Wondering when you should use a DBA- “Doing Business As” name in your business?
Below we will teach you what a DBA is and when you should use it in your business.
What Is A DBA- “Doing Business As”?
DBA stands for Doing Business As.
It is a fictitious, trade, or assumed name (which means an alias or nickname) for your business when you conduct business under a name that is not your legal name or legally registered business name.
It’s the name the public & your following will know your business by & how they will pay money to the business if they were to write a check.
Depending on where you live the cost of a DBA is generally $10 to $100.
A “Doing Business As” name does not protect you or your business with liability protection. For this, you would need to register an LLC or other legal business entity.
To register a DBA, you will first check with your county clerk.
Then, with the state registry of where you live.
Once you have your DBA, you can then open a checking or savings account under your new “doing business as” name to keep organization & separation of finances.
How Are DBAs Used In Business?
A DBA is required & needed in two instances.
Both of these instances are when you don’t conduct business using
- Your legal name
- Your legally registered business name
Example 1- Sole Proprietor DBA
The instance of being a sole proprietor.
My legally registered name is Danielle Phelps.
If I was being paid a check to the business name of Passion Profit CEO, I’d have to register that name as an LLC or Company to collect payments if I did not have a DBA.
Some states though don’t require a DBA if the business has your legal name in the “doing business as” name.
For instance, if I wanted to use Phelps’ Passion Profit CEO. This does vary by location. Please, check with your county clerk to be sure.
Example 2- Public Affiliation DBA
The instance of public affiliation.
My legally registered business name is Passion Profit CEO LLC.
If I wanted to conduct any marketing or take payments for my business & did not want to use the LLC on Passion Profit CEO LLC, I would be required to have a DBA of Passion Profit CEO.
Example 3- Business Scaling DBA
The instance of business scaling.
When business takes off there may be times you want to expand your business by using DBA’s.
This is when you want to market multiple businesses under one legal business entity.
For example, if your business does coaching & marketing you could have a legal business entity like Passion Profit CEO LLC but could have segmented DBAs of Passion Profit Coaching and/or Passion Profit Marketing.
Another great example of this is a homestead. You might have the homestead legally registered as Two Rivers Crossing LLC and then have DBAs like Phelps Produce, D&D Kennels, and The Seeding Library to specify the different business forms. You then would just keep separate books for each business or use code under Two Rivers Crossing LLC bookkeeping books to know what income and expenses went with each individual DBA.
Another great example of this could be location awareness and having the DBA specify the location. For example, Passion Profit CEO LLC could expand from its home location of Kentucky to Tennessee. Passion Profit CEO LLC would then have two DBA’s of Passion Profit CEO KY & Passion Profit CEO TN.
Finally, you could also operate multiple types of businesses using a DBA with a legally registered business entity like a corporation. For example, Phelps Solutions Inc. with DBA’s of Phelps Marketing, Phelps Construction, and Phelps Kennels.
However, with these options, there is a slight downfall.
If for any reason, there is a requirement to close the doors on Phelps Solutions Inc, all the DBA’s close their doors, too. This leaves you with no business at all. Why? Because all of the businesses are under one business entity & thus are held responsible for the risk of liability for the company as a whole.
Conclusion Of DBAs
There are many pros and cons to using a DBA – “Doing Business As” name.
No matter what route you choose to go, it is of wisest decision, to speak with an attorney about your unique situation to get custom feedback for legalizing your income streams.
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