Advantages of Filing for a DBA

By Joe Stone

Filing for a DBA is the easiest type of business registration. The acronym "DBA" is short for "doing business as" and is generally used when referring to any type of fictitious name, assumed name or trade name for your business. Filing for a DBA is most advantageous when you are just starting your business, but as you become established you should consider the advantages offered by other forms of business registration.

State DBA Laws

DBA filing requirements are determined by the state law where your business is located. Three states — New Mexico, Mississippi and Kansas — do not have any DBA filing requirements. In Arizona and Alabama, DBA filing is optional. In all other states, you must file if you are using a DBA to conduct business. To file a DBA, you typically must use the DBA form approved in your state and file it with the appropriate government office, such as the secretary of state or county clerk. In most states, you also must publish your DBA in a newspaper of general circulation in the county where your business is located.

Advantages of Filing for DBA

The biggest advantage in using a DBA is the minimal cost required to protect your business name. For example, in California the typical filing fee for a DBA is as low as $26, while the fees to incorporate under a business name are as much as $900. Also, filing a DBA rather than incorporating means that you do not have to adhere to ongoing corporate formalities, such as holding annual meetings and preparing corporate minutes, and incur the legal and accounting fees associated with them.

File a DBA for your business online. Get Started Now

Name Protection

A DBA filing is evidence of your right to use your business name should someone attempt to use the name after you have established it in your community. You can use the court to prevent someone else from improperly using the same name to take potential customers away from your business. Filing is also important to protect your right to use the court if you are located in a state where DBA filing is mandatory. For example, in Nevada, you will be barred from filing a lawsuit under your DBA if you have not filed it as required by law.

Disadvantages in Using a DBA

The ease and minimal cost associated with filing a DBA as an alternative to incorporating is offset by the disadvantage of being personally liable for the debts of your business. This means that business creditors can sue you personally and enforce a judgment against your personal assets, such as your home. Another disadvantage is paying self-employment tax for Social Security and Medicare, which is similar to the withholding from a wage-earner's paycheck. In most cases, your self-employment tax will be higher than you would have paid receiving the same earnings as an employee.

Best Use of a DBA

If you are just starting your business, using a DBA is a good way to minimize your initial costs while protecting your business name. However, as your business becomes established and begins to grow, you need to evaluate how to best protect your personal assets by forming a separate legal entity for your business, such as a corporation or limited liability company. You will also have more tax options with a separate entity which can reduce your overall tax liability. Your DBA can still be used by transferring it to your newly formed corporation or LLC.

File a DBA for your business online. Get Started Now
Can an LLC File a DBA & Still Do Business Under the LLC Name?



Related articles

Steps in Formation of Sole Proprietorship in Wisconsin

As the Wisconsin Bar Association puts it, choosing the form of your business is similar to buying a car. There are a certain number of models you can choose from with their own customized features. A sole proprietorship – a business with one owner who makes the management decisions – is the easiest type of business entity to establish. However, it's important to set up your sole proprietorship correctly, which might mean registering the name of the business and obtaining an Employee Identification Number (EIN) from the Internal Revenue Service for tax purposes.

How to Create a Sole Proprietorship in South Carolina

If you are starting a business in South Carolina and want to operate it as a sole proprietorship, it isn’t necessary to file any formation documents with the Secretary of State to create it. In fact, you can begin operating your business at any time. However, despite the fact that South Carolina doesn’t impose formal requirements to create a sole proprietorship, there are other state requirements you must comply with.

How do I Convert a DBA to LLC?

If you are conducting business using a DBA, which is short for "doing business as" and sometimes called a fictitious business name, and want and you want to use the DBA as a name for an LLC, you can do this by following the LLC naming laws in your state. Each state has its own LLC laws and state agency charged with overseeing compliance with these laws, usually the secretary of state. Although variations exist between state LLC laws, forming an LLC using your DBA name will require determining the name’s availability and filing the required document that starts the LLC’s existence.

Related articles

Differences Between LLC & DBA

LLC and DBA are two acronyms commonly used to indicate important legal aspects about a business. LLC, or limited ...

How Do I Extend My DBA?

A business owner using a fictitious name, trade name or assumed name -- commonly called “doing business as” or DBA -- ...

Advantages & Disadvantages of Filing for a Fictitious Business Name

The name you use to conduct business can greatly affect the success of your endeavor. While you're required by state ...

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 ...

Browse by category
Ready to Begin? GET STARTED