Can a DBA Company Own an LLC?

By William Pirraglia

You can own an LLC if you are a sole proprietor or partnership using a DBA, or "doing business as." A DBA is not an official company structure, but an identity -- usually called a "fictitious name" or "trade name" -- for business and/or recognition purposes. Your state will recognize your DBA identity, but the legal structure will typically be a single owner business or a partnership. Since states make the rules for DBA recognition, check with your jurisdiction to learn the legal way to own the LLC.

You can own an LLC if you are a sole proprietor or partnership using a DBA, or "doing business as." A DBA is not an official company structure, but an identity -- usually called a "fictitious name" or "trade name" -- for business and/or recognition purposes. Your state will recognize your DBA identity, but the legal structure will typically be a single owner business or a partnership. Since states make the rules for DBA recognition, check with your jurisdiction to learn the legal way to own the LLC.

DBAs

A DBA is simply a company conducting business under a name other than the legal one under which it was organized and registered with the state. For example, Joe and Bob Smith register the "Smith Partnership" with their state. They then file a request for the fictitious name, "Smith Brothers Antiques." If approved, the official title of the company is "Smith Partnership DBA Smith Brothers Antiques." Similarly, Joe Smith, sole proprietorship, could request the DBA, "Smith Antique Restoration," This allows Mr. Smith to open bank accounts, use business checks, sign contracts and make legal agreements in the DBA name.

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LLCs and DBAs

Since LLCs can own other LLCs, an LLC using a DBA can also own another LLC. For example, "Joe and Bob Smith, LLC, DBA Smith Brothers Antiques" can also own "ABC Antiques, LLC." The DBA classification does not eliminate the legal business from owning another LLC, which is sometimes beneficial when revenues come from different products, markets and/or industries.

Purpose of DBAs

Using a DBA gives you the ability to establish a trade name that becomes more familiar to the marketplace. Like LLCs, the ability to use DBAs is regulated by your state, not federal law. Always learn about your state laws and consider your DBA choices carefully. For example, even though a fictitious name, you cannot use "Joe Smith Company DBA Microsoft." However, "Joe Smith Company" will probably mean little to your potential customers. However, adopting the name "Joe Smith Company DBA Smith Antiques" targets your company purpose. The name, "Smith Antiques," is much more likely to become a household name if you are successful.

Reasons for DBAs Owning LLCs

There is at least one overwhelming reason for a DBA to own an LLC: limited liability. The personal asset protection offered by LLCs, similar to the personal limited liability offered by corporations, can be a huge advantage. Unincorporated companies, whether operating with a DBA or not, cannot protect the personal assets of their owners. However, even the smallest company can afford to create an LLC, much simpler to organize and manage than a corporation, and enjoy the same limited liability as Fortune 500 organizations.

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Advantages & Disadvantages of Filing for a Fictitious Business Name

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Operating a business as a sole proprietorship has very few formal requirements. Typically, all an entrepreneur has to do is start running the business under his own name to effectively be in business as a sole proprietor. However, some types of businesses in regulated industries, such as law, medicine and cosmetology, require a state occupational or professional business license before they can begin operations. Regardless of their legal structure, businesses often choose to use fictitious trade names for marketing purposes.

What Does DBA Mean in Business?

In the business world, DBA - which stands for "doing business as" - is a vitally important acronym to know. It signifies that an individual or company is doing business under a fictitious name. One common example would be a chain store franchise, operated under a commercial name familiar to everyone but actually run by an individual or firm owning the local franchise. State laws govern the creation and use of DBA fictitious names.

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Running a successful business requires a keen understanding of the marketplace. In the initial stages of operations, this foresight is important for determining how to structure a company and the names it will use in conducting transactions with the public. A limited liability company allows owners to enjoy the "pass-through" tax advantages of partnerships as well as avoiding personal liability for the business's debts. While state law requires that LLCs operate under the legal name contained in their Articles of Organization, sometimes this name is not desirable from a branding perspective, particularly if the company will market very different products or services. In that case, the LLC can register one or more "doing business as" names with the state.

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