Why do companies use dba

The same is true if your partnership, LLC, or corporation wants to do business under a name different from its legal name. This would be the case if, say, the Veggies R Us corporation decided to spin off its ice cream business, naming it The Cream of the Crop.

The Cream of the Crop would need a DBA filing since the name being used is different from its parent corporation. For more information about where to file, check here.

Get free online marketing tips and resources delivered directly to your inbox. In the meantime, start building your store with a free day trial of Shopify. Try Shopify free for 14 days, no credit card required. By entering your email, you agree to receive marketing emails from Shopify. While a DBA may be right for your business, it's important to understand how they work and when to use them. A DBA is often used by sole proprietors who want to operate their business under a business name that is different from their individual name.

In most states, registering a DBA name gives your business the ability to use a fictitious business name; however, keep in mind that a DBA name is not the same as a legal business entity and it does not give you the same limited liability or legal protections as an LLC or other corporate structure for your business. There are two main situations where business owners would want to use a fictitious business name or DBA:.

There are many reasons to use a DBA for your business, and they offer a lot of benefits. It's important to keep in mind though, that a DBA doesn't replace the benefits you get with a legal business entity. But, when used in conjunction with your legal structure, a DBA can help your business grow and thrive.

DBAs and legal formation are not mutually exclusive, so to avoid these pitfalls, simply ensure you have a legal entity in place before filing a DBA. Note that if your business expands to other states, you'll need to file a foreign qualification in each new state to avoid steep penalties. Your business's legal name in the states where you qualify will be the name on your company's certificate of authority.

If you want to use a different name, you'll have to register a DBA in that state. You can file a DBA in order to transact business under your company's domain name. This is useful in the event your company name is not available as a domain name, or if you want to expand your business into e-commerce. It's also relatively inexpensive. No, a DBA is not a legal entity. If you register a DBA without first forming some type of legal entity, your state will automatically recognize your business as a sole proprietorship.

Your business structure will determine how often your business has to file taxes. Sole proprietorship file taxes annually. Partnerships, LLCs and corporations submit annual tax returns to the IRS but may also have to pay quarterly taxes if they expect to owe taxes at the end of the year. Businesses must also submit tax returns to their state, and some states may require quarterly or annual tax returns.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet. Which businesses need a DBA? Compare Cards. How to file a DBA name. Advantages of filing a DBA. The bottom line.

Show More. What does DBA mean? Sole proprietorships and partnerships. Other legal entities. But you chose your business name for a reason—why use a DBA? Rather, the DBA is merely a description of the person or corporation who does business under some other name. Your bank may require you to provide a DBA certificate at the time of your account opening.

DBAs also allow you to pick a business name that reflects your brand identity. There is one major restriction: DBAs cannot include language that may lead customers to think that the unincorporated business is a corporation.

Of course, this exception does not apply if the company is a formal corporation legally registered with the Secretary of State. This limitation exists to prevent businesses from using DBAs to falsely indicate that they have incorporation status. Procedures for filing a DBA vary among states. Some business experts recommend that all small businesses should register their DBAs, regardless of whether you are legally required to file.

Multiple businesses are allowed to go by the same DBA name in the same state, so if you find out your DBA is already in use, you may still be able to use some parts of the name or pick a different name entirely. Some jurisdictions require businesses to publish their prospective DBA names in the legal notices of a local newspaper.