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Doing business as (DBA)
Starting your own business? DBA is a term you’ll want to understand.
What is doing business as (DBA)?
Doing business as (DBA), also known as a fictitious business name or a trade name, refers to the operating name of a company. The DBA name is often different than the legal name of a company. Partnerships and sole proprietorships generally are named after their owner or owners, and DBAs lets them distinguish the operating business’s name from their own personal names.
Different types of businesses adopt DBAs for various purposes. Sole proprietors are required to register their business under the owner’s legal name. Partnerships are frequently named after the business owners. In either case, a DBA is a good way to distinguish the operating company from the legal entity that owns the business.
Many states and municipalities require businesses to register a company with a DBA in order to transact business. Banks require DBAs for a company to obtain a business bank account. Often publishers and other media outlets require a DBA before they will accept advertising commissions from companies.
For larger companies, DBAs are used to create multiple trade names for a single company. When a company enters a novel line of business, they will file a new DBA to distinguish one business line from another. Also, filing a DBA lets other companies know that a firm intends to make use of a trade name. However, businesses do not have exclusive use of a DBA they register. Trademarks are used to give a company exclusive use of a business or product name.
States have different rules for establishing and filing a DBA. In many states, the business owner needs to deliver necessary paperwork and pay a registration fee to the county clerk. Some states require the business to advertise the DBA name in a local paper for a period of time before using the name.
Do you need a loan to start or expand a DBA business? This Personal Loan Calculator can show you what type of payment to expect along with an amortization schedule.
Doing business as (DBA) example
Herbie wants to open a produce stand to sell vegetables that he grows in his garden. He wants to name the business Patty’s Produce in honor of his mother, who taught him how to garden. In this case, he needs to file for a DBA. The official name for the business is Herbie DBA Patty’s Produce, and he uses this name on all legal documents.
This also applies if Herbie already owns a produce stand that he incorporated as Herbie’s Produce Inc. and wants to expand the operation to include an organic produce division. If he plans to distinguish between the two parts of the business and wants to give the new division a name like Herbie’s Organic Vegetables, he must register the new name as a DBA and use the name Herbie’s Produce Inc. DBA Herbie’s Organic Vegetables.
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