What is a DBA and why might your business need one?
Updated March 22, 2024 | Published December 19, 2023
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Categories:
- Business
DBA Definition
DBA is an acronym meaning “Doing Business As.” It’s a way to label your business with a name that is different from your legal business name. It does not provide protection for your business name so that others can’t use it. A DBA is also not a type of business entity like a sole proprietorship or LLC.
Applying for an entity name or trademark will protect your business name at a federal level. Remember when choosing a DBA name that you cannot choose a name trademarked by someone else. So, before you choose your name, do your research to make sure it isn’t already being used.
How to start a DBA
In Massachusetts, to start a DBA you need to apply for a business certificate in the town or city where your business is located. In the City of Worcester, there is a certificate form for sole proprietorships and partnerships, and a separate form for corporations and LLCs.
The certificate serves to create a public record of your DBA name but is not a tax designation. Businesses operating as DBAs will need to apply for an Employer Identification Number (EIN) also called a Federal Tax Identification Number. Getting a DBA and EIN allows you to open a business checking account.
Why might your business need a DBA?
There are several reasons a business owner might want to operate under a DBA name. Each reason is unique to the business’s needs, but here are a few examples:
Marketing
Joe Smith has a landscaping company with the legal name “Joe Smith Landscaping Services”, but he wants to operate under the name “Green Thumb Landscaping” for branding and marketing purposes.
Brand recognition
A business with a name like “Isabella Robertson Interior Design Studios, LLC” is a bit long. So, she wants to use a DBA name that’s shorter and easier for people to remember and recognize. She applies for a certificate to use the name “Home Sweet Home Design” instead.
Expansion
A pizza shop called “Anthony’s Pizza” had one location when they started but has now expanded to include new locations in different towns. To keep each shop’s revenue in separate accounts, they use a DBA name to define which location the account is for. Like “Anthony’s Pizza, DBA Anthony’s Pizza, Worcester.”
Likewise, a business registered as an LLC or Corporation may want to start a small business on the side. For example, a catering company that does dinner services could set up a DBA for another company that strictly bakes wedding cakes – “Davis Catering DBA Elegant Cakes.”
Identity Protection
If the name of the legal entity contains the owner’s name, like “Josh Miller Photography” they may want to use a DBA name to keep their identity private and operate under something like “Say Cheese Photography.”
Professionalism and Legitimacy
Sue Johnson is a hairdresser with no employees who operates at her home salon. She wants to do business as “Sue’s Hair Salon” to seem legitimate and make it easier for people to find her.
Cost and ease
Filing fees for a DBA certificate vary by town and city but can cost anywhere between $10-$100. Filing in the City of Worcester is $50. In comparison, the fee to file a certificate of registration for an LLC in Massachusetts is currently $500 with additional annual fees.
Opening a business account
A sole proprietor or partnership may want to start a DBA just to open a business bank account. A self-employed author, for example, may not want to use a business name different from their real name. However, in order to open a business account at a bank or credit union, it may be required to register a DBA certificate.
Sources:
https://www.mass.gov/info-details/starting-a-business-in-massachusetts
https://www.sec.state.ma.us/divisions/corporations/filing-by-subject/limited-liability/corporations-limited-liability-company.htm
https://www.worcesterma.gov/city-clerk/certificates-licenses/business-certificates
https://www.legalzoom.com/articles/what-is-a-dba