Differences Between LLC and DBA

By Michelle Kaminsky, J.D.

Differences Between LLC and DBA

By Michelle Kaminsky, J.D.

LLC and DBA are both acronyms that communicate important legal aspects of a business, but they are entirely different concepts:

  • LLC (limited liability company) refers to a type of business structure with a separate legal existence from its owners.
  • DBA (doing business as) is also sometimes called a fictitious business name (FBN), trade name, or assumed name, and is merely the name used by an individual, LLC, corporation, or other entity to conduct business.

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Every state has its own laws regarding the formation of an LLC and the registration of a DBA, but below you'll find some basic information about each of these commonly used business terms.

DBA Basics

A DBA is the name a business owner uses to sell products or provide services. It is not the legal name of the business, but rather the name presented to the public. A DBA informs the public as to the true owner of a business.

When you need to file a DBA to operate depends on state law but, generally, if you use a business name that doesn't include your surname or one that implies more than one owner, you will probably need to register a DBA before using it.

Many states require the registration of a DBA before it can be used or soon after its first use. Even if not technically required, though, you will likely need a DBA to open a bank account or use the business name in contracts anyway, so the sooner you get a DBA registered, the sooner you can get your business moving.

Filing a DBA is usually a straightforward process that requires you to submit paperwork and a filing fee to the appropriate agency, usually the Secretary of State or county clerk. Some states, such as California, also require that you publish a notice in the local newspaper regarding your DBA and then submit proof that you have done so.

Many states also require that you renew your DBA periodically, but there are no yearly reporting requirements.

LLC Basics

An LLC is a separate legal entity from the individual or individuals 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.

No state requires a business to form an LLC, which means that the decision to do so is voluntary and made by business owners depending upon whether such a legal structure is beneficial to them.

While state laws vary, forming an LLC usually means filing articles of organization and sometimes an operating agreement or other informational document with the appropriate agency, often the Secretary of State.

The LLC often must also file an annual report confirming the entity's contact information, as well as any changes in membership, registered agents, etc.

Protections

One of biggest advantages of forming an LLC is the protection it provides for 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.

In contrast, a DBA provides 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.

Note that neither a DBA nor an LLC prevents others from using your business's name. For that type of protection, you would need to pursue trademark registration.

Startup and Maintenance Costs

Both DBAs and LLCs require startup 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 are significantly less than an LLC within the same state.

For example, in Los Angeles County, California, you can register a DBA for $26. The filing fee for a California LLC is $70 with the Articles of Organization and another $20 with a Statement of Information.

While the DBA will require a small renewal fee every five years in California, the LLC will have to pay an $800 tax every year of its existence.

Taxation

There are no tax consequences associated with a DBA, but the LLC may choose how it is taxed, whether as a sole proprietorship, corporation, or partnership.

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.