{"id":4819,"date":"2021-07-15T09:42:09","date_gmt":"2021-07-15T14:42:09","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/dba-vs-llc.html"},"modified":"2025-10-14T23:50:00","modified_gmt":"2025-10-15T04:50:00","slug":"dba-vs-llc","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/dba-vs-llc.html","title":{"rendered":"Should My Small Business Form as a DBA, LLC, or Both?"},"content":{"rendered":"\n
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Should My Small Business Form as a DBA, LLC, or Both?<\/h1>\n\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last reviewed\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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A \u201cdoing business as<\/span>\u201d (DBA<\/span>) is a registered fictitious name for an existing business<\/span>, while a limited liability company<\/span> (LLC) is a formal business structure<\/span> that is a separate legal entity<\/span>. The main difference is that any LLC provides limited <\/span>liability protection<\/span>, a benefit a DBA<\/span> lacks.<\/p>\n\n <\/div>\n\n\n\n

Many small <\/span>business<\/span> owners<\/span> wonder about the best way to set up their company. Two popular options for establishing the company are to register it as \u201cdoing business as<\/span>\u201d (DBA<\/span>) or a\u00a0limited liability company<\/span><\/a>\u00a0(LLC). While both DBAs<\/span> and LLCs are registered with the state and allow you to conduct business using a\u00a0new name<\/a>, only the LLC allows you to protect your assets from business creditors.<\/p>\n

The decision can influence liability protection<\/span>, tax flexibility, and more. Let\u2019s dive into the differences and help you choose what\u2019s best for your startup<\/span>.<\/p>\n

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What Is a DBA<\/span>?<\/h2>\n

DBA<\/span><\/a> stands for\u00a0\u201cdoing business as<\/span>.”\u00a0It\u2019s an acronym for a fictitious <\/span>business name<\/span> that entrepreneurs<\/span> use. DBAs<\/span> are common in the business world. They are sometimes referred to as trade names<\/span>, fictitious names, or assumed names<\/span> because they let an individual or business operate under a name that is different from their legal name<\/span>.<\/p>\n

Filing a DBA<\/span><\/a> is done at the state level. There are often state fees involved. Depending on where you live, you establish your DBA<\/span> by registering it with your city, county, or state licensing agency.\u00a0<\/p>\n

Additionally, most states require that you apply for the DBA<\/span> and pay for a registration fee<\/span> before you start operating the business under the new name. This is because DBAs<\/span> protect the public by letting them look up who owns a business should they want to pursue legal action against it. It\u2019s crucial to check with the secretary of state<\/span> in your area about the specific DBA<\/span><\/a> filing<\/span> process.<\/p>\n

DBA<\/span> registration lets you conduct business under a different name<\/span>, but it provides no other benefits for companies or their owners. A DBA<\/span> does not offer any tax advantage for business owners<\/span> and does not protect owners from liability for the actions of the new business<\/span>.<\/p>\n

DBAs<\/span>: Lack of Liability Protection<\/span><\/h2>\n

One major thing to understand about DBAs<\/span> is that they don\u2019t provide liability protection<\/span>. This means if someone sues the business, they can go after the owner\u2019s personal assets<\/span>. For example, if a sole proprietor<\/span> wants to operate under a name different from their personal name<\/span>, they get a DBA<\/span>. This means if someone sues the business, they can go after the owner\u2019s personal assets<\/span>.\u00a0<\/p>\n

Since there\u2019s no shield between the business and the owner, the risk of personal financial loss is greater. It\u2019s a common misconception that a DBA<\/span> offers the same legal protection<\/span> as entities like LLCs, but this is not the case.<\/p>\n

What Is an LLC?<\/h2>\n

LLC stands for \u201climited liability company<\/span>.” An LLC is a business that has registered with the state to operate as an organization that is legally separate from its owners. As a separate entity, an LLC can own property and enter into business agreements. Additionally, the owners of an LLC are not liable for the business\u2019s debts beyond what they invested in the company.<\/p>\n

When it comes to taxes, LLCs operate as pass-through entities. That means the company itself pays no tax, and any profits or losses it has are\u00a0passed through\u00a0to the owners without the business being taxed. The owners then include the LLCs\u2019 profits or losses on their federal income tax<\/span> returns.<\/p>\n

The owners of an LLC can also choose to have it taxed like a corporation, in which case its income will be subject to the federal corporate tax when earned by the company. It is then taxed again when distributed to its owners.<\/p>\n

The primary disadvantage of operating a business as an LLC as opposed to a DBA<\/span> is that you will need to follow certain business formalities to maintain its status as an entity separate from its owners. For example, LLC owners<\/span> are usually required to have a registered agent<\/span>, file\u00a0articles of organization<\/span><\/a>\u00a0with the state, file annual reports<\/span>, and pay annual filing fees<\/span>.<\/p>\n

Tax Flexibility: DBAs<\/span> vs. LLCs<\/h2>\n

When it comes to taxes, DBAs<\/span> and LLCs are treated differently. A DBA<\/span> is not a separate legal entity<\/span>, so it has no impact on your tax status. If a company is a sole proprietor<\/span>, the income and expenses of a business flow directly to the owner\u2019s personal tax return<\/span>.<\/p>\n

On the other hand, an\u00a0LLC offers tax flexibility<\/a>. While an LLC can be taxed as a sole proprietorship<\/span> if there\u2019s only one member, called a single-member LLC<\/span>, it has the option to be taxed as a corporation or a partnership\u00a0if there are multiple members. This means LLC members can choose the tax treatment<\/span> that is most beneficial for their business, which\u00a0can lead to potential tax benefits<\/span> that a DBA<\/span> doesn\u2019t offer.<\/p>\n

Furthermore, some states may have additional tax advantages for LLCs. This emphasizes the importance of understanding your state\u2019s specific tax regulations. Consult with a tax professional or a business formation<\/span> lawyer when deciding between a DBA<\/span> and an LLC.<\/p>\n

Operating as Both a DBA<\/span> and LLC<\/h2>\n

An LLC can have a DBA<\/span>. This is useful when the LLC wants to operate under a different brand identity<\/span>. If you have already formed an LLC, you can still register a DBA<\/span> with the state if you do not want the company to operate under its own name<\/span>. LLCs will often register new DBAs<\/span> when they want to offer products or services under a separate <\/span>business<\/span> name<\/span> without creating a new LLC for each business.<\/p>\n

Having both an LLC and DBA<\/span> offers the benefits of an LLC\u2019s liability protection<\/span> from business debts<\/span> while also giving the flexibility to use different <\/span>business<\/span> names<\/span>. However, remember that the DBA<\/span> itself doesn\u2019t give any legal protection<\/span>. That comes from the\u00a0LLC. When opening a business bank account<\/span> or getting business licenses<\/span>, the DBA<\/span> name<\/span> and the LLC name might both be used.<\/p>\n

Need Help Deciding Between a DBA<\/span> and an LLC? Get Legal Help<\/h2>\n

If you don\u2019t know whether operating your business as a DBA<\/span> or an LLC is best for your company, getting legal help from\u00a0a\u00a0local business<\/span> attorney<\/a>\u00a0can help. A lawyer can assist you in determining whether a DBA<\/span> or an LLC is best for both the business and its owners and in completing the paperwork necessary to file with the state for whichever business structure<\/span> you decide on.\u00a0<\/p>\n

If you decide to operate the business as an LLC, an attorney can verify that you are following all of the rules and regulations to ensure that you are protected from personal liability<\/span> for the company\u2019s debts and obligations. They can also make sure your operating agreement<\/span> for your\u00a0business entity<\/span> is what you need it to be.<\/p>\n

If you know which type of business<\/span> you would like to form and you would prefer to DIY, consider using a\u00a0reputable business formation<\/span> service like the one we offer.<\/a><\/p>\n\n\n

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