What Is a DBA? A Guide to How DBAs Work

Businesses use a DBA (standing for "doing business as") as a public-facing, assumed business name in place of their legal, registered business name. Unless a business files a DBA, the business name may default to the business owner’s full legal name. A DBA is also called a fictitious business name or trade name. Owners of sole proprietorships or general partnerships are usually obligated to use their full name to register their business. A DBA gives business owners the ability to operate under a recognizable business name without registering a completely new business. The purpose of filing for a DBA is to give your business a different name than your own. This is applicable for most business entities that want to establish a brand name that is different from the sole proprietor's name. Filing a DBA with the state establishes a public record of a particular business operating under a new name without requiring the business to incorporate with the state, as they would with a [Limited Liability Company](https://www.masterclass.com/articles/limited-liability-company-explained), limited partnership, or corporation (like an [S corporation](https://www.masterclass.com/articles/s-corporation-guide) or C corporation). A DBA also gives you access to an EIN (or employer identification number) which allows you to set up a business bank account to separate your personal finances from your business finances. Here are some of the types of businesses that can require a DBA. 1. __Sole Proprietorships and general partnerships__: Both sole proprietorships and general partnerships must do business under the name of the business owner unless they apply for a DBA. 2. __Franchises__: Many franchisees do business by applying for a DBA to make their legal business name the same as their franchise. Most franchisees operate as LLCs or corporations, so in order for them to assume the franchise name as their own, they need to file for a DBA. 3. __Single branch of a large business__: If a large business opens a new branch of their business that they want to conduct business under a different name, they can file for a DBA for that specific location rather than having to start an entirely new small business under that new name. A limited liability company (LLC) is a business status that allows the owner to separate their business’ liabilities and finances from their personal ones. A DBA is simply a different name for a sole proprietorship or general partnership, in which the business owner is still legally liable for the business. Here are some of the key differences between DBA and an LLC. - __Liability__: As the name suggests, LLCs offer liability protection to the business owners or partners. They cannot be held responsible for the business's debts, and cannot be sued individually for the errors of their business. With a DBA, the business owners or partners are liable for the business's debts and legal operations, and their personal assets may be seized in the event of the business defaulting. - __Business Structure__: A DBA is not set up as a separate legal entity from the business owner, and remains the same legal entity as the business itself. Forming an LLC creates a separate legal entity, independent of the business owners, partners, or members. - __Registration Costs__: A DBA is less costly to set up than an LCC, or any other entities that require incorporation (like C corporations or C corporations). A business owner that wants to avoid higher filing fees may choose to establish a DBA to operate under an assumed business name that is different from their own personal name, without having to establish a new separate business. Filing a DBA is one of the simplest ways that a business owner can differentiate their identity from their business’ brand. However, before you start using your fictitious business name, your business needs to file a DBA with the state. Here are some tips to follow when performing a DBA name filing. 1. __Look up your state’s requirements__. DBA filing is typically done at your county clerk's office or state government offices, and DBA registration fees can vary state to state, costing as much as $100. In certain states, it is required that there is a public announcement of the new DBA name in a local newspaper. Familiarize yourself with these requirements before going any further. 2. __Choose a unique name__. There are very few restrictions on what a DBA name can be, the only general rule being that "LLC," "Inc." or "Corp." cannot be included in your new business name, giving the false impression of your business being a corporation or an LLC. Do a quick search to make sure that your DBA name is not already in use to avoid confusion. 3. __File your DBA__. Once you know the specific requirements of your state and have chosen a business name, you can file your DBA name registration in the place where you are doing business. Get the [MasterClass Annual Membership](https://www.masterclass.com) for exclusive access to video lessons taught by business luminaries, including Howard Schultz, Chris Voss, Robin Roberts, Sara Blakely, Daniel Pink, Bob Iger, Anna Wintour, and more. Many business owners file a DBA with the local government if they want their company name to be different from their own name. Read on to learn more about which companies are required to use a DBA, how a DBA works, and how you can file one for your own business.