Consequences for Not Filing a DBA

By Stephanie Kurose, J.D.

Consequences for Not Filing a DBA

By Stephanie Kurose, J.D.

A DBA, or "doing business as," is a fictitious name that a business can register if it does not want to conduct business transactions under its legal name. State law regulates DBAs, so the rules for registering and maintaining it varies by state. It is important to follow the specific laws of each state because being in violation of any applicable laws can have serious consequences for the business.

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DBA Basics

Some states refer to DBAs as fictitious names, assumed names, or trade names. Many businesses choose to register and operate in this manner because the chosen name suits the business's needs better than its legal name. Sole proprietorships and partnerships often use fictitious names because these businesses' legal names are typically the personal names of the business owners. They can be a great tool for marketing, advertising, and developing a specific brand.

Each state has its own laws governing businesses that operate under an assumed name. Some states may require business owners to register with the state, while others may require the DBA be registered at the county or local level. Other states, like Alabama, do not require a business to file the name. Thus, the consequences of not filing also vary by state. If the business operates in more than one state, it must follow the rules for each of those states.

Conducting Business Through a DBA

Not filing a DBA can lead to harsh penalties in some states. For instance, Colorado may impose steep fines and even bring an injunction to prevent a business using an unregistered name from operating within the state. Similarly, New Hampshire does not allow a business to begin operating or advertising in the state without first registering its fictitious name.

Missouri requires a business to file its name with the Secretary of State. If a business fails to do so, it can be charged with a misdemeanor and face up to $1,000 in penalties. Being charged with a misdemeanor may also harm a business' ability to raise money or attract business partners.

 

Enforcing Contracts and Opening a Business Bank Accounts

If a business has improperly filed or has failed to file a DBA in a state that requires it to do so, it cannot enforce any contract signed under the unregistered business name. For example, if a business uses an unregistered name to order inventory from a supplier who either does not deliver or otherwise fails to live up to the terms of the contract, it cannot sue the supplier or turn to the courts to enforce the contract unless and until the business properly registers its assumed name. Some states, like Pennsylvania, fine a business for registering it after bringing a lawsuit to enforce a contract made prior to registration.

Oftentimes, business owners need to open a business bank account that is separate from their personal account. Many banks require proof that the name used to open the bank account is properly registered. If a business owner has not registered their DBA, they will likely be rejected from opening a bank account in that name.

Filing for a fictitious name is generally very easy and straightforward. To be safe and avoid these possible consequences, a business should always register its DBA with the state agency that has jurisdiction over business, even if their state does not require it.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.