"Doing Business As" names and Employer Identification Numbers serve important, yet distinct, purposes in business operations. A DBA allows a business to operate under a name other than its legal name, while an EIN serves to identify the company to the state and federal authorities for tax purposes. A business generally only has one EIN but may change DBAs. If a business chooses to change its DBA name, it must do so at the state or local level. However, because a business only has one EIN, a new DBA is automatically tied to the old EIN.
Employer Identification Number
An Employer Identification Number is a number assigned by the IRS to businesses for use on tax documents and other filings. The EIN works like a Social Security number for business entities and ties a business to its tax account. Every type of business, from corporations to sole proprietorships, may register for an EIN. While a sole proprietor may simply use the Social Security number of the owner on tax filings, all businesses with employees must have an EIN. Further, regardless of how many departments or divisions a business has, or the number of registered DBAs, a business typically only has one EIN.
Doing Business As
Many businesses register a Doing Business As name, also known as a fictitious, assumed or trade name. A DBA allows a business to use a name other than its original, legal name. Many states require partnerships and sole proprietorships to operate under the personal names of the owners unless a DBA is registered. Further, some businesses may use a DBA because their legal name is not available for use in a particular state.
When registering an EIN, you must use the legal name of the business. For sole proprietorships and partnerships, the legal name is likely the names of the owners. The legal name of a corporation, LLC or other incorporated entity is the name originally registered with the state where the business was formed. Conversely, a DBA is only an alias and does not have to be permanently tied to the business. A business may register multiple DBAs, or change its DBA, without having to acquire a new EIN or make any changes with the IRS.
Because an EIN is tied to the legal name of the business, and not the DBA, you only need to update the DBA registration at the local level. Contact your state or county business registrar to find out how to change a registered DBA. Some states may allow you to simply file a form to change a DBA, or you may cancel an old DBA and register a new name. Once you have a new DBA registration, you may use the name and existing EIN to change over bank accounts, licenses and any other matters registered with the old DBA. However, many businesses choose to use their legal name for licenses and other registrations.
References & Resources
- Dynamic Graphics/Creatas/Getty Images