A common question business owners ask is whether they should run their business as a sole proprietor, under a DBA, or form an entity such as an LLC. I’m going to break it down for you in a 3-part series.
PART 1 – DBAs:
A d/b/a (doing business as, sometimes also known as a business certificate) is NOT a legal entity. Both a sole proprietor (which is an individual running a business without any kind of legal entity) or a legal entity (such as an LLC, Corporation, or Partnership) can file for, and operate under, a d/b/a. In simplest terms, a d/b/a is a fictitious name. So, for example, I could be Lisa Sigman, d/b/a Legal Wonder Woman (I couldn’t actually use that name because I’d be violating DC’s trademark, but it would be cool if I could!!), or Boring Business Name, Inc., d/b/a Super Sexy Catchy Cool Business ®.
A d/b/a is filed in the city or town where your primary place of business (PPOB) is located. This is either the address you indicated as your PPOB when your entity was filed, or if you aren’t an entity, the address where you physically sit when you do the majority of your work – if you’re a door-to-door saleswoman with no desk, then determining where to file your d/b/a depends (I had to throw a lawyerly ‘it depends’ in here somewhere!).
Worth noting, that state law requires that all businesses file a business certificate, but some municipalities may carve out an exception to that if you are an LLC or Corp. Typically, the fee is nominal ($20-$25) and lasts four years. And this filing is absolutely one you can handle yourself.
A d/b/a provides NO legal protection whatsoever. It simply alerts the town or city where you operate that you exist and gives you the opportunity to operate under a different name (if you choose). That latter part is especially useful for three things:
1) if you are a sole proprietor but want to be able to receive payment in your business’ name as opposed to your personal name (in which case share your d/b/a certificate with your bank),
2) if you created an entity with one name but have rebranded (and haven’t we all rebranded at some point, or several times in 2020??) and now want to operate under another and do not want to go through the hoops of creating a new entity, or
3) if you are operating a new business venture under your existing entity but under a different brand (e.g. you started Mastermind Life Coaching® Inc., but now also want to design and sell adult coloring books under the brand Color Yourself Calm™ but keep it all under the corporation).
Here’s the TL;DR: Yes, you can get a d/b/a; yes, you can file it yourself; some towns require all businesses to file; and no, it doesn’t give you an iota of protection.
Next up: PART 2 – Legal Entities