Have you heard about DBA (Doing Business As)? How can I use it in my American company?
Would you like to know about this term, which is used in the business sector?
In this article we will tell you a little more about DBA (Doing Business As), its definition, why some companies use this term, what the benefits are.
What is it? What is its definition?
A DBA (Doing Business As) is what we call in Brazil the Fantasy Name for your company, nothing more than an official nickname for your company, a fictitious business name.
They are not separate business structures or legal entities.
A DBA does not provide asset protection or liability protection for business structures of any kind.
Through it, legally, your company can: accept payments, open bank accounts, and operate commercially under a fictitious name.
This is very effective for business growth and branding.
Let’s illustrate:
Let’s suppose you have a restaurant called Aunt Bety’s Homemade Food, however you don’t want to operate anymore, it is too big, your restaurant will operate on CCTB, a short name.
Through it, you will be able to legally do business under the name CCBT.
The United States has 50 states, besides its Federal District and some territories that are possessions of the country, stay tuned on which are the 5 largest in the USA, they can be an option to start your projects.
What are the legal requirements to make a DBA(Doing Business As)?
Understand that each state and county in the US has specific rules for this process.
For example: in the State of Alabama and Arizona, there is no formal registration to make one, while in some parts of New York and Florida, there is a requirement that before registering, it is necessary to publish the purpose of your DBA in local newspapers.
As we can see, registration will vary from state to state, so be aware of the requirements of the state agencies where your business name will operate.
According to state laws, the registration process does not allow the name of a DBA that is already registered, or has a similar name operating with intent to mislead the public, the consequences for this are great, and there may be penalties for the company.
So be aware of the registration process.
Who needs one?
There are formal and informal businesses, we will explain these two business structures.
1) INFORMAL BUSINESSES
In informal businesses, businesses are individual and can have partnerships.
Example: a sole proprietorship, which is named after the owner’s last name, and then the owner wants to create a trade name for his business.
For this process he will need to create a DBA (Doing Business As).
In informal businesses, partnerships are more likely to use a DBA, because if they do not, your business must have the last name of all the partners involved in the partnership.
2) FORMAL BUSINESS
Formal businesses, on the other hand, are made up of large corporations and LLC’s.
DBA’s are also very useful for this type of business.
If you want to change the brand of your company, through a trade name registration, you will have a new name, and this can be an abbreviated version of the current name of your company, just an acronym or even a totally different name.
This registration can be done even in case the owner wants to change the name of his company for good.
It’s important to point out that if an entrepreneur wants his company to do business in other states, it will be necessary to make more than one registration in each of them.
As we said, each state has its own registration procedures.
If you are considering creating a Doing Business As, to do business in the United States, we have some tips that you can use.
And how much does this registration cost?
Since registration has rules that vary from state to state, the price also changes, it is a good idea to check the website of the Secretary of State of the state where you want to install your DBA.
You will deal with the Secretary of State or the county clerk.
SEE THE UPDATED PRICE LIST FOR REGISTERING A DBA:
- In California it costs around $100
- In Texas, this process costs around $25
- In the State of Wyoming, it costs around $100
Check out a basic guide on how to create a DBA for your company, from the Massachusetts Secretary of State’s website.
Conclusion
A DBA (Doing Business As) is a fictitious, business name of a company.
Informal business companies can use it, and it is more recommended than using the owner’s last name as the trade name.
Formal business companies can use a DBA to rebrand or create new ones, or if they want to change the trade name they are currently using
DBAs do not provide asset protection, and are not separate legal entities and do not provide liability protection for informal businesses.
Importantly, if you own an LLC and wish to purchase a DBA for it, your LLC is still liable for any losses you may have.
The cancellation process also varies from state to state, as does the application process.
So it is good for the business owner to inquire with the secretary of the state or county that they wish to set up their company.
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