Differences Between LLC & DBA

By Joe Stone

LLC and DBA are two acronyms commonly used to indicate important legal aspects about a business. LLC, or limited liability company, refers to a separate legal entity that is distinguishable from its owners. DBA, or doing business as, refers to a pseudonym that an owner uses to conduct business. It is important to understand the difference between the two when planning to use either as part of your business structure.

LLC and DBA are two acronyms commonly used to indicate important legal aspects about a business. LLC, or limited liability company, refers to a separate legal entity that is distinguishable from its owners. DBA, or doing business as, refers to a pseudonym that an owner uses to conduct business. It is important to understand the difference between the two when planning to use either as part of your business structure.

DBA Basics

A DBA is not the legal name for a business -- it is simply the name that a business owner wants to use to sell products or provide services. A DBA is sometimes referred to as a fictitious name, trade name or assumed name. All states have laws regarding the proper registration and use of a DBA. Some states, such as California, Florida and Connecticut, make registration of a DBA mandatory before it can be used by a business owner.

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LLC Basics

An LLC is a separate legal entity from the individual member or members who formed the LLC. In contrast to a DBA, the name of the LLC is the legal name for the business and must be used on all government applications and forms, such as a business license or tax filing. Each state has its own laws regarding the formation of an LLC; however, unlike requirements for a DBA, no state requires a business to form an LLC. The decision to form an LLC is voluntarily made by the business owners depending upon whether such a business structure is beneficial for them.

Personal Liability Protection

One of the primary reasons a business owner decides to form an LLC is the protection it provides the business owners’ personal assets. The owners of the LLC -- called members -- will not be personally liable for decisions or actions taken by the LLC. With regard to a DBA, there is no such protection from liability. Because the DBA is not a separate legal entity, all business decisions and action taken using the DBA are the responsibilities of the business owners.

Start-up and Maintenance Costs

Both DBAs and LLCs require start-up costs for filing and ongoing costs to maintain the DBA or LLC in good standing. Although costs vary among states, the costs associated with a DBA will be significantly smaller than an LLC within the same state. For example, as of November 2010, a DBA can be registered in Los Angeles County, California for $26. The filing fee for a California LLC is $70, with an additional $800 payment required for state taxes. The DBA will require a small renewal fee every five years; the LLC will have to pay the $800 tax every year of its existence.

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Can an LLC File a DBA & Still Do Business Under the LLC Name?

References

Related articles

How to Transfer a DBA to a New Entity in Texas

Texas law allows businesses to operate under an assumed name, also known as a "doing business as" or DBA, for any legitimate business reason, as long as the name is unique and properly registered with an official state entity. DBAs are registered at the state or county level in Texas, depending on the type of entity that will be using the name and where in the state the entity will be doing business. By law, transferring the DBA to a new entity requires an authorized party to file a new assumed name certificate with the appropriate state and local offices within 60 days of the transfer, updating the business ownership information.

Trade Name Registration & Renewal in the State of Ohio

Ohio law permits you to register a trade name for your business which is used to designate and distinguish your business from all others. Registering the trade name also means that you assert a right to the exclusive use of the name. The registration is effective for five years and will expire unless properly renewed.

How to Add a DBA to an S-Corp

A DBA is an acronym for “doing business as," and can be used by any business owner, including an S Corporation, to distinguish the business’s products and services from its competitors. Any type of trade name, fictitious name or assumed name used for a business is generally referred to as a DBA. To add a DBA to your S-Corp, you must follow the requirements of the state law where your S-Corp was formed. Most states require registration of a DBA with a government agency, with some states further requiring publication of the DBA in an approved newspaper.

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