What does DBA mean? DBA stands for "doing business as". It is a fictitious name used to legally carry on business instead of using your own legal name.
How does a DBA differ from an LLC? A key difference is liability protection. With a DBA, there is no legal separation between personal and business assets. An LLC protects owners’ personal assets from business debts and lawsuits.
Differences Between DBA and LLC
What are some other differences? LLCs require more paperwork and compliance than DBAs, which are simpler to set up. DBAs have more complex tax requirements while taxes for DBAs pass through to the owner’s personal tax return.
Advantages of LLC vs DBA
What are the advantages of an LLC vs a DBA? LLCs protect personal assets, can have multiple owners and owners, and give state-level exclusive naming rights. DBAs are quicker to set up, have lower costs, and simpler tax and paperwork requirements.
What should you consider when deciding? Understand legal and tax implications. Consider if exclusive naming is important. Weigh costs and requirements. Think about plans for future growth or ownership changes.
Best Use Cases for DBA
Why would a company use a DBA?
Does a DBA protect your business name?
Short for “doing business as," a DBA is a fictitious name that businesses can use to operate under a different name than their legal business name.
Who can use a DBA?
Benefits of filing for a DBA
If you have a sole proprietorship, consider converting to an LLC for added benefits.
The primary benefit to a DBA is that it allows a sole proprietor or a general partnership to do business with a typical business name.
Each entity should have a legal name and file for a DBA if operating under a different name is illegal.
If a sole proprietor decides to operate their business using a DBA, they must register the name with their state’s secretary of state.
If you have a sole proprietorship and decide to register a DBA, it will not suddenly protect you from business liability, the way an LLC would.