What does DBA stand for? Why does your business need it?

Finalizing a name for your business is one of the important steps that every entrepreneur has to take in the early stages of starting a business. Either you wish to take over a business or start your own, your business name will ultimately link to your business’s image, the perception of your business, brand, and can even impact your brand’s SEO marketing campaigns.

But imagine if you have selected a name for your business and end up changing it after some time? Consider a more daunting scenario for instance, when you want to register a business as an LLC, you need to have your business name included in your article of organization. In this case when you hover over the registration process and your business name does not convey your company’s message, and later you realize that you want a name change. Going through the same registration process becomes an ordeal at that time.

If this is the case, then don’t panic, you are not alone in such circumstances. Luckily every state has options regarding the name change process which you may already have heard with the name of DBA. What does DBA stand for?

DBA is used as a business tool to address issues concerning business names. Scroll down to know what DBA stands for and how it is beneficial for your business.

What DBA stand for?

DBA stands for ‘doing business as’, and it benefits those organizations who want to be called with a different name from which they have been called officially. DBA is famous for another term called ‘fictitious business name’ that means it’s the name of the business that is used in legal applications and instructions that you may have seen on many websites of the secretary of state.  

An entrepreneur may want to use DBA when one wants to end a general partnership of a business or if he/she is a sole proprietor. By default, these entrepreneurs must have the same name for their company (ies) too as of the business owner/s. You can also use your first and last name e.g. John Smith as a company name, but it does not represent what your business is and what service you provide, hence it will be a poor selection.

In case you have registered the name and now you feel like giving your business a name change, DBA comes to help you here. By using DBA, you can use your company’s name as’ John Household Services’ in applications and on other platforms as a substitute for ‘John Smith’.

How to file for DBA?

Usually, DBA can be obtained by filing the fictitious company name document at the authorities of your state or country-level or sometimes both. Another mandatory condition except filing is the publication of DBA that may be required according to your jurisdiction in the form of a legal newspaper or any print media. DBA filings may take seven to thirty days but that is based on your jurisdiction requirements and the procedure.

The process of filing for DBA is relatively straightforward than registering a business. In general, usually, you have to contact your local recorder’s office or clerk’s office to file for DBA and get a certificate. In many states, the terminology behind filing for DBA may vary, it is also termed as fictitious name registration, fictitious business name filing, or a certificate for an assumed name for a business. The fee for having the DBA certificate can also vary but it’s not as expensive as it may appear.

DBA vs. LLC organizations and other business structures

A crucial point that every entrepreneur should stress about DBA is that it is entirely different from the business entity type or the business structure. For instance, on deciding to use a DBA, you should not be considering it between having a DBA and forming an LLC or sole proprietorship or corporation, or partnership.  You choose your business structure first and then decide to apply a fictitious name and get a DBA.

Considering the same scenario, if you want to have a partnership or sole partnership, then a DBA should be employed first instead of choosing a structure as the structure of the business is already decided by the owner of the business. But you can easily go for a business name registration incorporating LLC or corporation with your business name and work under a different name. For instance, you can register your business name officially as John Smith, LLC and use DBA to make an impactful and less dry business name such as Smith Household services.

Usually, the structure of your business does not impact the use of DBA. The main exceptions arrive when you have a certain profession to go along with your business name. Medical practitioners, attorneys, engineers, or accountants, everyone else has to face limitations when it comes to having a business name. This may include titles, terms, certification acronyms, and licenses with your business name. Apart from profession, if your business structure does not fall under LLC or corporation requirements, you cannot simply put LLC or Corp with your business names just by using DBA.

Pros and cons of DBA

There are myriad reasons for which you have to use DBA and operate a business under another trade name. For instance, if a business is grown internationally and has a diversified range of customers, then it might need to operate with significantly origin-specific names for the industries in different regions.

Following are some pros and cons of filing and using DBA for businesses.

Benefits of DBA

Filing and operating a name under DBA has many good reasons and benefits, some of them are already discussed in the article. Apart from those benefits, DBA allows companies to change their names without moving to an entirely new structure.

Both corporations and LLCs are required to comply with ongoing requirements while the proprietorships and partnerships do not.

About that, DBA’s vital advantage is the flexibility that they provide in circumstances where you are stuck into giving it a name for your business while establishing it in urgency. If you have filed articles of incorporation to register a corporation or the articles of organization for LLC, you might have chosen a business name that may be straightforward or boring to just complete the registration process quickly. If you think that name is holding you back from getting attention and making an online presence, then you can file for DBA to have a name change.

Another benefit that DBA provides is for the sole proprietor. When it comes to opening a bank account, if you don’t have DBA filing, then you may have to open an account with your credentials. This is a more convenient way if you want to keep your accounting matters separate within your personal and business bank accounts.

Drawbacks of DBA

When you possess an LLC corporation, a DBA filing cannot help you change your company’s official name under any circumstances. You can only add a term to your official business name if you want to go for region-specific trade names with your business name.

Another but probably a potential drawback of using a DBA for your business name is, it does not protect you from any legal obligation. It means don’t have the right to use the name such as – if you are a Medical practitioner and use acronyms like Dr., PhD., etc.

The bottom line

The answer to a frequently asked question ‘Do I need to file a DBA?’ depends on the circumstances you have. If your name is also your business name and that also resembles other businesses, then you may have to file a DBA to add more personalization to it.

Using a DBA for your business can also increase your market reach and appeal to more businesses and brands to collaborate with your business.

Lastly, it is also required to note that DBA does not impact the structure of your business, it only provides the personalization that could represent your business better in the market.