A sole proprietorship has one owner. To operate under a name different than the owner’s, sole proprietorships need to file a DBA (Doing Business As). A DBA is legally required to operate a business with a trade name or pseudonym different from the registered, legal name.
Filing a DBA allows sole proprietorships to market under a specific business name rather than the owner’s. This can help convey business values and offerings. A DBA does not change the legal structure but can provide marketing advantages.
Sole proprietors must register the DBA name with local government before using it. This identifies the responsible party if company issues arise. They must also use the DBA name on all related forms and applications.
DBA Registration and Usage
Sole proprietorships can have multiple DBAs and in multiple states if properly registered. Owners file tax returns under their personal name but list the DBA on accompanying forms.
Pros and Cons of a Sole Proprietorship
A sole proprietorship’s advantages include ease of formation and the owner retaining sole profit control. The main disadvantage is unlimited personal liability for all losses and liabilities. Profits are taxed through the owner’s income tax return.