Your small business name is one of the most important parts of your business. It reflects your brand and appeals to your target market. Your business name also plays an important legal role with the IRS and state and local agencies. Be sure to register a business name carefully with the appropriate authorities. Name registration often goes hand in hand with business registration, but if you want to operate as a different name than your registered name, you will need to file a DBA.
What Is a DBA?
A DBA, which stands for “doing business as,” is different from the legal registered name of your business. Often, a DBA is known as a trade name or fictitious name. Every business has a legal name, but not all businesses have DBAs.
For example, the legal name of a sole proprietorship or partnership is the same as the name of the business owner or partners. If they choose to do business under another name, that name is a DBA. A corporation or LLC, on the other hand, has a legal name that is on the formation documents, such as the articles of incorporation. If they choose to do business under a different name, then that is a DBA.
A business can have a limitless number of DBAs. However, most states require that the DBA be registered if the business wants to use it to conduct operations. The reason the DBA needs to be registered is so consumers can know the real owners of a business.
Why Use a Fictitious Name?
Sometimes, the legal name of your business is not the name under which you want to operate. There are many reasons you may need to use a DBA or fictitious name. Your situation may vary depending on your industry or your business structure. Some common reasons for using a DBA include:
- If your legal business name is long or hard to pronounce or spell, you may find more success with a DBA.
- If you own a sole proprietorship or partnership and don’t want to do business under your personal legal name, you can use a DBA.
- If you need to open a business bank account, your bank may require a DBA filing in your state, especially if you’re a sole proprietor.
- If you’re launching a new product line for the business and want the name to reflect it, then you may choose a DBA. For example, if your legal business name is Coco’s Cupcakes, LLC but you’re now starting to make pet food, you may use a DBA for that side of the business.
- If your legal name is not available as a domain name, you can use a DBA to ensure that you find a matching domain name.
Choosing Your Business Name
Choosing the right new business name, whether it’s the legal name or the DBA, is a difficult task that should not be taken lightly. While you have the opportunity to have multiple DBAs, it’s still important to pick a name you can use for the long term. Constantly switching names in your business can cause confusion for your customers and stakeholders and can require a lot of paperwork.
When thinking of a business name, ensure that it:
- Reflects your company’s mission
- Tells customers what kind of products or services you offer
- Is easy to say, read and spell
- Differs from your direct competitors’ names
- Includes an abbreviation about your business structure, such as Inc. or LLC
Once you’ve narrowed down a few business names, discuss them with others so you can get an outsider’s perspective. You’ll also need to ensure that the business name you’ve chosen hasn’t been trademarked by another company and that it is available as a website domain name. Take a couple of days to sleep on it before you register your business name and make it official.
Registering Your Business Structure
When you register your business, you establish a legal name for it. If you’re a sole proprietor or partnership, then the work is already done, as your legal name is the business’s legal name. However, if you’re a different kind of business structure, such as a C corporation, S corporation, nonprofit, limited liability corporation or cooperative, then your legal business name is different from your personal name. In these cases, your legal business name is the name on the documents you used to register your business.
Different Ways to Register Your DBA
Depending on the rules of the state in which you operate, you may need to register your DBA with the state, county or city authority. Even if registering your DBA with the state is not required in your area, it’s a good idea to register it voluntarily because you can then use it to conduct business and open a business bank account. The rules vary by state, so it’s best to check with your secretary of state’s office or regional business bureau for more details.
Keep in mind that multiple businesses can use the same DBA in one state, so you have to be careful about what you pick. Trademark infringement laws apply, so you cannot use a name if it has been trademarked. In addition to registering your name with the state, it’s a good idea to investigate trademarking your DBA.
A trademark is a way to protect your DBA on a national level. If your DBA and logo are trademarked, then that means that others in the same or similar industry cannot use them in any way. This helps to differentiate your brand and alleviate any confusion for consumers. Check the Trademark Electronic Search System, maintained by the United States Patent and Trademark Office, to see if your DBA is available.
Operating Under Multiple Business Names
In some cases, you may need to operate your business under multiple DBAs or legal names. There are two paths you can take:
- Forming a single company and registering multiple DBAs: For example, if you have a designer clothing line that is Sarah’s Fashions LLC, you may want to branch out into different kinds of products. You could then create a DBA for each line, such as Sarah’s Shoes, Sarah’s Childrenswear and Sarah’s Activewear.
- Forming a holding company and registering multiple legal entities: A holding company owns multiple assets but doesn’t conduct any business. You could set up a holding company, Sarah’s Fashions LLC, and then each division, shoes, children's wear and activewear, would be set up as separate LLCs. Those names would not be DBAs but legal business names.
Changing Your Business Name or DBA
If you find that your legal business name or DBA no longer reflects the direction in which your company is going, you do have the option to change them. The way you change them will depend on the kind of business structure you have and the rules of your state.
- Sole proprietor or partnership: You can cancel your DBA and file for a new fictitious name by working with the state or local authority where you filed your name. Keep in mind that if you used your DBA to open a bank account, you’ll need to work with the bank to see if it can update the name on your account or if you will need to open a new account with your new DBA. You may also have to acquire new local licenses and permits if they were filed using your old DBA. Finally, you’ll need to inform the IRS of your DBA change, and you may require a new EIN.
- Corporations and LLCs: It’s easier to keep your legal company name and file for a new DBA than it is to change your legal company name. If you’re filing for a new DBA, you’ll need to confirm that your bank can add that new name to your account or whether you need to open a new account. The process for changing your legal company name is more complicated and requires filing articles of amendment for your business in addition to notifying the IRS and possibly getting a new EIN.
- Entrepreneur: Doing Business As (DBA)
- U.S. Small Business Administration: Choose Your Business Name
- Wolters Kluwer: What is DBA & When to File One
- All Business: Multiple Companies Under One Roof: Understanding the Basics of DBAs and Holding Companies
- Forbes: Changing Your Business Name: A Step-By-Step Guide
- United States Patent and Trademark Office: Using the Trademark Electronic Search System
Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.