A fictitious business name, sometimes called an assumed name or DBA, short for "doing business as," allows you to legally do business using 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 in a business sense under this name.
In fact, it can be considered fraud if you present your business under a name other than the proper legal name without proper notification. Fortunately, there's really not much excuse for not filing an assumed business name because it's so easy and inexpensive.
Do You Have to File a DBA?
A DBA allows you as a sole proprietor to use a business name other than your personal name. If your business name implies that more than one owner or individual is involved, for example, like Shawad & Sons or The Anderson Group, or if you just want to use your first name, such as Joe's Garage or Sam's Boat Rentals, you would typically file an assumed name.
In some jurisdictions, you can use either your full name or part of your name, plus a description of your product or service, without filing an assumed name. You might do business as Elena Garza Interior Design or J. Washington Investigations. The exact rules vary from state to state so check with your local business regulatory authority.
You may have some prospective clients that require you to have a DBA before they award you a contract for work.
When to File?
When you file for your DBA, it may take one to four weeks to hear back regarding your name approval. This varies by jurisdiction, but it's wise to file at least 30 to 60 days before you intend to open the doors of your new business.
Why Use an Assumed Name?
An assumed name lets you use a name for your business without creating a formal legal entity such as a corporation, partnership or LLC. You may need the DBA to open a business checking account, and you'll be able to get a business phone listing for your chosen business name. It's the least expensive way to legally do business under a business name for sole proprietors.
An assumed name also allows a single legal entity such as a corporation or LLC to operate multiple businesses without creating a new legal entity for each business. For example, you might set up a parent corporation with a generic name like LVH Web Enterprises, Inc. or Neighborhood Bars, LLC, then file an assumed name for each website or bar if you're planning to operate a series or chain of them.
There's often significant expense involved in filing and maintaining a corporation, so this helps control costs while still allowing you to expand your business.
You can also use DBAs to segregate your business. If your company wants to get into a new business line that has nothing to do with your existing business and company name, you can create a different, appropriate assumed name for the new business line.
If your company sells the same products, but to different audiences, you can also use different assumed names to keep everything straight. For example, if you sell women's clothing and teenager's clothing, you can set up two different assumed names to help you target each specific group.
How Do You Apply for an Assumed Name or DBA?
Check to see if you can register your assumed name with the Secretary of State or another state agency, but you may find registration handled at the county level in most states. Each county may have different forms and fees for registering a name.
The process is usually fairly simple and straightforward. You perform a search through the provided database to make sure the name is not already in use, then submit a simple form along with the correct filing fee, which usually ranges between $25 and $100 as of 2017.
Some states also require that you publish a notice in the local newspaper announcing your new DBA name, and submit an affidavit to show that you have fulfilled the publication requirement. Call your county clerk's office to find out what the local fees and procedures are in your area.
Proper use of a fictitious business name can be a powerful branding tool at minimal cost. Take advantage of it. Pick a great business name and use it at every opportunity.