As states start to transition tiers amid COVID-19, storefronts are beginning to increase indoor capacity and ease into doing business in the “new normal.” Some brick-and-mortar business owners may be using this time to file paperwork for additional assets that can provide great benefits to their business. One such asset is a Doing Business As name, or DBA name.
Why you should file for a DBA name
What is a DBA?
If you plan to conduct or operate business under a name that is different from your legal business name, you will need to file for a DBA. A DBA is the official and public registration of a name under which you do business. DBAs may also be referred to as fictitious names, assumed names and/or trade names depending on your state of incorporation.
The state in which you file for a DBA name may ask you to publish this information or notice in a local newspaper. While this is not a requirement in all states, the request is often made to inform the public that you are the owner of the business.
Is a DBA the same as a trademark?
It’s not uncommon to confuse trademarks and DBAs. A DBA is a business name while a trademark is media that distinguishes a business, with a common form of media being a business name.
Both terms protect the name of the business. However, filing for trademark registration protects a business name and gives the owner exclusive rights at the federal level. A DBA is not a corporate name, and it may only be claimed by the owner on the state level.
For example, let’s say a DBA is filed for a business name in the state of California. The owner has rights to this DBA, but these rights do not extend past the state. A business in Utah may file for and use the same DBA as the one you have in California.
In short, the difference between a DBA name and a trademark is that filing for trademark registration protects your business name from being used by others at the federal level. A DBA may only go as far as the state level and is unable to grant exclusive rights across the U.S.
Benefits of a DBA
Having a DBA provides several benefits to your retail business — and, really, for all types of businesses. Here are a few of the most beneficial reasons for obtaining a DBA:
- The ability to do business under a different name. You may officially conduct business and accept money under a DBA.
- Open a business bank account. Business owners may not use their personal bank accounts to issue or receive checks under their business name. If you file for a DBA and obtain a certified copy of this document, you may bring it to the bank and use it to open a business bank account. Once you have a business bank account, you may accept money and payments under that company’s DBA. (Pro tip: Keep the certified copy of a DBA stored in a safe place afterward).
- Creating a separate business identity. An assumed name allows small businesses to create a professional, separate business identity for customers and vendors. This is particularly beneficial for sole proprietors, as they are able to establish a professional business identity without forming an LLC or corporation.
- Public marketing and advertising. Once your DBA is publicly registered, you may begin marketing and advertising the business under the DBA. This allows your business to increase its visibility and gain recognition with consumers.
- Discourage others from usage. You were able to conduct a search for and obtain a DBA in the state where you do business. Nobody else may register this DBA because you already officially registered it.
Who needs a DBA?
You might find yourself wondering if certain entity formations, like an LLC, require a DBA more or less than others. The truth is, it doesn’t matter which entity you have incorporated your business as. If the business plans to operate under a name that is different from its real name, it must file a DBA.
DBAs are often quite popular with sole proprietors. These are individual business owners who run their business on their own. Most sole proprietors use a business name that differs from their existing name, so it is necessary to file for a DBA. Filing for a DBA means the sole proprietor is doing business under this name and allows the entrepreneur to accept and sign checks under that name.
Another entity that may file for a DBA is an LLC. Having a DBA permits the entity to do business under a different name without having to form a new organization. For example, an LLC that provides auto repair services may wish to expand its business to offer auto detailing services, too. You may register a second name for your business with the state — its DBA — to keep the two separate business activities distinct.
How to file for a DBA
You have an understanding of what assumed names are, their benefits and which entities should obtain a DBA. After choosing a memorable name, it’s time to start filing for a DBA.
You may begin registering your DBA in the state, city or county in which you do business. It is recommended that you conduct a name search prior to filing the DBA. The DBA cannot mislead the public by being deceptively similar or exact to any other business name.
If the DBA is available, you may begin preparing an application for the assumed name. You may find these documents through the Secretary of State or with the help of a third-party filing service. Fill out the application completely, and pay the necessary filing fee. Once the paperwork has been processed, you should obtain a DBA for your small business.
From there, you may conduct business under the DBA. Remember to check in with the state to see if you need to renew your DBA and what the renewal deadlines look like. In the event that your retail business does not plan to use its DBA, for whatever reason, you may file a statement of abandonment with the county clerk where you are registered.