DBA-doing business as

DBA refers to 'doing business as'. Below is a simple explanation of when to register a DBA.

1) Sole proprietor: You are a sole proprietor and you do not want to use your personal name for privacy reasons. You can file a DBA-doing business as with your state and register a DBA. This will allow you to transact under your DBA name instead of your name.

Eg: John Doe has a consulting business. He does not want to use his personal name in his contracts or other communications with any outside parties, therefore he registers a DBA as ABC Consulting. ABC Consulting can be used in all his paperwork and company references instead of his name.

 

2) LLC - In few situations, you do not want to create another LLC if you are adding a new line of business. In these circumstances, instead of starting a new LLC, you can create a DBA name for this LLC. This will save costs to maintain another LLC.

Eg: Same example as above. John Doe's original LLC is called ABC Technology Consulting LLC. John Doe starts a new healthcare insurance business. He can register a DBA as ABC healthcare consultants. It is not required for him to start a new LLC. He, however, needs to follow the same process i.e get necessary business permits and licenses as required for his new line of business.

Regarding the taxation for DBA, it can roll into its parent entity and all taxes are reported on the overall income or loss.

For additional questions, schedule time with your tax or legal professional on DBA formation.

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Posted In: Company Formation

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