The pandemic has been devastating for many. According to a Fed study, roughly 800,000 businesses closed last year. Businesses closed at a faster rate than they did during the previous recession. It was a time of uncertainty for many. But out of this darkness, came light. Business applications have had high rates every month since the pandemic started. In August 2021 alone, there were 427,842 new business applications filed in the US. Seeing that hundreds of thousands of people are aspiring business owners, many would be required to register for a DBA seeing that most states require it. This article will explore the benefits of getting a DBA.
Firstly, what is a DBA?
DBA stands for “doing business as”. This business form is mainly used by sole proprietors who would like to name their business a name different to their personal name. Seeing that getting a DBA is a simple process, entrepreneurs using this business form are able to save time and money. DBA’s are also able to be converted into an LLC or corporation in the future if the entrepreneurs choose to do so.
This business form is also popular in LLCs and corporations that would like to use a different name. Already established businesses are able to register for a DBA, different from their name, when branching out into new industries or when expanding into other states. Entrepreneurs should note that DBA’s do not offer what corporate structures do, such as limited liability or legal protections.
Most states in the US require businesses to get a DBA. But 13 of these states require businesses to register for DBA’s at local levels, rather than at state levels. When registering at local levels, business owners would have to obtain DBA’s from their country clerk, while business owners would have to get a DBA from the Secretary of State when registering with the state. The states which require local level registrations are:
- Alabama
- Alaska
- Arizona
- Delaware
- Florida
- Hawaii
- Kansas
- Maryland
- Mississippi
- Nebraska
- Ohio
- Wisconsin
- Wyoming
So, why do US entrepreneurs prefer DBA’s?
Firstly, DBA’s is a business form that offers flexibility. Businesses which are already established and incorporated are able to use the DBA business form to expand. If a business would like to set up a storefront in another state, but their name has already been registered in that state, the business could get a DBA to operate in the specific state. If businesses would like to expand into a different industry, they could also get a DBA. This is necessary seeing that “Quadbikes Incorporated LLC” would not be suitable if the business decides to open a coffee shop or clothing store.
Secondly, DBA’s do offer protection. As said earlier, they do not offer limited liability of legal protection, but they do offer privacy protection. If businesses advertise the business with the owner or owners’ names attached, their privacy won’t be protected. In these cases, owners would often be directly contacted by clients or salespeople. If business owners got a DBA, this would be prevented.
Thirdly, this business form allows business owners to target their branding in a range of markets. If business owners have businesses in a range of different industries, getting DBA’s would allow the owner to have a different name for each business. This would also be beneficial to owners of a sole proprietorship and partnerships to create creative and appealing names. Seeing that the names of business owners do not hold marketing power, unless the business is owned by a celebrity, getting a DBA would be able to offer more marketing power.
Fourthly, getting a DBA is a legal requirement in many states. Therefore, getting a DBA allows a business to remain compliant with its state. If a specific state requires a DBA and a business does not have one, they would possibly file a fraud lawsuit.
The bottom line
DBA’s offer a range of benefits which proves why many businesses prefer getting a DBA, even when it is not legally required. For business owners interested in getting a DBA, they have to follow a few simple steps. By visiting or contacting the local clerk’s office, business owners would be able to get a DBA certificate. In certain states, this DBA certificate may be called a “fictitious name filing,” “fictitious name registration,” or an “assumed name certificate.” Getting a DBA proves to be even simpler, as they are able to be obtained online.
