A ‘DBA’ or ‘Doing Business As’ is simply another name for your already-established business, it can also be called ‘Assumed Name’, ‘Trade Name’, or ‘Fictitious Name’.There are various reasons for why a company will use a DBA, however there can be a lack of clarity when it comes to its purpose in the company and if it can have different owners; it can be confusing because it might be viewed as the actual business. This article will provide more understanding about ownership associated with a DBA.
To understand how ownership is attached to a DBA it’s necessary to first understand what a DBA is used for, what type of business it is, and what the business structure is. As mentioned, a DBA is another name used within a company, it is not the official and legal name of the company itself.
What a DBA is Used For
Every business will have different needs and goals to accomplish and setting up a DBA will be different for everyone. Below are various reasons why you would use a DBA:
Building a Brand
Any type of business can register a DBA if they have a product or service that needs to be marketed within the existing company.
If the business is a sole proprietorship or partnership a DBA can be used instead of the person’s legal name to highlight the purpose of the business more.
Sole proprietors and partnerships can use a DBA instead of their last names to give themselves more privacy when the name is used.
Having a DBA set up can also indicate that the business is more professional and aligned with their business services instead of just using their legal name, this can apply to sole proprietors or partnerships and depends on the type of business established.
Availability of Domain Names
Finding an online name can prove to be tricky with so many businesses already online with a website, and it can happen that your business name is not available, a DBA can be used in this instance to match the domain name.
Business Bank Account
Some businesses like sole proprietors and partnerships will be required to have a DBA to be able to open a business bank account.
If the business is an LLC owners can set up multiple businesses under the LLC and each business can operate with their own DBA.
Business Type and Structure
A DBA itself cannot have two ‘owners’, however the type of business that has a structure where it can have more than one member or owner can use a DBA, in other words, a DBA is just a tool, a name, used by a stand-alone business that has different owners. It’s worthwhile to understand what type of businesses can have different owners.
LLC (Limited Liability Company)
An LLC is a simple type of business that provides protection for a business owners’ personal assets compared to a sole proprietorship or general partnership without liability protection. It is a formal business structure and can have single or multiple members.
A Series LLC can be used if a company wants to open different ‘branches’ that will operate under the primary LLC, however each of these branches can also operate independently from the primary LLC.
Sole Proprietorships can also be confused with DBAs, however in this case a Sole Proprietorship is an informal business structure without the liability protection offered by an LLC, but it can be converted to an LLC.
It can be easy to confuse a DBA as a stand-alone business, but knowing the difference between a DBA and business structures like LLCs can provide the clarity needed about the role of a DBA in a business. For more detailed information about how to file a DBA for your business, whether it’s a sole proprietorship or LLC, you can visit TRUiC’s Startup Savant online website.