DBA Overview

DBA, or Doing Business As, is a legal term of business where a person or entity of one name operates their business under another. This is a common practice for sole proprietors, franchise operators and conglomerate corporations.

A sole proprietor may use DBA in most states if they file the proper paperwork with the state and request a fictitious name. The fictitious name allows the sole proprietor to operate under a brand name while still maintaining ownership as an individual.

Businesses that operate franchises often use DBAs so that their business can operate many different franchises under the same corporate brand. Corporate conglomerates also operate in the same manner. These types of businesses often use the fictitious name for their public-facing businesses because it is already well known in the public.

When an entity operates a DBA, the owner takes full legal responsibility for the operations of the assumed named business. A DBA does not offer the same corporate protections in legal matters unless it is owned by a corporation.

Purposes

In most cases, a DBA is used simply for the purpose of creating a name that can be recognizable to the public and provide the owner with a way to advertise. There are not any specific tax credits or special protections associated with this type of business ownership.

Most states require DBA entities to file for the appropriate licensing in their state and local municipalities. Banks typically require proof of licensing under that name as well as any fictitious name filings before they will allow any accounts to be opened. Regulations under relating to homeland security may also require certain DBAs to file additional paperwork before receiving licensing or bank accounts.

A DBA’s taxes may be filed as personal income for sole proprietors or as separate tax-paying entities if part of a corporate structure. It is very important to file taxes for this type of establishment correctly to avoid penalties and fines.

Businesses operating under a DBA are required to operate under all the guidelines set forth by their state for such entities. This may include publishing a notification in the legal section of the newspaper for several weeks to announce the name of their business and the responsible party for that business. Some states require that DBAs post owner information alongside their business licenses for public view. Additional requirements may need to be met depending on the city and state in which the DBA is operating.