Difference Between Sole Proprietorship and DBA
A sole proprietorship is owned and operated by one person. Sole proprietorships may use the owner’s name or a fictitious name (DBA). Using a DBA does not create a separate legal entity. Sole proprietorships are popular due to the simplicity of getting started. The owner typically signs checks, contracts, and leases in their own name. If operating under an assumed name, the owner can register a “doing business as” name and open a business bank account with the DBA, receiving payments under the fictitious name.
Sole Proprietorship Details
A sole proprietor who includes their last name in the business name does not need to file a DBA statement. When filing a DBA, it’s normally circulated to let the community know who is behind the business since a sole proprietorship is unincorporated. Several sole proprietors operate under their legal name, so a trading name isn’t always necessary. Due to little regulation, sole proprietorships are the most common and easiest business type to establish.
Assumed Name and DBA
An assumed name is also called a DBA name. Regardless of your business form you may need to comply with your state’s assumed name statutes if using any name other than your legal name. For sole proprietorships, the assumed name certificate serves as official proof of the right to use and conduct business under an alias or “DBA” name. It must be filed where you will do business and usually requires a fee.
- DBAs are typically registered at the county and/or state level. One rule is that your assumed name cannot include words like "Incorporated" or abbreviations like "Inc."
- Sole proprietorships don’t offer liability protection. A DBA is less costly than an LLC but offers less protection too.
- Expanding a business is easier with an LLC.