A Doing Business As (DBA), also known as a fictitious business name, trade name, or an assumed name, is a name that the legal owners of a business register with the state. Owners must register a DBA only if they use a name—on business signs, letterheads, advertisements, and so on—other than the names of the legal owners of the business (for sole proprietors and partnerships) or the name the owners listed on the formation paperwork (for LLCs and corporations). For example, if Sherry Smith owns a flower shop as a sole proprietor, she could use the name “Smith's Flowers” without registering. However, she would have to register the name “Sunshine Flowers” if that's the name she uses when doing business.
The purpose of a DBA is to give the pubic a way to identify the true owners of a business. Suppose, for example, that a customer of Sunshine Flowers is injured at Sherry's shop, and decides to file a lawsuit. How will the customer know who owns Sunshine and whom to serve with legal papers? He'll go to the local registry of DBAs and look up Sunshine flowers, which will reveal the owner's name, Sherry Smith.
In most states, if you own a sole proprietorship or a partnership, you must register a DBA if the business name you use does not include the last name(s) of the owners. That's not the only instance in which a DBA must be registered.
If you want to use a name that suggests the business has more or fewer owners than it has, you must register the DBA. In our example, Sherry cannot use the name “Smith & Company Flowers” without registering, because the name suggests the company has more than one owner. If Sherry owned the flower shop as a partnership with one or more other owners, the partnership can avoid registration by either listing all of the owners' last names, or otherwise indicating that the partnership has more than one owner. In this scenario, the partnership could use the name “Smith & Company Flowers,” without registering the DBA, but could not use the name “Smith's Flowers”, as the latter suggests the company has only one owner (registration would be required).
If the owners of a corporation or LLC want to use a name other than the one on their formation paperwork (such as their Articles of Incorporation), they must register a DBA. The rules for corporations and LLCs are stricter than the ones for sole proprietors and partners, in that the law does not allow any variation of the legal name of an LLC or a corporation without registration. As noted above, sole proprietors and partners can include words in the business name other than the owners' names and can change the order of the partners' names without registration (so long as they meet the requirements discussed above). Owners of LLCs and corporations must register before they make any changes to their business name, including rearranging the order of words, adding words, or subtracting words.
For example, if your corporation's legal name is “Desert Tacos, Inc.,” and you want to go by “Desert Tacos” or “Tacos of the Desert, Inc.” you must first register a DBA. If your business is a sole proprietorship or a partnership, you would also have to register these names (unless your name happens to be “Desert,” in which case you can use “Desert Tacos” without registration).
The process for registering a DBA depends on your state, county, and city. In most states, you must file paperwork with the secretary of state and pay a filing fee. The registration might last indefinitely, or it might expire after a specified period (such as five years), after which you must file paperwork to renew it.
Many states and cities require each filer to publish a statement in a local newspaper. The statement will include the legal name of your business, the company's contact information, and the assumed name (DBA). Your local government agency will likely provide a list of approved local newspapers where you can file your statement. After the required time for publication (typically around 4 weeks), you must notify the licensing agency that you fulfilled the publication requirement. In some areas, the newspaper will send the notification of publication to the agency, while in other states you must submit your own paperwork with proof of publication (such as a receipt from the newspaper).
If you use a name other than the legal name for your business and fail to register the DBA, you might face legal and financial consequences. In some states, it is a misdemeanor to operate a business under an unregistered name. The state might impose fines or stop your business from continuing to operate under the assumed name until you register, or both.
Be sure to register your DBA before offering your services or entering agreements under the assumed name. Most banks will not allow you to open an account without showing that you registered the business name. If you enter into a contract under a DBA that you have not registered, and the other party does not perform under the contract (for example, they do not ship the products they agreed to send), you typically cannot sue them in court to enforce the agreement.