Fictitious Business Name: An Overview
Sometimes called a Fictitious Business Name, Doing Business As (DBA), assumed business name, or trade name, these filings let the public know the true owner of a business. Note that I’ll be using DBA and Fictitious Business Name interchangeably throughout this article.
The DBA or Fictitious Business Name designation was created as a form of consumer protection, to prevent unscrupulous business owners from operating under a different name to avoid legal trouble. When a business files a DBA, it’s typically printed in the local newspaper, so the community can see who is behind the business.
Who needs to file a DBA?
There are two circumstances when your business needs to file a DBA registration:
1: If you are a sole proprietor or general partnership conducting business using a name that’s different from your own name. For example, if Jane Doe wants to open a bookstore called Books for Cooks, she would need to file a DBA. In some places, you’re able to use your name plus a description of your product/service without filing a DBA. For example, if Jane Doe wanted to open a bookstore called Jane Doe’s Cookbooks, she may not have to file a DBA. If your business name implies a group (i.e. The Doe Group) or you just use your first name (i.e. Jane’s Cookbooks), you’ll have to file a DBA.
2: If you have incorporated or formed a limited liability company (LLC) and are operating the business under a name that is different from the name of the company or LLC. For example, let’s say that Jane Doe Cookbooks, LLC also wants to operate under the name JanesCookbooks.com, the LLC would need to file for a DBA for JanesCookbooks.com. Likewise, if Jane Doe wanted to expand into cooking supplies, then Jane Doe Cookbooks, LLC would need to file a DBA to do business as Jane Doe Cooking Supplies.
The benefits of a DBA
The main benefit of filing a DBA registration is it will keep you in compliance with the law. For sole proprietors, a DBA lets them use a typical business name without creating a formal legal entity (i.e. corporation or LLC). This is typically the least expensive way to legally conduct business under a different business name.
Filing a DBA gives the sole proprietor the freedom to use a business name what helps market their products or services, as well as create a separate professional business identity. However, be advised that a DBA doesn’t protect your business name from being used by others. For that, you will need to seek trademark protection.
For sole proprietors, filing a DBA is required to open a bank account and receive payment in the name of your business. Most banks will not allow you to open an account without receiving a copy of your filed DBA (for this reason, it’s best to file your DBA from the start!).
For an LLC or corporation, a DBA lets the company operate multiple businesses without having to create separate legal entities for each business. For example, if you plan on opening a series of websites, boutique shops, or restaurants, you might want to set up one corporation with a relatively generic name and then file a DBA for each website, shop, or restaurant. This will help you control costs and paperwork, while still expanding your business.
How to File a DBA
Specific requirements for filing a DBA vary from state to state, county to county. In some states, you register your DBA with the State Secretary of State or other state agency. In some states, registration is handled at the county level and each county may have different forms and fees for the process.
The Small Business Administration (SBA) offers a chart outlining the different requirements for fictitious name filings state by state. Some states also require that you publish a notice in your local newspaper and then submit proof that you have fulfilled the publication requirement. Of course, specific publication requirements vary. Turning to a professional legal document filing service can take the complexity out of the process and make sure that you’re following your county and state requirements to a T.
Deadline to File
DBAs should be filed before any business is conducted using the fictitious business name. Some jurisdictions will allow you to file within a short time period of first using the name. However, since a DBA is usually a prerequisite to opening a bank account for the business or using the name in contracts, it is best to get it done upfront. It’s an affordable process and will keep your business in good legal standing from the start.
Fictitious Concept Photo via Shutterstock
[“source-smallbiztrends”]