When starting a new business, expanding a pre-existing one, or starting a freelance job, you have several options on how to register your business under your state, including “doing business as” (DBA) or a limited liability company (LLC). Both of these options allow you to conduct business under a different name. However, it is important to distinguish between the two because an LLC is an official business structure, and DBA only allows you to do business under an assumed name.
What is a DBA?
A DBA is a fictitious name registration you file with your state to perform business activities under a new name. Suppose your company is a sole proprietorship or a limited partnership. You must submit a DBA application if you want to offer your services under a name different from the business owner’s legal name. On the other hand, if you own an LLC or a corporation, you need to file a DBA only when you want to provide services under a name different from the name listed on the paperwork used to establish your business.
What is an LLC?
An LLC is a business structure that requires you to submit formation paperwork, often referred to as the Articles of Organization, to the state for it to be legally recognized. Once established, the state recognizes the company as a separate entity from the business owners, protecting the individuals running the company from being held personally liable if the LLC has debts, goes bankrupt, or has other liabilities.
What’s the difference between a DBA and an LLC?
An LLC is an official business structure that provides many benefits to it’s owners that a DBA does not provide. This includes the following:
- Protects you from being held personally liable for business debts
- Provides trademark protection of your business name
- Different tax options, including pass-through and corporation tax
With these benefits come several responsibilities and maintenance costs for running an LLC. When filing the paperwork to establish your LLC, you must ensure that you are filling out and submitting all necessary paperwork required by the state you are filing with. These include the following responsibilities:
- Submitting filing fees and required paperwork in the state you are filing in
- Sending in your annual report by the deadline to prevent the dissolution of your LLC by the state
- Filing taxes to ensure your LLC is in good standing with the state and to take full advantage of the benefits that come with creating an LLC
Is an LLC business structure right for me?
This is an excellent option for anyone with a growing business who wants to separate their personal assets from their company. LLCs can be used to run and own almost any type of business.
Certain businesses in specific industries are restricted from operating as LLCs, including banks and insurance agencies. Suppose you want further information on whether an L.L.C. is your best business structure. In that case, you should contact a business attorney to determine the best business structure for your company. To ensure you follow your state’s specific guidelines and restrictions, find an attorney with experience operating in your given state.
Why would you use a DBA?
There are two main reasons for utilizing a DBA. These include the following:
- If you want to operate multiple businesses under one established LLC. Say, for instance, you have a pet store named “Purrfect Paws Pet Store LLC.” You want to branch off and create a business that provides grooming services, “Purrfect Paws Grooming.”
- If you want to expand your business and operate it under a different name to connect more locally, you must submit a DBA registration with the state you work in. An example is if you own a wine store called “Texas Fine Wines LLC” and you decided to open one in New Orleans, you may want to use the name “New Orleans Fine Wines.” You would then be known as “Texas Fine Wines LLC, DBA New Orleans Fine Wines.”
Can an LLC obtain a DBA?
If you own an LLC, you can register for a DBA. All you need to do is provide your LLC legal name.
How to register a DBA as a pre-existing LLC?
The first step when registering a DBA is determining where you want to open your business. You must apply with the specific state you are working in. There are various DBA forms, you must use the one listed on your state government’s website. When you file this application, you need to provide your LLC name. There are restrictions on what name you can use. If the assumed name you want to use is already registered under another business with the state, you cannot use it. To prevent forfeiting fees, perform a business search to determine whether your desired name is available. You will most likely be required to pay a registration fee typically less than $100.
In certain states, you may need to publish a notice in an approved newspaper to begin using your DBA name. If your state requires a publication, you can typically find a local newspaper that offers lower costs for publication than other newspaper types.
How to create an LLC?
Step 1: Choose your business name
Requirements for your L.L.C. name vary from state to state. In general, the name must include the phrase “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.” Your company name must also be distinguishable from any other L.L.C., corporation, or limited partnership names already filed with the state. You can check whether your desired business name is still available before you submit your articles of organization with the state by doing a business search.
Step 2: Choose a registered agent
In most states, you must have a registered agent listed on your formation paperwork.
Registered agents have several duties that include maintaining your business address, receiving service of process for the business, receiving other official paperwork on behalf of the business, and forwarding legal papers promptly to the owners. The registered agent must be a state resident or an entity with the state you are registering with.
Step 3: Operating Agreement
Operating agreements are often not required to be legally filed. Nevertheless, it is strongly recommended you do so anyway as it can provide many guidelines to follow in cases of ambiguity or disagreement between members.
Step 4: Articles of Organization/Formation
The Articles of Organization or Certificate of Organization is part of the formal legal document needed when filing for an LLC at the state level. It creates the rights, duties, liabilities, and other obligations between each member and between the members and L.L.C. You need the following information to complete the form:
- Entity Name
- LLC address
- Service of Process Address
- Registered Agent
- Signature of LLC owner
Make sure to include the filing fee along with the paperwork.