Whenever you conduct business and use a name other than your legal name, you may need to register with your state to get a DBA license. DBA stands for "doing business as" and is also known as a "fictitious business name" or "assumed business name".
Why Use a DBA
You should consider using a DBA if you:
- Want to build a brand separate from your legal name
- Plan to run multiple businesses in your market
- Need to save money by using one business structure as opposed to incorporating many different businesses
- Choose to advertise with something other than your business name
- Want to open a business banking account
Why States Require a DBA License
Imagine making a purchase from a company and the goods you received were damaged. Next, imagine not having any way to ask for a refund or contact the owner because you don't know who you've really done business with. The DBA protects consumers in that they know exactly who is running a company, and how to contact them directly should a problem arise.
You also receive legal protection when you register your DBA, because without one you cannot legally enforce any signed contracts. It also lets other businesses in your state know that you are already using that name. If you don't register a DBA when required, you could find yourself facing costly legal issues in the future.
When You Don't Need a DBA License
State laws vary on whether you have to register a DBA, if it contains your last name. For example, a state may not require John Carter to register "Carter Consulting" as a DBA because it contains his last name. Be sure to check the laws of your state. You can avoid having to get a DBA license if you include your full name, such as "John Carter Consulting." Consider your brand and whether you plan to run multiple businesses, rather than the costs of filing for a license.
How to Register a DBA
Go to your county's office and register your DBA with the clerk (sometimes you'll have to register with a state government agency). Call ahead of time and find out the fees and requirements. Some states want you to fill out a "fictitious business name statement" and pay a fee, or buy a certificate of "doing business as." You may also purchase DBA forms online or from office supply stores. Once you have a DBA, you can open bank accounts and engage in other business activities. You can also sign contracts and not have to worry that they won't be enforced, simply because you didn't get a DBA license.
Getting a DBA will cost money up front, but it will save you money in the long run. Don't let the costs impact how you name your business. Make sure you choose a business name that will make customers remember who you are and what you sell. Choosing an effective DBA plays a crucial role in the profitability of your business.
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Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.
