Understanding the Purpose of a DBA
Doing business as (DBA) is a term used for a trade name, a fictitious business name, or an alias. When an individual or company does business under a name that differs from the existing registered legal name, it is referred to as a DBA. A DBA allows a business or individual the freedom to conduct business with an alternate name from a legal standpoint.
This arrangement has a few benefits, which include:
- The business or individual is legally allowed to use the DBA name, so long as they continue to follow state guidelines.
- It allows for a business or individual to expand without the additional cost of creating a new company.
- It helps the business or individual differentiate services or products and open up new markets.
- It presents a more viable, cohesive branding message and public image.
A DBA also presents the opportunity to bring collectively separate entities that have similar interests. By registering a DBA, entities can create supplier and vendor discounts, consolidate insurance, and there is also the possibility of managing a group of properties under one DBA.
How to Register a DBA
The registration of a DBA is an easy process for most entities; however, requirements may be different depending on the state or country. Generally, this process requires the DBA to be registered with the county, complete any relevant state and federal documents, and/or file the DBA name with the local government.
The following steps are the most common when registering a DBA name:
- Confirm that the DBA name is available. Before registering a DBA, you will need to confirm the name is available and not already being used by another legal entity.
- Register with the county. After confirming the DBA name is available, the business will need to submit the applications and documents for the DBA registration with the county that the business is located.
- File the DBA with the state. Although this is not always required, some states will require businesses to file the DBA with the state.
- Post a public notice. In some areas, it is necessary to publish notice of the DBA name in a local newspaper or other media. This ensures that anyone interested in objecting to the establishment of the DBA is given fair notification.
After the application has been processed, the business will receive confirmation of the DBA registration, allowing the entity to legally use that name.
Legal Implications of Using a DBA
When using a DBA, there are certain legal implications that should be taken into consideration, albeit ultimately, use of a DBA is dependent on the jurisdiction. For example, in some states, the use of a DBA is mandatory; in other states, DBA names are not required to be registered, but borrowers must still provide their legal name when seeking a loan.
Furthermore, businesses using a DBA must adhere to legal guidelines, which include but are not limited to the following:
- The DBA name must be registered with a locally-recognized agency, or it loses any legally-binding quality.
- Businesses may not use a DBA name for anything illegal or fraudulent.
- Finally, a DBA must include the legal or true name of the business somewhere in the name.
Depending on the jurisdiction, using a DBA can help protect the business from certain liabilities, but businesses should consult with an attorney before deciding on a DBA name and its uses.