What is a DBA?
It’s no secret that the business world loves acronyms. There are so many acronyms, in fact, that while we are out here figuring out our KPIs and our ROIs and our CAQs, it’s easy to forget about another important acronym: DBA.
DBA, which stands for “Doing Business As, ” describes a business operating under any name that differs from its original legal business name. More rarely, this may be known as a “trade name,” an “assumed name,” or even a “fictitious business name.” A DBA can be used by a sole proprietorship, a corporation, or a partnership.
In this article, we will go over the scenarios where a DBA is advantageous, and what goes into obtaining a DBA.
Why use a DBA?
A DBA is not a business structure. Instead, it is a way of legally registering a new name that is associated with your original company. Companies may file a DBA for a variety of reasons, with the most common ones being:
Sole proprietorship naming conventions
There are many advantages to running a sole proprietorship. For one thing, they are the simplest kind of business structure and the most economical to run, which makes them ideal for self-employed individuals without employees who can operate a business under their legal name. They are also the most likely business type to need a DBA.
For example, say John Doe runs a sole proprietorship where he offers local landscaping services. After two years of working, he decides that he wants to run his business under a different name that is not his personal name. In order to do this, he is legally required to file a DBA. For most sole proprietorships, announcing that they are “doing business as” a different name is usually the easiest and most economical way to register a small business name.
Operating more than one business under an incorporation
Business owners who run an incorporated business and wish to operate another company under a different name do not have to start from scratch. Filing a DBA form is the easiest way for them to legally operate more than one business under their existing corporation. This is especially handy if a business wishes to advertise products that do not line up with their other offerings, which brings us to our next point.
Picture this: John Smith is a small business owner who has built John’s Sweet Treats, where he sells cookies and cupcakes for baby showers and wedding celebrations. One day, while working in his kitchen, John Smith realizes that he also has a knack for producing smoothie bowls. He knows that his smoothie bowl creations will sell, but he also worries that it might be confusing for customers if he were to market wellness food under the same company name as his desserts.
Small business owners who find themselves in similar situations need not start an entirely new business—they can simply operate their new business under a DBA name.
Benefits of registering a DBA
Not only is filing a DBA convenient, but it can also help your business out. Here are some of the trickle-down advantages that come when you’re “doing business as”:
You’re staking your claim
By registering a DBA, you are announcing to the world that you are the owner of a shiny new business name. While this may not prevent another business from using the same name, this rule varies among the different states and provinces.
You can show your creativity
While we’re sure you have a perfectly fine name for an individual, our legal names are not always the most enticing name for our companies or services. Using a fictitious name means that you can use imagery to your advantage by choosing a name that is sure to entice customers.
You’re following the rules
While it’s true that registering your business as a corporation provides you with liability protection that safeguards your personal assets, these protections may be waived if you do not have the proper DBA paperwork in order. This is because any paperwork may be void if it is assigned to the wrong company name.
How do I get a DBA?
If you believe that a DBA is the right next step for your business entity, you may be wondering how to go about acquiring one. While this process will vary based on your location, here are the most common steps involved in getting a DBA name:
Where do you need to file for a DBA?
Most DBA filings can be done online through the government. You can visit your provincial government’s website to see the process in your province. The DBA forms may also be different depending on your business type.
In some areas, such as the Canadian province of British Columbia, you will be asked to rank your top three preferred name choices in case your top choice is not available.
Who needs to file a DBA?
In most cases, the business owner will be the one to file for a DBA. If you prefer, you can hire a professional filing service to file a DBA for you.
When do you need to file?
While it will depend on each jurisdiction, most DBA filings take 1-4 weeks to process.
Filing a DBA: key points for successful filing
In order to avoid any delays in your DBA filing, here are some quick tips to help guide you through the process:
- The name of the business you are filing cannot use “Inc.” or “Corp.” at the end of it unless your business is incorporated
- You must be able to prove that your entity is in good standing—your state or province should be able to provide you with a certificate that states this
- Many of the rules surrounding a DBA originated in consumer protection—so be prepared to publicly announce your assumed business name to the public
- Understand that your DBA name will need to be renewed down the line (usually, this happens after five years)
- Remember to determine whether or not you need a DBA early on, as it is illegal to operate a business under a name that is not registered
What does a DBA allow you to do?
A DBA allows multiple company names to function under one business entity. It is often used by sole proprietorships who are operating under a different name than the business owner’s personal name or by a corporation with multiple brands or products under a parent company. It is not a business structure and does not offer any protection for personal assets or any copyright protection.
Does a DBA have to file taxes?
Yes, every business has to file taxes, whether or not they have a DBA.
Do you need a separate bank account for a DBA?
This depends on the structure of your business! One of the consequences of forming a corporation is that you are required to have a separate business account. However, if you operate as a sole proprietorship, you are not required by law to have a separate business bank account.
How much does it cost to start a DBA?
Depending on your local processes, the cost of starting a DBA is usually between $10 and $100.
How do you write a DBA name?
You can write your business’s assumed name in the same way that you register it! For example, if your entity’s approved DBA is “Super Fun Business Services,” you can use the name “Super Fun Business Services” anywhere you would use your business name, i.e., on your website, invoices, or business cards.
There are multiple avenues that any business can take to authentically grow—and if you are a sole proprietor looking to adopt a business name or a corporation launching a new project, you may find that a DBA is the easiest and most cost-effective option for you. Doing the proper research is a great way to ensure that you will be doing business smoothly, even when you are “doing business as”!
Ready to start your business? Ownr has helped over 30,000+ entrepreneurs hit the ground running quickly—and affordably. If you have questions about how to register or incorporate your business, give us a call at 1-800-766-6302, Monday through Friday from 9 am to 5 pm EST, or email us at [email protected]
This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.