When you start a business, you may choose to operate under another name for legal or branding reasons. Doing Business As (DBA) is the term used when an individual operates a business under a different name than their own. However, there are some unique considerations when operating your business as something other than your personal name. This article explains what is a DBA, how to set up a DBA, and the pros and cons of using a DBA instead of your personal name when starting your own business.
What is a Doing Business As?
A Doing Business As, or DBA, is a term used to describe when an individual operates a business under a different name than their own. For example, if John Smith owns a construction company but wants to do business under the name, “John’s Home Improvements,” he would be conducting his business as a DBA. In many states, you can also operate a corporation or LLC as a DBA.
How to set up a DBA
If you have decided that using a DBA is the best option for you, the first step is to determine what you would like to call your business. Once you have chosen a name, you need to make sure that it is available to you. If you decide to call your business, “John’s Improvements,” you can go online and check to see if that name is available. When it is, you will likely be able to complete the business registration process online.
If the name you have chosen is not available, there are two main things you can do. First, you can try to come up with an alternate name and see if that available. Alternatively, you can conduct your business as a DBA of your name. You can choose to operate your business under your name, but put “doing business as” the name you want to use.
Is a DBA the same as a LLC?
A DBA and a LLC are not the same thing. However, they are both forms of business entities, and they both allow individuals to operate their business under a name other than their own. That said, a DBA is more of a legal term and less of a formal business structure. That is, it does not offer the same legal protections and tax benefits as a LLC. That said, it is much cheaper and easier to set up, and it only requires a name change on your business license, not a full business re-structure.
The benefits of doing business as something other than your name
There are a number of reasons why you may choose to operate your business as a DBA. For example, you may have a name that is too similar to another business. In this case, you may want to operate under a different name to avoid brand confusion. Or, you may want to operate under a name that better aligns with your company culture. Whatever the reason, there are a few benefits to doing so. First, you can brand your business however you like. This may be particularly important if you are starting a new business under a different name than your own.
In this case, you can use your chosen name to help create an identity for your company. Second, you can protect your personal assets while still having full control over your business. This is particularly important if you are self-employed and do not have workers’ compensation insurance. That’s because if your name is the same as your business, you could be held personally liable for any accidents or lawsuits that occur on your job site.
The downsides of doing business as something other than your name
Like any decision, there are a few downsides of operating your business as a DBA. First, using a DBA will likely incur some extra costs. You will likely need to change your name on your business license. Make sure that your company name appears on all your marketing materials. Additionally, if your business ever needs to take out a loan, a certain amount of due diligence will be required. This is why operating your business as an LLC is a better option than a DBA. The LLC offers much of the same protection as a DBA, but it also comes with more tax benefits.
Final words: Should you operate your business as a DBA?
At the end of the day, operating your business as a DBA is a decision you need to make carefully. It is an especially good option if you are just starting out and want to get your business name out there before investing in a formal re-structure. However, once your business has grown to a certain point, you may want to consider re-structuring it as an LLC. This way, you can enjoy the same protection and benefits as those who have always operated their business as an LLC.