What Is a DBA?

When you use a name for your business other than your legal name, you're using a DBA (short for "doing business as"). For a sole proprietorship or partnership, your legal name is each owner's personal name. For a limited liability company (LLC), corporation, or other registered business, your legal name is the name used on the company's formation paperwork.

A DBA can also be known as a "fictitious business name," "trade name," or an "assumed name." Most states require businesses using DBAs to register their trade name with the state or county.

Why Do Businesses Use DBAs?

Businesses usually use DBAs on:

• business signs
• letterheads
• advertisements, and
• websites.

A business can use a DBA for many reasons. For sole proprietors and partnerships, individuals could want to use a business name to protect their privacy or to create an identity for their business that's separate from them as an individual. For LLCs and corporations, a company might want to use a more marketable name than what's on their legal paperwork.

Whatever the reason your business uses a DBA, it's important to follow your state's laws regarding DBA registration (as discussed below). When you register your DBA, the public has a way to identify the true owners of the 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.

When Must Sole Proprietors and Partnerships Register DBAs?

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 can't use the name "Smith & Company Flowers" without registering it 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 could avoid registration by either:

• listing all of the owners' last names
• using a name that shows the partnership has more than one owner, or
• legally forming the partnership with the state under the desired name.

For instance, the partnership could potentially use the name "Smith & Company Flowers" without registering the DBA. But it couldn't use the name "Smith's Flowers" as that name suggests the company has only one owner (registration would be required).

Make sure you check your state's DBA registration laws. While the laws in most states are generally very similar, you'll find some variations that are important to note. For example, your state might require you to list all of the owners' last names and not allow you to vaguely indicate that there's more than one owner.

Corporation and LLC DBA Registration

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 or articles of organization), they must register a DBA.

The rules for corporations and LLCs are typically stricter than the ones for sole proprietors and partnerships. For example, the law doesn't usually allow any variation of the legal name of an LLC or a corporation without registration. Owners of LLCs and corporations must register a DBA if 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.

In contrast, as noted in the earlier section, sole proprietors and partners can usually include words in the business name other than the owners' names and change the order of the partners' names without registration (so long as they meet the requirements discussed above).

How to Register a DBA

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 expire after a specified period (such as five years), after which you must file paperwork to renew it.

Some states and counties require you to publish a statement in a local newspaper notifying the public of the DBA filing. The statement will usually need to 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. In other states, you must submit your own paperwork with proof of publication (such as a receipt from the newspaper).

Consequences for Using a DBA Without Registration

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's 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 it.

Be sure to register your DBA before you offer your services or sign any business agreement under the assumed name. Most banks won't allow you to open an account without showing that you've registered the business name.