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.
Overview of LLCs and DBAs
Many business owners wish to set up their company to avoid personal liability for company debts and pay taxes only at the individual level, also known as "pass-through" taxation. While an LLC accomplishes these goals, sometimes the use of the company's legal name is not desirable. A DBA name -- also known as a fictitious name, trade name or assumed name -- is a name a company uses, different from its legal name, to conduct business. The use of a DBA is governed by state law and some states require that no two businesses use the same DBA.
Registration of DBAs
Once the LLC's owners agree upon a DBA and ensure that the name is unique within the state and locality where it will conduct business, the next step is registration. The purpose of registration is to put the public and local government authorities on notice as to what person or entity is behind the name, making it possible to tie responsibility for the operations back to the owners. Failure to register a DBA before beginning operations may lead to the regulatory state or local authority imposing a penalty on the business.
Multiple DBAs Are Allowed
Registration of the DBA name with the state is fairly simple for an LLC and involves the completion of a form indicating the name and paying the filing fee. While there is no limit to the number of names an LLC can operate under, each name typically needs to be registered separately.
Reasons for Multiple DBAs
Selecting a business name is of vital importance for an LLC. Many factors must be considered, particularly with regard to how the name will affect the business's success in the marketplace. Multiple DBA names can allow a company that will be operating in multiple markets to tailor separate names for each product or service line. Further, it may be that one name proves to not be beneficial to the business or it may desire to rebrand its image and register a new DBA.
References & Resources
- U.S. Small Business Administration: Register Your Business Name
- Vermont Secretary of State: Corporations Divisions: Trade Names
- City of Boston: Business Registration Information and Forms
- U.S. Small Business Administration: Choose Your Business Name
- Oregon Secretary of State: Business Information Center Frequently Asked Questions
- Vermont Secretary of State: Form: Trade Names Registration
- Citizens Media Law Project: Limited Liability Company