Thursday, June 13, 2024

Why a DBA Is Necessary for Some Businesses

Where a business wishes to operate under a registered name that is different from its legal name, it can apply for a DBA (“doing business as”). There are numerous personal and professional reasons a business may desire to do this: an alternate name might feel more natural and fitting, or perhaps the owners don’t want their names on the public records of the business.

Whatever the case, there may be times when a business isn’t exactly choosing a DBA, but it is required to have one. These two types of reasons for a business acquiring a DBA have been outlined below.

Why a DBA May Be Required

Some types of small business formation are required to have a DBA in order to remain in compliance with the law. For example, the main benefit of filing a DBA registration for sole proprietors is that a DBA would allow them to use a typical business name without creating a formal legal entity such as a corporation or an LLC.

This is typically the least expensive way to conduct a business legally under a different name. This would in turn provide a business with the freedom to use a name that can help in the marketing of their products or services, and create a separate business identity. Be aware, however, that a DBA does not protect a business name from being used by others, for that a trademark must be sought.

Sole proprietors are also required to file for a DBA in order to open a business bank account and receive payment in their business’s name. The majority of banks will deny sole proprietors such an account without them first showing a copy of their filed DBA.

DBAs also allow LLCs and corporations to operate multiple businesses without the need to create separate legal entities for each one, which would be costly, time-consuming and frustrating. This allows them to keep a grip on the costs and paperworks of their businesses while still expanding their business.

Why a Company May Choose a DBA

Business owners who do not wish to operate their business under their own name might be interested in a DBA. This is particularly important for sole proprietors and general partnerships, as filing for a DBA grants them the ability to enforce a separation between themselves and the business; their personal name(s) will no longer appear on the business’s public record.

Companies may also choose to file for a DBA if they are entering a new line of business that their current name does not reflect. A DBA is frequently used when a corporation or LLC wishes to begin marketing goods or services that their current name does not represent. In such cases, a more descriptive business name could be beneficial and thus desirable.

A DBA is also often pursued in order for a company to operate under the company’s domain name. This is particularly helpful when the company’s business name is not available as a domain name and the business wishes to maintain consistency. This also applies if a business wants to operate another branch via a website in addition to its existing one, but under a different name. A DBA might allow a business to create a fictitious name to specifically target a previously untargetable audience and generate increased revenue.

Having a DBA also strengthens business credibility for sole proprietorships and general partnerships. For the sake of the public, it can notify them about your brand in a bolder and more legitimate way than the business’s legal name ever could.

Companies doing business as a sole proprietorship will find that a DBA is at the very least extremely useful for their operation, and at the most – certainly necessary. Sole proprietors are required to have a DBA largely in order to remain compliant with the law: it allows them to use a typical business name without creating a formal legal entity (such as a corporation or LLC) and enables them to open business accounts with most banks. However, a business may not only choose to pursue a DBA out of pure necessity, as there are many advantages to having one as well.

Sam Allcock
Sam Allcock
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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