What is an Assumed Business Name
An assumed business name is the operating name of a business and is different from the legal name. This is sometimes known as a fictitious business name, trade name, “doing business as” or DBA. Most commonly used by a sole proprietorship or partnership, it is occasionally used by corporations and LLCs.
Why use an assumed name?
The requirements vary by state but some of the most common reasons to register a DBA include:
The registration of a fictitious business name is required in most states. This filing connects the name of a business to the name and location of the business owner.
Opening a bank account
Most banks will need the assumed name statement before opening a business checking account. The bank uses this to verify you are doing business under a different name. Without this account, the business owner can’t take payment under the business name.
Setting up vendor accounts
Before buying items for resale, many vendors will ask for the DBA filing to verify the existence of the business. Additionally, vendors may ask for a resale certificate, business license and/or an Employer Identification Number (EIN).
When is a DBA needed?
Not all businesses need to register for a DBA name and will depend on the state of formation and legal entity.
Sole proprietorships and partnerships
In most states, a sole proprietor or partnership will need to register for a trade name if they are doing business under a name other than the owners full first and last name.
One example would be Bob Jones operating his cleaning business. If he were to only operate as Bob Jones, there is no registration but if he were to name his company “Cowboy Cleaners”, he would need to file for an assumed name certificate in most states.
Corporations and LLCs
Unlike sole proprietorships and partnerships, the corporation and LLC are legal entities separate from the owner(s). By creating this legal entity, a unique name is selected at the time of formation and no DBA is needed.
Corporations and LLCs may also operate under a different business name. One example is an LLC investing in real estate that also wants to offer property management services. This would allow them to do so without having to create a new business entity but still have liability protection.
Restrictions on registering fictitious business names
There aren’t many restrictions on what words aren’t allowed in most states, with the primary one being the use of entity designators. These are words such as Incorporation, Corp, Limited Liability Company, LLC, etc. that denote a type of registered business entity.
In most states there isn’t a limit to multiple businesses having the same DBA name. A few states require a unique name and you will want to search before registering. Don’t mistake this restriction as protecting your business name as it offers little to no protection. To keep others from using your name, read more about trademarks.
How do I get a DBA?
The process of filing a DBA varies by state and the entity being formed.
Sole Proprietorships and Partnerships
Generally, sole proprietors and partnerships register their business name in the county (sometimes the town or parish) where the business is located. In some states, a separate filing will be necessary in each county where the business physically operates. To register, the business owner files with the County Clerk’s office (sometimes called the County Recorder or Town Clerk). Sometimes, the statement of intent to use the name has to be published in a newspaper that has distribution in the county where the name is being filed.
Alternatively, a few states have a statewide registration through the Secretary of State or similar agency.
Some states offer a quick turnaround, but in a state with the publishing requirement, it may take up to 60 days (often 2-3 weeks) before the assumed name can be used. Before running the ad be sure to check with the County Clerk first as there may be restrictions on allowed publications and posting requirements.
More information on filing can be found in Step 3 in our Guide to Starting a Business.
Corporations and LLCs
Corporations and LLCs wanting to use a fictitious business name will typically file a form with their Secretary of State.
Cost to file an assumed name
To cost in each state will vary but the filing fee typically ranges from $10 to $100. This is often a onetime cost, but a few states require a periodic renewal.
Some states also require publishing a public notice in a local newspaper that can increase the cost by another $20 to $100. The publishing fee is a onetime cost.
What information is needed to file?
Commonly the name of business, type of business (sole proprietorship or partnership), principal business address (PO Boxes are not usually allowed), owner’s names and proof of publication are needed in most states.
The fictitious business name statement is notarized and then a certificate is provided to the business.
Does a DBA require an Employer Identification Number (EIN)?
The DBA has no relation to whether a business needs an EIN. A partnership will always need one, but a sole proprietorship with no employees will use the owner’s Social Security Number.