How to Set Up a Sole Proprietorship Using a DBA

By Larissa Bodniowycz, J.D.

How to Set Up a Sole Proprietorship Using a DBA

By Larissa Bodniowycz, J.D.

Sole proprietorships are a type of business owned and run by just one individual. The sole proprietorship is not considered a separate legal entity. It is one and the same as the person who owns the business. By default, when an individual forms a sole proprietorship, it will be under the individual's name unless he registers the business under a DBA, or "doing business as."

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DBA Explained

A DBA allows a sole proprietor to conduct business under a name other than his own. A DBA functions as your business's trade or fictitious name.

Not all sole proprietorships will need or utilize a DBA. Whether a sole proprietorship needs a DBA will depend upon the jurisdiction's requirements and the business owner's preferences. A DBA is useful because it makes business banking easier and helps to keep business finances separate from the proprietor's personal funds. A DBA can also help develop the business's brand.

A sole proprietor must properly register a DBA with the state as a fictitious business name if she chooses to utilize one. For example, a hairdresser named Jane Smith can either have her clients pay her by writing a check to Jane Smith (in which case Jane Smith would be operating under her own name and would not have a DBA), or she can register a DBA for the name “Hair by Jane" and operate her business under that trade name.

Form a Sole Proprietorship Using a DBA

Registering a DBA with the state is just one step in officially forming a sole proprietorship. Follow these steps to properly set up sole proprietorships using DBAs:

1. Check the DBA's Name Availability

Make sure your DBA name is available. Check with the Secretary of State and search the database of active businesses operating within your state. Go a step further and search the United States Patent and Trademark system to make sure no one else is using your DBA name as a trademark. You want to make sure your trade name is unique.

2. Submit an Application for the DBA

To register your DBA, the state must receive a completed application. Requirements vary by jurisdiction, but generally you will need to file paperwork with your state or county and pay a filing fee. In some states, such as California, you will also need to publish a statement about your DBA in a county newspaper for several weeks. It is typically recommended that you complete the application process before you start operating under your DBA trade name.

3. Obtain a State Business License

Obtain a state business license, if required. Most states do not require sole proprietorships to obtain a license from the state to operate. However, some states, do. Check the requirements for your state.

4. Obtain Necessary Licenses or Permits

Obtain any applicable state or local licenses or permits to operate your proprietorship. State and local level government departments regulate certain types of businesses such as law firms and medical offices. Check your county and state's office of business or economic development for lists of regulated occupations and necessary licenses.

5. Register with the State Tax Department

Register your business with the state department of taxation if you are planning to hire employees or sell products that require you to charge sales tax.

6. Apply for an Employer Identification Number

Apply for an employer identification number with the Internal Revenue Service. This is a requirement if you want to open a bank account under your DBA or hire employees. Complete online on the IRS website.

Owning your own business doesn't mean you have to go at it alone. An online legal service provider or business attorney can help you through the DBA, permitting, and tax filing processes.

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.