DBA stands for "doing business as." A DBA is essentially a name a person or business uses other than their official name in order to transact business. For example, if John Doe wants to name his lawn mowing business "Integrity Landscaping," he could register a DBA and start to conduct business as Integrity Landscaping.
Likewise, if Betty and Jane already have a business legally named B&J Enterprises, and they open a bakery as partners, they can register a DBA and conduct business as "Sisters' Bakery" or whatever other name they choose.
DBAs are sometimes called "fictitious names" because the name being used is not the same as the person or business' real or official name. Other terms commonly used for a DBA include "assumed name" and "trade name."
Purpose and Advantages of Using a DBA
In some states, business owners who use an assumed name are required by law to register a DBA with their local authorities – in most cases, the county clerk or state government – in order to protect consumers. Even in states that don't require a DBA, many businesses register a DBA for branding. Using a DBA allows you to conduct several business functions using the assumed name.
For example, having a DBA lets you open bank accounts with your business name on them, receive and cash checks in your business' name, and use the business name on contracts. Having a DBA can also prevent competitors from using a name that is the same as or very similar to your business name.
Tax Implications of Using a DBA
The way a business is taxed and how a business should file taxes depend on a number of factors. These include the type of business, such as sole proprietorship, partnership, corporation or LLC. Using a DBA does not, in and of itself, add extra tax implications. The expense incurred to obtain the DBA is a normal business expense and can be written off as a deduction if you maintain the proper documentation.
Legal Implications of Using a DBA
The legal implications of using a DBA – or, more importantly, of failing to use a DBA if you should be using one under your state's laws – vary considerably from state to state. In some states, you could face fines or even misdemeanor charges if you are doing business under an assumed name without properly registering a DBA. In many states, you can't legally enforce a contract with your business if you are using an unregistered assumed name.