAT you need a trademark. (Read on for more about trademarks vs. DBAs.)

If your business is an LLC…

You can name your LLC the name which you want your business to be, meaning often people with LLCs don’t register DBAs.

Granted, there are some scenarios when a DBA might be beneficial even though you have an LLC.

Scenario 1: While LLCs are indeed quick & easy to set up, a DBA is still an even easier & faster way to register a name with your Secretary of State.

So if you want to lock down the name within the next couple minutes and are waiting on the LLC for some reason, it just takes one visit to your secretary of state’s website to lock down the name, sometimes for free or sometimes for as little as $25. (Price is state-dependent, but generally, no matter which state you’re in, it’s extremely affordable.)

You don’t require a lawyer to help with this, registering a DBA is as simple as filling out a form on your Secretary of State’s website and can be done in minutes.

So if you’re looking to save the name quite literally today and aren’t ready to file an LLC yet, a DBA can be useful.

Scenario 2: Additionally, in some states, it’s required to have a DBA to keep your business compliant. (This is because it makes it easier on the state’s part to identify you when you have a DBA.)

Scenario 3: Some banks require you to have a DBA to open a business account, it’s rare, but happens in some cases.

Scenario 4: You registered an LLC with another name but want to use a new name for the business. Say for example you called your LLC ‘Kelly’s Cupcakes’ but now you’ve decided to branch out past just cupcakes and rebrand to be ‘Cakes & More’.

One option, in this case, is to start a new LLC and shut down the old one, granted that takes a fair bit of paperwork and makes your tax filings a bit more complex as you shut down an LLC and start another in a year. (ie. If you have 2 LLCs operating in a year that means two tax returns, and no one wants that!)

An easier method to change the name of the LLC is to simply get a DBA of ‘Cakes & More.’

So your business would technically legally then be ‘Kelly’s Cupcakes LLC, DBA Cakes & More.’

Granted in your logo & promo materials you don’t need to have the full LLC & DBA name, you could just use the DBA name ‘Cakes & More.’

So getting a DBA is in essence the quickest & easiest way to change the name your business is known by if you have a LLC already set up with another name.

If I get the DBA for a name, do I own it and can I stop someone else from using it?

In short, no.

If you get a DBA you do not own the name and cannot stop other businesses from using it.

The only way to do that is via a trademark.

Trademarking a name is a much more lengthy process (think 12-18 months), and requires working with an intellectual property attorney (at least it’s highly advisable to work with a lawyer in order to trademark your name correctly.)

A lot of business owners think that by registering a DBA with their chosen name it’s theirs to have and to hold for the long run, but the truth is if someone trademarks the name of your DBA, you may be forced to stop using it.

Whoever owns a trademark owns a name. If you have a DBA think of it as making use of a name, but you don’t own it.

Can I separate two businesses by getting two DBAs?

When business owners talk about separating businesses, it’s most often a step considered from a liability protection perspective.

Let us explain.

Let’s say you run Cakes & More and now want to open up a new online course business all about how to open up your own Cake shop. Often when business owners open up a 2nd business, they want to separate the two. The reason for this is that if the businesses are left together, any lawsuit against one “side” of the business affects the other “side.” For example, if Cakes & More was sued and it was operating together with the online course business, any settlement for the Cakes & More lawsuit could also be taken from the revenue of the online course business.

So separating different businesses makes sense from the perspective that if a lawsuit took place, when businesses are separate then a settlement may only be taken from the one business, not both.

There’s one VERY important mistake we see a lot of business owners making however, they open 2 DBAs and assume that separates the two businesses but that is not the case.

Because a DBA provides absolutely no liability protection, having two DBAs does not separate the businesses.

Only two LLCs or separate entities can make the two businesses legally seen as two businesses.

So if you’d like to truly separate your businesses not just from the perspective of what your customers know the business to be, but also from a liability standpoint, then you’ll want two LLCs, not two DBAs.

How to register a DBA:

Step 1. Go to your Secretary of States website
Step 2. Find the ‘Register a DBA’ page
Step 3. Complete the DBA registration form

That’s it! You don’t need a lawyer’s help for this, you don’t need any legal documents or templates for this, and again it may be registered for (depending on your state) $0 - $25 on average.

Do I need to do anything to keep the DBA name and renew it?

Like most cases with the law, it depends on your state. Some states require you to renew the name every 5 years, others don’t. When you’re registering your DBA on your Secretary of States website look out for what your state’s renewal requirements are.

And just to quickly summarize, let’s do a quick true & false of DBAs so we’re all clear on the important aspect.

TRUE & FALSE; DBA edition:

  • A DBA provides liability protection: False! (You’ll want to start an LLC for liability protection because a DBA does NOT provide liability protection.)

  • A DBA is a requirement to use a name: True and False! (If you’re a sole proprietor and want to use a name other than your own then you may either register a LLC with that name or get a DBA with that name. If you’re a LLC you can simply just name the LLC name your preferred business name and skip the getting a DBA step.)

  • When you register a DBA you own the name: False! It’s only when you trademark a name that you own it and can stop others from using it, a DBA does not provide you protection to own a name and be the only one able to use it.

find this post helpful? Pin it now.

 
 

and be sure to grab our free legal resource before you head off!

Business, LLC & IncorporationsPaige Hulse2023Comment