The Purpose and Use of a Fictitious Business Name
A fictitious business name (also known as an assumed or DBA name) is used to identify a business that is operated under a name other than its legal one. It can either be an individual, royalty, or partnership, or its legal name. If a business owner wants their business to operate under a name other than its legal one, then they must file a fictitious business name statement with the local county clerk or county recorder’s office.
Using a fictitious business name offers many advantages; it separates the business’ legal entity from its public-facing presence, it allows business owners to use descriptive names, it reduces the need to register a trademark, and it reduces the need to obtain business insurance. It also allows business owners to use catchy names instead of the cumbersome legal names.
How to Register a Fictitious Business Name
- First, research existing fictitious business names to make sure your desired name isn’t already being used.
- Visit the county clerk or recorder’s office to register your fictitious business name.
- Some states may require proof of an address, so provide copies of your rental contract or lease agreement.
- You’ll have to pay a small fee to register the name.
- You’ll also need to fill out a name request form and a fictitious business name statement.
- The fictitious business name will need to be published in a local newspaper as an official notice.
Legal Considerations Regarding Fictitious Business Names
It’s important that businesses use fictitious business names correctly and legally. Failure to do so can result in hefty fines and even jail time. Here are some important legal considerations to bear in mind when using a fictitious business name:
- Apply for a federal tax identification number (EIN) with the IRS: This is mandatory; a business can’t operate without an EIN.
- Find out if your state requires businesses to register: All businesses must register with the state in order to be able to file taxes as a business entity.
- File a fictitious business name: A fictitious business name statement must be filed with the county clerk or recorder’s office so the fictitious business name is publicly declared.
- Comply with local business regulations: Depending on the type of business, you may need to obtain special permits or licenses to legally operate.