Consequences for Not Filing a DBA

By Jim Thomas

DBA is short for "doing business as." It's a fictitious name you give to your business when you register it with the state or county, depending on the law in the state where you reside. For example, if your name is John Jones and you are opening a pizza parlor called JJ's Pizza, you are required in most states to register JJ's Pizza as your DBA name. As the Small Business Administration website states, a DBA name is also known as a fictitious name, assumed name or trade name. Although some states, such as Alabama, don't require you to file a DBA name, you have the right to do so. And it's a good idea to do so, since you can run into a heap of potential problems by not registering your DBA name.

DBA is short for "doing business as." It's a fictitious name you give to your business when you register it with the state or county, depending on the law in the state where you reside. For example, if your name is John Jones and you are opening a pizza parlor called JJ's Pizza, you are required in most states to register JJ's Pizza as your DBA name. As the Small Business Administration website states, a DBA name is also known as a fictitious name, assumed name or trade name. Although some states, such as Alabama, don't require you to file a DBA name, you have the right to do so. And it's a good idea to do so, since you can run into a heap of potential problems by not registering your DBA name.

Enforcing Contracts

If you don't obtain a DBA, you can't enforce any contract that you sign under your unregistered business name. For example, if you order office furniture and computers from a supplier who takes your money and doesn't deliver the goods, you can't sue to get your money back, at least not until the time you register your DBA. In Pennsylvania, the court has the power to fine you $500, although the fine is not automatic, if you register your DBA after you have already gone into business and then come to court to enforce your contractual rights.

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Shut Down of Business

In a number of states, you can suffer harsh penalties for not registering a trade name. Colorado has the authority to assess monetary penalties and even bring an injunction to prevent you from conducting business. In New Hampshire, you can't conduct business or even advertise your business until you obtain a DBA name.

Misdemeanor

In Missouri, you are required to file your DBA with the secretary of state's office. Failure to do so is a misdemeanor and you can be charged by the local prosecutor. Penalties for misdemeanors run as much as $1,000 in Missouri. In addition, a misdemeanor charge on your record might harm your ability to raise money or attract partners to your business.

Bank Accounts

When you start a new business, you'll want to open a bank account for that business that is separate from your personal account. However, many banks will refuse to open an account using your business name without proof you have registered it. You'll need a copy of your DBA registration to establish proof.

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Advantages & Disadvantages of Filing for a Fictitious Business Name

References

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