What’s a DBA?

It’s common for small business owners to wonder, “What’s a DBA?” This term stands for “doing business as” and refers to situations when a business operates under a name different from the one officially registered with the state.

Here’s an example of a DBA in action. Let’s say that Kathy Jackson in Arizona wants to start an accounting business. She files to become a sole proprietorship: a business structure named after the individual who owns the business. If she names her business Kathy Jackson Accounting Services, she won’t need a DBA because her business mirrors the legal name she used when registering her sole proprietorship with the state of Arizona. But if she wants to use a name like World’s Best Accounting Services or Healthcare Accounting Pros, she’d need to register for a DBA because her business name differs from the name Kathy Jackson.

In most cases, those who own sole proprietorships and name their business something other than their legal name will need a DBA. Same goes for corporations and LLCs that want to do business under a different name than the one they used when originally filing their paperwork with the state.

You should note that some states don’t require you to register a DBA. Given this wide range of requirements, you’ll need to do your due diligence to make sure you take the correct steps for your location.

So how will a DBA help your business? The main advantage: you can come up with a name that’s as specific and descriptive as you could ever want. In the example above, if Kathy Jackson were focusing her accounting work in the healthcare industry, she’d probably want to include that in her business name instead of using the generic “Kathy Jackson Accounting Services.” By using “Healthcare Accounting Pros,” her skills are highlighted front and center.

The related benefit to a DBA: when you use a creative name such as Healthcare Accounting Pros, you don’t need to register for a new legal entity. You can just get a DBA for the sole proprietorship, corporation, or LLC you’ve already created.

Obtaining a DBA can be a mildly difficult process in some states, but the benefits often far outweigh the negatives. It’s crucial to consider the choice from every angle before taking that first step.

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