dba. d/b/a, Fictitious Name, Assumed Name
Why do businesses use "dba's?" And what is the benefit of using a dba?
"dba" is short for "doing business as". In some states it is called a "fictitious name". You might set up a business under one name but as time goes on sell a product with a particular name and eventually operate under that name. For example, perhaps you started your corporation (or other entity) as "Joe's Appliance Repair, Inc." and over time began to do more and more computer repairs and started listing "Joe's Computer Repairs" on business cards, etc. You're effectively doing business under the computer name. There are a myriad of issues with using dba's or fictitious names, including:
You may have to register in the state and/or county to use a different name.
The registration may have to be renewed periodically to be valid. Example, every five years. You should be responsible to calendar that renewal.
The fact that you are operating under a dba doesn't assure that you have the legal rights to do so. All trade names, slogans, logos and related intellectual property rights should be verified and protected by your having intellectual property counsel (IP) advise you what steps should be taken. Even in the example above, the fact that the entity was formed with a similar name as the eventual dba my not give you any assurance that the legal right to use that assumed name is legally permissible. It may not be or it may infringe on someone else's rights.
If you use an assumed name will it jeopardize the limited liability protection from operating under the entity name? In the illustration above you set up a corporation using a particular name that included "Inc." at the end. If you have a corporation and operate with a name including "Inc.", "Incorporated", "Corp." etc. that puts the public on notice that you are operating as an entity with limited liability. A similar result would follow if you used a limited liability company and complied with state law as to the LLC name by having "L.L.C.", "LLC" or "Limited" (depending on state law) in the name. Now, if you start operating as "Joe's Computer Repair" with no "Inc.", "LLC", etc. in the name is the public still on notice as to your being an entity with limited liability? You need to speak with your corporate attorney on this one.
Speak to your property, casualty and liability insurance company. Confirm that no change is necessary to your policy to cover operations under this name.
If the dba relates to business in another state, there might be ways to structure the operations, perhaps through a license or new entity, to minimize your state income tax burdens. Check with your accountant.
If your business is planning to develop a new moniker, trade name, etc. it might make sense to speak with your estate planner or asset protection consultant. It might be advisable to have a new entity, perhaps a family limited partnership, LLC or trust for children or other heirs, develop those rights and license them to the existing business.
"dba", fictitious or assumed names are commonly used in business and are a great way to identify yourself to your customers and market your business, product or services. However, like many things that are perceived as simple, there could be a host of potentially significant legal and economic steps to consider.