Transferring DBA Ownership in California
To transfer ownership of a DBA in California, create an Operating Agreement allowing owners to transfer shares to third parties or LLC members.
Forming an LLC from a DBA
To turn a DBA into an LLC, you must file articles of organization with the state. This formally registers your business as a separate legal entity and provides liability protection.
DBA vs. LLC
The biggest difference between a DBA and an LLC is liability protection. A DBA does not provide liability protection while an LLC shields owners from creditors and lawsuits.
-
Registering a DBA name
Registering a DBA name notifies the public that a person or business is conducting business under a name other than its legal name. Assumed name (DBA) laws are consumer protection laws.
-
Forming an LLC from a DBA
To form an LLC from a DBA, file articles of organization with the state to formally register the business as a legal entity. This provides liability protection.
-
Reasons to Convert a Sole Proprietorship
Some reasons to convert a sole proprietorship into a private limited company: To limit liabilities since sole proprietors have unlimited liability while a company’s is limited to assets. To have a separate legal entity that can sue and be sued and own property in its own name.
-
How to Establish a Sole Proprietorship
Sole proprietorships offer simplicity but unlimited liability while S corporations limit liability but require more complex setups. Sole proprietorships mean self-employment tax on all income while S corporations allow pass-through taxation to save on taxes. Factors like risk tolerance and growth aspirations matter. Defining business structures is key.
-
Sole Proprietorship Accounting
Sole proprietorship accounting should track the owner’s cash withdrawals and contributions to operating funds. The owner is fully liable for all business liabilities since no separate legal entity exists. Challenges: Sole proprietors often struggle to raise money since they can’t sell stock shares.