How to File Income Tax With a DBA Business
Properly reporting your business income to the Internal Revenue Service is one of your most important obligations as a small business owner. If you use an assumed business name, also known as a "doing business as" or DBA, the way you file your business income taxes depends on the way your company is legally structured.
Businesses are formed under state law which requires every business to operate under a legal name that distinguishes it from any other business operating in the state. This requirement ensures that the public is able to properly identify the legally responsible party doing business under a particular name. If a business wants to operate under a name that is not its legal name, it must register a fictitious business name, also known as a DBA, with a state agency. Any type of business can use one or more DBAs, including a sole proprietorship, partnership, limited liability company or corporation, as long as the DBA is registered in the state where it will be used according to the state's registration procedures.
The legal business name of a sole proprietorship is the name of the owner. An owner can register a DBA so the business has its own name which the proprietor can use to build brand name recognition. However, sole proprietors are required by the Internal Revenue Service to report business income and expenses on the owner's personal income tax return. The Form 1040 tax return is filed under the owner's name, and he uses Schedule C to report his business affairs. On Schedule C, the owner's name goes at the top of the form, while section C requests the name of the business, which would be the sole proprietorship's DBA. The same process would apply for a single-member LLC that is taxed as a sole proprietorship.
Partnerships and LLCs that are taxed as partnerships file IRS Form 1065 to report business income and expenses. The top of Form 1065 requests the legal name of the business, not any DBA that the business may have registered. A partnership's legal name is a composite of the names of the partners, and an LLC's legal name is the name used to file the company's articles of organization. When a partnership or LLC is first formed and requests an Employer Identification Number from the IRS, the application asks the business to identify its trade or DBA name, in addition to its legal name.
If your business is organized as a corporation or an LLC that is taxed as a corporation, it must file a corporate tax return on IRS Form 1120. The tax form requires it to indicate the legal name that was used to file the company's articles of incorporation. A corporation can register one or more DBAs, but the DBA is merely a business alias and is not important for tax purposes.