What are the benefits of filing for a DBA?

Seven advantages of filing for a DBA.

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A business is required to register its legal name with the state it is based and operates in. In many cases, a business will also elect to file a DBA (Doing Business As). A DBA is a fictitious name that the business will trade under. It is different to the originally registered name and is used to either diversify a brand, rebrand or in the case of a sole proprietor, to not trade under the owner's surname. Enhanced value, privacy protection and increased flexibility are some of the benefits of filing for a DBA. Below is a list of 7 advantages of filing for a DBA.

Enhanced value

As mentioned a DBA can assist in diversifying a brand or creating brand awareness. There is no limit on the number of DOA’s a business can register and especially benefits a business that has more than one division. A DOA can be created for each division so the name fits with the specific services or products offered.

Privacy protection

For businesses such as a sole-proprietorship, most states usually require that the owner use their legal name to register the business with. Depending on the operations of the business, the owner may not want their business to trade under their legal name. The owner may also want to keep their name private in order to limit the use thereof in business transactions. By registering a DBA, the business can trade under a more professional name that accurately reflects the function of the business.

Increased flexibility

When a business wants to expand its operations into other states, it will be required to register a name. This might be an issue when the business name is already in use in that state. The business will then not be able to trade under its current name in the state in question. By using a fictitious name (DBA), the business can easily expand into the required area and trade under the assumed name.

Compliance

A business filing for a DBA can trade legally under the assumed name and does not have to add LLC or corporation to their business name.

Note: It is important to remember that a DBA is not a business entity. It only serves as a name for the business to trade under. A DBA can also not provide limited liability protection.

Business banking

A business bank account can be opened when filing for a DBA. Even if the LLC has not been registered yet, the business will be able to receive payments in the name of the business. This is also beneficial when it comes to brand awareness as well as aid in bookkeeping and accounting.

Protection

A trademark is registered to protect the intellectual property of a business. A Logo, slogan, name and even business colours can be trademarked which offers increased protection over state lines. This means that other companies may not use the name, logo etc. of your business and can avoid confusion and/hassles in the future.

Cost effective and easy

It is quite easy to file for a DBA. The costs will depend on the state where the DBA is filed, but range from $10 to $100. It is not advisable to trade under an assumed name if a DBA has not been filed as it can lead to quite severe penalties totaling thousands of dollars.

There are only 3 steps to follow namely:

  • Choose a state
  • Choose a name
  • Register the DBA

All states have different requirements which will regulate whether the DBA must be filed with more than one governmental agency.

A business with a DBA can have some or all of the advantages mentioned in this article. There are many available sources that provide additional information to learn more about the procedures. It is sensible for any business to investigate all areas of the filing process in order to make an informed decision.



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