Doing Business As (DBA)

Overview

A DBA is not a type of entity or form for operating a business. It refers to a fictitious business name that one uses to describe the business that is being conducted. It is sometimes used as if it was synonymous with a sole proprietorship and unlimited liability. For example, some incorporation services or so-called asset protection companies will refer to the risk of operating as a DBA.

In fact, any type of entity (including limited liability entities) may, and often do, file a DBA to register one or more trade names in which the entity engages in business. Here’s a common example. Paul Webb starts a business repairing computers and names his business “Elite Computer Repair.” Since this is not Paul’s legal name, he must file a DBA registering the name “Elite Computer Repair” as his fictitious business name. This is the classic use of a DBA for a sole proprietor.

As Paul’s business grows, he decides he wants to incorporate. However, he discovers that his state already lists an active corporation with the name “Elite Computer Repair, Inc.” There cannot be two corporations in the same state with identical, or substantially identical, names. Paul has built a reputation and following in his business name and doesn’t want to abandon it.
 
The solution is to form a corporation using a different name and then register the DBA “Elite Computer Repair” as the DBA of the new corporation. Let’s say the corporation name he establishes is “Paul’s Computer Services, Inc.” He files a DBA registering the name “Elite Computer Repair” as the DBA of Paul’s Computer Services, Inc. The DBA name can’t use the “Inc.” or any other corporation ending because it’s not a corporation. But Paul may continue operating as Elite Computer Repair as he has always done and is not required to use his corporation name at all with his customers or in any advertising, but may do so if he wishes.
 
Contrary to the impression created by some, Paul’s use of the DBA in this instance still provides Paul with the limited liability protection of his corporation. The only caveat to maintain this protection is that Paul must be sure that any contracts that are signed for the business are done as a representative of his corporation (e.g., Paul’s Computer Services, Inc., by Paul Jones, President) and not in his name personally.


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