Understanding the Role of a DBA: Is It Essential for Your Business?

Are you using a fake business name? If you’re a sole proprietor running a business under a different name, you might be breaking the law in your state. Many business owners or self-employed individuals use a business name even if they aren’t a corporation or LLC. If you do, you’ll likely need to register it according to state law. This process is usually simple and can prevent potential legal consequences.

Most states require you to register your business name through a DBA (Doing Business As) filing, either at the county or state level. This ensures public protection by allowing individuals to know who you are if you’re operating under a pseudonym. You’ll need to provide your real name, address, and proof of identity when you file.

However, if your business name includes your real name, like “John Smith Accounting,” you may be exempt. Independent contractors invoicing in their own names also don’t need to register. But names like “Smith Projects” are considered business names and must be registered.

Using a business name has its perks, like looking more professional on invoices. More importantly, if you want to open a business bank account to manage your finances, banks usually require a DBA.

Some states, such as Alabama, Arizona, Kansas, New Mexico, and Tennessee, don’t mandate registration. Still, you can register with the Secretary of State’s office to protect your business name from being used by others. State websites often have guides for business filings, and the Small Business Administration provides a list of these sites to help you get started. Terms for business names can differ – you might see “trade name,” “assumed name,” or “fictitious business name.”

If required to file in your county, check the county clerk’s website to see if your desired name is available. Many processes can be completed online. Some states need a notarized proof of identity or public notice in a local newspaper. Fees are usually low, and registration lasts a long time. State laws often require you to register as soon as you start using your business name.

If you don’t file a DBA, you could face penalties. For example, in Colorado, your business could be shut down, and in New Hampshire, you can’t advertise without a DBA. Missouri may charge you with a misdemeanor and a $1,000 fine, while Pennsylvania fines up to $500.

Not registering means you might not be able to enforce contracts signed under that name. If you’re cheated on an invoice or don’t receive goods, you might not be able to seek court damages. State remedies won’t assist unless your business name is registered.

If you’re unsure whether you need to file a DBA, consult a professional, as this article isn’t legal or accounting advice.