The Advantages of a DBA

By Anna Assad

A business uses a fictitious name, also known as a trade name or "doing business as" name, to conduct business. The DBA name is different from the true name of the business, although the names may share similarities. While sole proprietors often use DBAs, other business types, such as corporations, may use fictitious names as well. Many states allow a business to register a DBA in the counties the business will use the name in.

Privacy

A DBA allows the business to separate itself from the DBA name. A sole proprietor operating under his own name, for example, might not want his real name all over advertisements aimed at the public. The assumed name lets the business owner maintain his privacy while still reaching out to the public for customers. Since DBA filing is usually simple and inexpensive, it's an easy way to for a small business owner to guard his privacy.

Accounting

Having a DBA allows a business to open up a bank account in its own name. Without a registered DBA, a sole proprietor, for example, would have to open a bank account in his own name. Banks have special accounts that offer perks for businesses, such as no maintenance fees, and a DBA allows a small business to get a business account. It's also easier for a business to track specific project success, loss and growth with a separate bank account.

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Brand Development

A DBA allows a business to develop a brand separate from other brands and services associated with the true business name. If the brand products the DBA is attached to don't go over well or attract negative attention, the business has some distance from the failure, since the failure is tied to the DBA name in the eyes of the public. If the brand goes over well, the marketability of the DBA increases.

Name Use Rights

A DBA registration may protect the business owner from local theft of the name. In some states, a business using a registered DBA has the sole right to use the name in the area covered by registration, often the county the business registered the DBA in.

Transfers

A business owner can sell a section of his business off much easier if he's using a DBA for it. Selling a section of his company tied to his true business name would jeopardize that name and potentially confuse the public. With a DBA, he can sell the section and transfer the DBA name to the buyer. The buyer can apply for the same DBA if the state does not allow DBA transfers once the original owner cancels his registration. The ability of buyers to keep the name associated with the business section makes the purchase more attractive.

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How Important Is a DBA?

References

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