How Important Is a DBA?

By Cindy Hill

A trade name, which is the DBA, or doing business as, name, may well be a business's most valuable asset. Through its DBA, a business helps the public form a positive association between the name and the business's services or products. A DBA can create legal and economic problems for a business if it is too similar to a trade name of another business, while registering a DBA can help protect a business trade name against misuse by other businesses.

Selecting a DBA

The name you select for your business should make a positive connection with your target market, but there is much more to the DBA selection process than coming up with a fun name. You have to first check your local and state business name databases to ensure that no one else is operating a business under the same, or a confusingly similar, name in your area. Internet search engines and trademark search services can help you determine if someone else is using a similar name for online, national or global marketing. If Internet traffic will contribute to the growth of the business, also check on the availability of domain names for your DBA. Generic trade names, such as calling a cleaning service "The Cleaning Service," are the most difficult to legally protect from misuse by other businesses, while unique, creative names provide greater legal protection.

State DBA Registration

Most states require any person or business operating under a fictitious name to register that name with a state agency. Some states also require registration with county offices. A few states do not require registration of DBAs, but allow for optional registration. Sole proprietors, as well as businesses organized as partnerships, LLCs or corporations, can register a DBA that is different from their personal name or the formal name of their business entity. State and local business associations or the U.S. Small Business Administration can help guide you to the registration process for your state. Registration, even where not mandated by law, puts the public on notice that you are doing business under a certain trade name. This helps prevent misappropriation of your DBA by other businesses, as well as providing a means for people to locate and contact the DBA owner.

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Trademark and Copyright

Registering a DBA with a state business agency is only one form of protection for a business trade name. Trademark registration with the U.S. Patent and Trademark Office can provide broader legal protection, securing the exclusive use of that business name throughout the United States. Trademark registration can protect not only the DBA itself, but the font, design, slogan, logo or color associated with the DBA on your business marketing materials. Copyright registration through the U.S. Copyright Office can provide additional legal protection to the artwork used in your business logo or the text contained in your marketing materials, including your DBA and any related slogans.

Potential Liabilities

Failure to appropriately register and protect your DBA creates potential legal and economic liabilities. If you have not registered your DBA before any other similar names have been registered in a particular market area, another business with a similar name may sue to compel you to change your business name. Even if you are not compelled to change your business name, you may lose market share if the public confuses a similarly-named business with yours. Business owners often incorporate to insulate themselves from personal liability for the business's financial obligations, but using an unregistered fictitious trade name rather than the corporation's formal name can remove the protection afforded by the corporation. Registering a DBA to the corporation insures that the protection from personal liability stays in place.

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How to Set Up a DBA in California
 

References

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