Understanding Business Structures: DBA VS LLC
A DBA, or “doing business as,” allows a business to operate under a name other than its legal name. An LLC, or limited liability company, is a legal business structure that offers liability protection.
DBA Simplified
- DBAs are simpler and cheaper to set up.
- With a DBA, there is no legal separation between personal and business assets. The owner has unlimited personal liability.
- Multiple businesses can register the same DBA name.
- Taxes for DBAs pass through to the owner’s personal return.
The Advantages of LLCs
- LLCs require more paperwork and fees but protect personal assets.
- An LLC protects owners’ assets from business debts and lawsuits.
- LLCs provide exclusive rights to the business name in a state.
- LLCs have more complex tax requirements.
Consider liability risks and costs. LLCs limit liability but have more paperwork. DBAs are simpler with lower costs but no liability protection.
Review options thoroughly and consult experts. The choice impacts operations, finances, and future plans. Choose the structure to help your business vision succeed.
DBA (sole proprietorship) can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business.
Key Characteristics of DBA
- A DBA doesn’t form a legal business entity, but it allows you to legally conduct business under a different name.
- Those operating a sole proprietorship must use their legal name unless they have registered a DBA.
Business Name Registration
Changing the name of your LLC is difficult. Filing for a DBA is fast, easy, and usually inexpensive. Most states require DBA registration before doing business under any name other than your legal name.
Essential Principles of LLCs
- “Opting for Limited Liability Companies (LLCs) presents entrepreneurs with a flexible and protective business framework.”
- The biggest difference between the LLC name and a DBA name is the protection of the name.
Filing a DBA is fairly simple: File a certificate form with the county clerk. Some states may require you to announce your DBA in a local newspaper.
Trademark Protection. An LLC formation automatically offers you trademark protection within the state, county, or city.
When choosing a DBA name, be creative while adhering to local registration procedures.
In the decision between a DBA and an LLC, consider the long-term implications for your business. With the right choice, you set the course for success.