Monday, October 26, 2015

Everything You Need to Know About DBAs

DBAs are great for separating the business owner from the business. If an entrepreneur is planning on doing business using a name other than his or her own personal legal name, then he or she will probably need a DBA.  Most states require DBAs, in fact, prior to conducting any business under a name other than the business name or a personal name.

First of All, What Are DBAs?

DBA stands for “Doing Business As.” DBAs are specifically important for banking purposes. Operating under a business name without setting up a DBA would make it impossible to issue and receive checks under that business name.  For one thing, a business owner can’t use his personal account and issue checks or receive checks under his business name.  And a business owner can’t open an account under his business name without first having a DBA.  As a business owner, you should plan ahead for these potential banking issues by getting your DBA filed prior to setting up any bank accounts. With a DBA, you’re connected to your business—in that you can still receive checks under the name of your business—but you’ll still be able to keep the two accounts separate, separating yourself from the business entity.

How to Use a DBA

Sole proprietors are the most common users of DBAs.  Sole proprietors are individual business owners who run their businesses themselves, and are typically newer to the small business game. Since most people in these circumstances use a business name other than their own name, it’s often necessary for them to get DBAs.

DBAs can also be useful to corporations, LLCs, and other business entities because they permit doing business under other names without having to form new organizations.  In this way more formalized business entities that are seeking to branch out into other businesses or industries can do so without forming new corporations or LLCs.  This can save money (in the form of filing fees) and time (in the form of filing documents and maintaining the business entity throughout the year).

According to the Small Business Administration, DBAs can be registered either at the county clerk’s office or with the state government, depending on your state. They also have a handy list of each state’s requirements that you can check out to confirm where you’ll need to go, and with what documents.

The Benefits When Combined with a Business Entity

Forming a business entity such as a corporation or LLC, along with a DBA, provides excellent benefits for a business owner.  It allows you to have liability protection for your personal assets, arrange taxation of your business in a way that is the most beneficial for you and your business, and make use of various names for your different business endeavors.

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