State-Based Business Names
When you formed your S corporation, the state in which you incorporated likely checked the name you wanted to use for the new venture to ensure it wasn't already in use by another company operating within the state's territory. Every state has its own business code with rules for the formation and operation of corporations, but they all require corporations to transact business under the legal name listed in their articles of incorporation. This ensures that the public can identify the entity behind commercial transactions and businesses can protect the reputation established in the marketplace under a specific name.
Ordinary Uses for DBAs
S corporations can use an alias for business purposes within most states. As long as the name is properly registered within the state, the option to use one or more DBAs within the jurisdiction is usually available. Some of the optional reasons why an S corporation might choose to use a DBA in a particular market is to build a brand name that is not the legal name of the corporation, distinguish a division, develop a new product category that the corporation doesn't want customers to easily associate with the corporation's legal name, and to make it easier to spin off or sell a division or product line without losing the rights to the corporation's legal name.
Expanding Into Other States
The only time your S corporation may be required to use a DBA is if you want to expand into a state where another company is already using the company's legal name. Since incorporation is state-based, it's possible that another corporation was formed in a different state with the same or a confusingly similar name. To obtain permission from the new state to transact business within it's boundaries, the S corporation may be required to register a DBA. In this instance, the company may only be allowed to refer to itself within that particular state by its DBA.
Protecting a Trademarked Name
If your S corporation's legal name is federally trademarked, you have the exclusive right to use the mark within the entire United States. Finding out that another corporation is using the mark within the state your S corporation wants to expand into would be grounds for you to demand the infringing company stop using the name. In that instance, you could expand into the new state without resorting to the use of a DBA.