Does an LLC Need A DBA?
A store front with an open sign in a lattice window with twinkle lights in the backgroundDifferent business structures exist for a reason, and a business owner may choose one or another for various reasons, such as the number of people employed by the company, tax purposes, organizational structure, interstate commerce, and more. Many business owners do decide to add a DBA to their LLC, and there are pros and cons both for adding a DBA and for not doing so. If you are wondering if a DBA is the right choice for your LLC or have any other questions regarding your business structure, our New Small Business Consultation & Filing Package may be right for you. We will discuss your specific situation and help you decide what business structure is right for you and your business as well as perform all the research and help you fill out the paperwork! Learn more about this service and read on for more info about LLCs with DBAs.
DBAs - also sometimes called "tradenames" or "fictitious" names - can sometimes communicate better what your company does in a way that your regular LLC name can't. DBAs can be modified to reflect your industry advertising standards or attract new customers by using a unique name that's totally different from your competitors. From a marketing perspective, adding a DBA to an LLC can be a great idea, particularly if your LLC name is clumsy, hard-to-pronounce, hard-to-spell, generic, or confusing, and you can operate multiple DBAs under a single LLC. The right DBA can help you stand out in a crowded marketplace, perhaps even letting your potential customers know that you offer something that your competition doesn't.
But do you need a DBA for your LLC? The short answer is no, but there are good arguments both for and against adding a DBA to your LLC. There are differences between an LLC and a DBA, for instance, the fees usually vary by state, county, and city, but filing a DBA is almost always less expensive than filing for an LLC, and, while LLCs have to be renewed yearly, DBAs do not.
Some cities require you to publish a notice of DBA in the local paper, and the taxes for DBA are simpler than for an LLC, as you simply report your DBA's income as your own on your personal return. DBAs can also protect your privacy in that an LLC reveals your full, legal name, while a DBA doesn't.
Conversely, a DBA is simply a brand. It does not function as a legal entity or a business structure, and it does not protect your personal assets if your business is sued. Additionally, you don't own a trademark on your DBA name, so any business, even another local one, can operate under the same name as your business which can be confusing for customers, clients, vendors, and even the government. You will also need to file for a DBA in every state where you do business individually, and this adds to your startup costs.
If you are starting a small business, getting a DBA may be right for you if you have several areas or industries that you do business in or have multiple brands to do marketing for, but, ultimately, there are no real business or tax related reasons that make a DBA necessary. If you have more questions or still aren't sure what type of business entity you need to form for your new startup, we may be able to help! Make an appointment to talk about your new small business with our New Small Business Consultation & Filing Package!