The purpose of registering a DBA name is to notify the public that a particular person or business entity is conducting business under a name other than its legal name. Assumed name (DBA) laws are consumer protection laws.
For example, business owner John Smith might file the Doing Business As name "Smith Roofing." Corporations and limited liability companies (LLCs) may register DBA names for specific lines of business. For example, Helen's Food Service Inc. might register the DBA "Helen's Catering."
When starting a business, it is usually better to choose a formal business structure like an LLC. You won't need a DBA for branding because you will use your LLC name, and you will have personal liability protection. LLCs also offer increased business credibility and can help boost your business credit record.
A DBA (also known as a “sole proprietorship”, “Doing Business As”, or a “Fictitious Name”) is a business that is not separate from its owner, merely a different name that the business owner operates under.
Is DBA and sole proprietorship the same? Technically speaking, no. A sole proprietorship is a legal structure (like LLC or Corporation), and a DBA is not. A DBA is a legal requirement to operate your business with a trade name or a pseudonym different from your registered legal name.
An individual or a business entity can obtain one or more DBAs. If you are conducting business in your own name, you are a sole proprietor. If you want to do business under a name other than your legal name, then you can register a DBA.
Jan 15, 2020
It “passes through” the business and does not need its own tax return to be filed. Sole Proprietorship DBAs report all business related income and losses on Schedule C. Schedule C is filed along with the Form 1040.
It is free to employ others to work in the business. Commonly, owners operate their sole proprietorships under their personal name. However, they may use an assumed or fictitious name, also called a doing business as (DBA) name, by filing paperwork with the appropriate jurisdiction.
Yes, you can open a business bank account as a sole proprietor using a DBA. A sole proprietorship is a business owned by one person where there is no legal separation between the owner and the business.
As a sole proprietor, you can hire your spouse to be an employee. But, your spouse must be a legitimate employee. Don't try to sneak around the IRS by adding your spouse as an employee when they aren't doing the work of a legitimate employee.
One of the key benefits of an LLC versus the sole proprietorship is that a member's liability is limited to the amount of their investment in the LLC. Therefore, a member is not personally liable for the debts of the LLC. A sole proprietor would be liable for the debts incurred by the business.
An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN. An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number.
Here are some of the top disadvantages of sole proprietorship to consider:
The sole proprietorship form is ideal for small business owners who want to retain managerial control over their companies. Sole proprietorships are never subject to acquisitions like corporations, and strategic control cannot be transferred without the full consent of the business owner.
As a sole proprietor you must report all business income or losses on your personal income tax return; the business itself is not taxed separately. (The IRS calls this "pass-through" taxation, because business profits pass through the business to be taxed on your personal tax return.)
Owners of a one-person business, known as sole proprietors, have the option of using either their own Social Security number or a federal Employer Identification Number for tax filings and other official purposes.
Some examples of famous companies that started as sole proprietorships include:
Sole Proprietorship: The simplest type of business. Sole proprietorships are owned and operated by a single person and are very easy to set up.