: What does DBA stand for? DBA stands for “doing business as,” which is also known as a “trade name” or “fictitious business name” in some states. A company is said to be “doing business as” when it is operating under a business name other than its legal, registered name. For instance, a business owner named Ashleigh Wilson may wish to market, sell, and expand her business under the name “The Cookie Crumb Kitchen.” Filing for a DBA helps accomplish that goal.
When a DBA is Used – You should set up a DBA if:
- 1) You are a sole proprietor operating a business that doesn’t contain your own name, or
- 2) You formed an LLC and plan to use a name that varies from the name listed on your LLC/Corporation paperwork.
- A new entity must be set up when the structure of the current entity changes (e.g. sole owner to multiple owners) or when certain specific changes occur within the business structure.
- If the structure of a business hasn’t changed and the owner wants to vary the name of the business (e.g. a brand name), he or she may want to set up a DBA.
- A DBA may also be required in order to open a bank account and receive payments in the name of the business’ operating name.
DBA vs LLC – DBAs are preferred because they are the easiest and least expensive way to use a business name (no LLC formation required) and you can operate multiple business brand names without having to form multiple corporations.
DBA Taxes – In most cases, DBA taxes are entirely dependent on the owner’s business entity. In other words, the IRS does not require the DBA itself to file a separate tax return. If the business entity is a sole proprietorship or a single member LLC, the owner continues to report any profits as personal income on the owner’s Form 1040 using Schedule C.
General Filing Requirements:
- Some states require a DBA filing for protection of its consumers. Even though a state may not require a DBA, it is nevertheless recommended if you are actively using an operating name different from your formal business name.
- A DBA may be registered with the Secretary of State or the state’s equivalent department if the business is any of the following:
- (a) A sole proprietorship doing business under a name not containing the owner’s surname, such as “Anderson Plumbing Services;”
- (b) A partnership; or
- (c) A corporation, or LLC, doing business under a name other than its legal name.
- In order for the DBA statement filing to be valid in some states, the registrant must include information about the business, including the name and address of the company, and include information about the owner of the business.
- Generally, there is a state filing fee.
- Often, a registered agent in the state is required.