If you’ve ever considered freelancing, or starting your own business, you should take a few moments to answer this very important question: Do I need a DBA? Not every small business owner needs to pursue DBA application filing, but there are two circumstances under which a DBA is required, regardless of the type of work done by the business.
When is DBA Application Filing Required?
First, if you are a sole proprietor, or operating a business in a general partnership, if the assigned business name differs from your name, or the name of the people in the partnership, you will have to file a DBA. DBA is an acronym for doing business as, and helps state agencies provide some transparency with regards to who is operating a business that goes by a name other than the person responsible for the business.
DBA application filing was created to help protect consumers from unscrupulous business owners. If we were not able to track the names of the individuals that do business under a different name, it would be very difficult to track those people down in the event of legal trouble. When a business files a DBA, the business has to make a proclamation in the local newspaper, so the community can see who owns the new business.
Second, a DBA is required when/if a department, branch, or other body within an incorporated business or a LLC files a Limited Liability Company tax form and chooses to operate separately from the main business.
For example, if an incorporated business decides to offer their products or services online, they may chose to file a DBA (perhaps in the name of the new website) that will then allow the website to operate somewhat independently from the incorporated business or LLC.
The DBA still benefits from the protections afforded to both business entities, but the DBA will be able to make payments in its own name, have it’s own bank account, and so on.
This is why it’s important to know whether you need a DBA or not. Why waste time and money filing a DBA is you don’t have to?
To answer any additional questions, ask an expert here.