How Does a DBA Work?
The name of a business is one of its most prominent and important features. For the most basic types of businesses – sole proprietorships and general partnerships – the name may be simply the name or names of each individual owner. Corporate entities must register their businesses with the secretary of state and choose a specific name. A business’s legal name is not necessarily the one the business operates under, however. A "doing business as" name is also known as a fictitious or assumed business name.
The legal name of a business is the one chosen by the entrepreneurs when the business is formed. For corporate entities, the legal name of the business must be registered with the secretary of state and comply with certain business law requirements. For general partnerships and sole proprietorships, the legal name of the business is the given name for the individual owners. Every business has a legal name. Not every business operates under its legal name.
A “doing business as” name, or DBA, allows a business to operate under a name other than its legal name. This is particularly useful for general partnerships and sole proprietorships. If John Smith starts a business as a sole proprietorship, for example, the legal name of his business is “John Smith.” Clearly, this name does not offer any insight into John Smith’s business or provide any incentive to do business with John Smith. If John Smith chooses to call his business “John’s Junkyard Salvage,” the proper way to cite to his business is “John Smith, DBA John’s Junkyard Salvage.”
State laws vary, but generally the business must file a DBA statement with the secretary of state identifying both the legal name of the business and its fictitious name. Corporations must register a name when the corporation is formed, so often there is no need for a DBA. Assume a group of entrepreneurs from Let’s Sell It, LLC is a real estate company. Down the line, Let’s Sell It, LLC decides to begin selling used consumer goods. Rather than form a new entity, the limited liability company could decide to file a DBA statement and begin doing business under a new name, such as “Deals, Deals, Deals.”
A DBA statement is merely a formality to call out the fact that a business is operating under a name other than its legal name. Aside from basic information purposes, the filing of a DBA does not necessarily protect the trademark rights in the name. According to NOLO, a legal information resource, businesses should still file for trademark protection to protect the underlying intellectual property rights of the business name.