Before choosing a corporate structure for your business, it is important to understand the various types available. Your decision should factor in your ownership provisions, your current company size and your long-term plans for growth.
DBA (Doing Business As)
A fictitious business name, assumed name, or DBA allows you to legally do business as a particular name at minimal cost, and without having to create an entirely new business entity. You can accept payments, advertise and otherwise present yourself under that name. In fact, if you present your business under a name other than your proper legal name without proper notification, it may be considered fraud. Fortunately, filing for an assumed name is so easy and inexpensive, there is really not much excuse for not filing one.
Filing an assumed name allows you as a sole proprietor to use a business name rather than your personal name. In most states, you cannot open a business bank account or accept payments without a registered DBA.
The exact rules vary from country to country and from state to state within the U.S., so check with your local business regulatory authority regarding your area. If there is any implication that there are more people involved (e.g., Sanford
& Sons, The Mehle Group, etc.), or if you just use the first name (e.g., Sam’s Hardware Store, Fred’s Boathouse, etc.), you have to file an assumed name. It also lets you use a typical business name without creating a formal legal entity (i.e., corporation, partnership, LLC, etc.). You can even open a business checking account and get a business phone listing for the name. For sole proprietors, this is the least expensive way to legally do business under a business name.
A DBA also allows a single legal entity (corporation, LLC, etc.) to operate multiple businesses without creating a new legal entity for each business. For example, if you are planning to operate a series of Web sites, or a chain of stores, you might set up a corporation with a generic name, such as ABC Web Enterprises, Inc., or The Retailer, LLC, and then file an assumed name for each Web site or store. Since there is significant expense in filing and maintaining a corporation, this helps control costs while still allowing you to expand your business.
Applying for an Assumed Name
In some U.S. states you register your assumed name with an individual state’s secretary of state or other state agency, but in most states, registration is handled at the county -level, and each county may have different forms and fees for registering a name. The process is simple: you perform a search through the state or county database to make sure the name is not already in use, then submit a simple form, along with the correct filing fee (anywhere from $10 to $50). Some states also require that you publish a notice in your local newspaper and submit an affidavit to show that you have fulfilled the publication requirement. Call your county clerk’s office to find out the local fees and procedures in your area.
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