Overview
A sole proprietorship is a private company owned by one person. Sole proprietors pay personal taxes on profits and account for most US firms.
Importance of DBAs
A DBA (Doing Business As) provides a business name different from the owner’s, helping to attract customers and enable distinct identities. Sole proprietors often use DBAs for sales and marketing purposes. Multiple DBAs can operate under one person, although some states may limit the number.
Legal Considerations
Filing a DBA is controlled by state law, with some states requiring one registration for use anywhere and others needing registration in each locality. Sole proprietors remain liable for all debts, even with a DBA, as it does not create a separate legal entity. Income and debts continue to be associated with the individual.
Sole proprietors can open business accounts under their DBA names, accept payments under the DBA name, and may obtain an EIN to separate business and personal expenses. If a state restricts the number of DBAs, it may be advisable to consider forming an LLC, which allows multiple businesses to operate under distinct names.