Business names are essential marketing tools. The name that you choose to do business under will help customers identify you. Your business name will also help the government identify you and your company for legal purposes.
Whether you're forming a sole proprietorship, limited liability company (LLC), or corporation, you might need to consider DBA ("doing business as") registration.
DBA registration is necessary under certain circumstances. Under other circumstances, a business owner may choose to register a fictitious business name or trade name.
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Business Names for Legal Entities
Choosing a name and deciding on a business structure are two crucial steps in business formation. Three popular types of business entities are LLCs, corporations, and sole proprietorships.
Suppose you choose to organize your business as an LLC or a corporation. In that case, you will need to decide on the name that will be listed for your business on the organizational documents.
For a LLC, the business name is one of the items listed on the Articles of Organization. For a corporation, the business name should be listed on the Articles of Incorporation.
Filing Business Names
To form these legal entities, you must file the appropriate organizational documents with the Secretary of State or county clerk. By filing these documents, business owners also make the legal name of their business known. The name that a business owner lists on organizational documents is the legal business name.
There are no such documents for sole proprietors. Instead, the business name for a sole proprietorship is the owner's legal name.
Fictitious Business Names For Legal Entities
What happens if you form a business under one name but start doing business under a different name?
You could face legal penalties if you do business under a name other than your legal business name. To use a name other than your legal business name and avoid legal penalties, you must register the name as a DBA name.
- LLCs. Register a DBA name if you want to do business under a name other than the one listed on your Articles of Organization.
- Corporations. Register a DBA name if you want to do business under a name other than the one listed on your Articles of Incorporation.
- Sole proprietorships. Register a DBA name if you want to do business under a name other than your personal name.
Reasons For Registering a Fictitious Name For Your Small Business
Some business owners turn to DBA registration when they want to expand their business. Suppose the owner of The Best Gift Baskets, LLC has decided to start selling luggage. They don't want to confuse their customers by offering luggage under the business name of their gift basket company.
They could form a new LLC for their luggage business or register a DBA name for their luggage business. If they choose to register the assumed name for her luggage business, they could put the DBA name on contracts and bank accounts.
Note that, if you enter a contract under an assumed name that has not been registered, it might be difficult to enforce your rights under the agreement.
Privacy Concerns For Business Names
A sole proprietor may use a trade name because it seems more professional than doing business under one's own name. A sole proprietor might also want to use a different name due to privacy concerns. If you are considering starting up a sole proprietorship, you might not want your first or last name to be a part of the business name at all.
For example, Jane Smith might want to operate her candy business under "Just Sweets." To use the name "Just Sweets," she would need to register the name at the state or county level because it is different from the legal business name.
However, depending on her state, she might be able to do business under "Smith Sweets" without registering a trade name because she included her last name in the business name. It could be important to know the local and state laws that apply to business names in your area before you begin conducting business.
DBA Names and Finances
If you do business under a name other than the legal name for your business, you might need to have a DBA name certificate to get a business bank account.
Some banks require filing a DBA name certificate before you can use the assumed business name for your bank account.
How To Register a DBA Name
Business owners can typically register a DBA name at the state or county level. This means that you need to file your paperwork with either the Secretary of State or the county clerk's office.
The process for registering a DBA name generally includes:
- Conducting a name search to determine if the fictitious business name is already in use.
- Filing a fictitious business name statement.
- Paying a filing fee for the fictitious business name statement.
- Running notice of the fictitious business name in the local paper (if required).
It helps to conduct a name search before you submit a fictitious business name statement. There are databases that you can use to perform your search at the state or county level.
Filing the fictitious business statement involves filling out a form and paying a fee. The fee varies, depending on the state or county in which you conduct business.
You might have to run your statement in the local newspaper. The purpose of this requirement is to put the public on notice of your assumed name. Typically, the notice may run for a month or so. When you have met this requirement, you may need to submit an affidavit to that effect.
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Trade Names vs. Trademarks
You might be wondering if there is a difference between registering a trade name and registering a trademark. For example, if you register a trade name, do you also get trademark protection?
Registering a trade name and registering a trademark are two different processes. A DBA filing does not give you trademark protection. To have trademark protection, you would have to undergo a registration process at the federal level.
DBA Name Renewal
DBA name certificates typically have an expiration date. It is common for a DBA name certificate to be good for five years. You will need to renew your DBA name registration to avoid expiration.
In some states, there is also a requirement that you renew your registration if your information changes.
Contact an Attorney about Trade Name Registration
As a new business owner, your company name is an integral part of your brand and marketing. You want to have confidence that the name you are conducting business under is legal and suitable for your business needs.
Do not hesitate to reach out to a business attorney in your area for advice on fictitious business names.