Alrighty, friend. When it comes to dbas, there’s a lot to unpack.
Let’s start with what a dba is not. DBA stands for “doing business as.” I, Braden Drake, am doing business as Your Legal Gay Best Friend. That’s my biz name.
What a dba is not is a type of legal entity.
I see the question in Facebook groups ALL. THE. TIME. “Should I get an LLC or a dba?”
When business owners ask this question, what they really mean to be asking is “Should I get an LLC or remain a sole proprietorship.”
Don’t worry. You’re not a dumb, dumb if all this shit is new to you. I didn’t even learn it until after law school when I started my biz.
When you go into business and don’t file any paperwork with the state to become an LLC or a corporation, you have a sole proprietorship (or a general partnership if you are not a solo). A dba is a different thing.
A dba, technically, is not a license or document either.
People will say “go get your dba.” Well you don’t really get a dba. The dba literally means that you’re doing business as some name that’s other than the name of the owner.
The owner of the business can be a person, you, or it can be a legal entity, your LLC.
When a person or entity is “doing business as” something other than their or it’s full name, they need to get a Fictitious Business License. This is what we often confuse with a dba. In the rest of this post, I’ll also call the fictitious biz license an FBL.
So, here’s what you actually need to ask yourself.
Am I doing business as something other than my full personal name or my legal entity’s name?
If you have a sole proprietorship, we look to your personal name. If you have an LLC or corp, we look to your entity name.
Let’s break this down with an example.
Carol Ann Smith is a sole proprietor. Her business name is Carol Ann Photography. Does she need a fictitious business license?
First, ask if she a sole prop or does she have an entity (LLC or Corp)?
She’s a sole prop. Therefore, her business name must fully identify her with both first and last name in order for her to not require a fictitious business license.
Second, ask whether the name fully identifies the owner.
Who is the owner? Carol Ann. So, Carol Ann Photography looks good, but looking at the name, we don’t know which Carol Ann owns the business because it doesn’t include her last name. The business name does not fully identify the owner. Therefore, Carol Ann Smith is “doing business as” Carol Ann Photography and needs a FBL.
At the point, you might be thinking “what the actual fuck?” Why is the government being such an oppressive dick towards Carol?
Here’s why. Assume you write Carol a check made out to “Carol Ann Photography.” Carol’s pumped. You’re her first client. She takes it to the bank.
The banker tells Carol “I can’t cash this or deposit it in your personal account. We also can’t use it to open a business bank account because it doesn’t have your last name on it. We legally need to see the owner of the business on the check.”
So, Carol trots down to the County’s office, and gets her fictitious business license, which states that “Carol Ann Smith is the owner of and is legally doing business as Carol Ann Photography.”
That piece of paper stamped by the county acts an official ID stating that Carol is the valid owner of the business.
Let’s now give an even more obvious example. Barb is the owner “Lighthouse Planning.” You now write Barb a check, and she goes to the bank. Barb doesn’t have any legal documents. The banker is going to say “ok great Barb. How’s the fuck am I supposed to know that you are even a planner let alone own this company. Did you steal this check from someone?”
You get the picture.
Now let’s chat about dbas and LLCs for a sec
I have wrestled with the following question many, many times. “Do you need a dba when you are operating under an LLC name that is different from your personal name.”
Remember, what is really being asked here is “do you need a fictitious business license?”
Example: Barb goes and forms Lighthouse Planning LLC. You write a check to Lighthouse Planning LLC
That check doesn’t identify the human behind the biz, Barb, but consider who the owner of the bank account is. It’s the LLC. An LLC is like its own person.
So, Barb can march her way to the bank with her check and her Articles of Organization (the legal doc that shows proof of her LLC), and deposit that check. Like the Fictitious Business License, the Articles will show that Barb is the owner of the LLC. If the check matches the LLC name, she can make her deposit.
Here’s where it can be tricky
If Barb makes her LLC name Barb’s LLC, then Lighthouse Planning is nowhere to be found on the LLC docs.
Now, Barb’s LLC is doing business as Lighthouse Planning. The LLC would need to get a Fictitious Business License to show it is doing business under that name.
This is where the whole multiple dba thing comes into play
Barb’s LLC can have 4 websites each with different names. She’s doing business under multiple names and might need licenses for each.
Whether this is a good idea is a whole different blog post.
Ok, so what about all that publication and newspaper bullshit?
Remember that bit above where I said you don’t need a FBL if your LLC operates under its LLC name?
I wrote that in another post, and another attorney had the audacity to tell me I was wrong on a Facebook post! I secretly hope that she reads this because I’m petty.
I double checked. I was right.
But here’s where the confusion lies.
Aside from the banking bit, FBLs (or dbas if we still want to call them the wrong thing) do serve a second purpose.
Back in the day, businesses would choose their business name. They’d get their FBL to stake claim on their dba. Then, they’d publish the name in a local newspaper. This was and to some extent is still “required.”
Every morning, biz owners would read their paper and make sure no other local businesses were gettin all up in their space with the same name in the same area.
Most counties and websites will tell you that you have to have a dba if you’re operating under a name other than your own personal name, but I’m not sure you really do.
Here’s the deal. If you call your local county, there’s a good chance you will get different answers from every person there on what you “have” to do.
I have talked to several folks from several counties myself.
Here’s a paraphrased bit of info one nice lady at the San Diego office told me.
If you need the Fictitious Business License for banking, then you obviously need it. As far as publication and all that jazz, you are technically supposed to do it (if your business name doesn’t fully identify the owner like we discussed above), but no one is auditing that shit. Send me a message if I’m wrong on that, and you have ever gotten a letter.
A FBL can show evidence that you are using the name and have a right to it, but it is not a Trademark.
Without a Trademark, you have a right to use your name within your geographic area if you can show use in the area before someone else. Having an FBL can help demonstrate that. But if you want to protect your name outside of your area, you need a Trademark.
Nowadays, many of us are operating online, so having brand protection just in our area is not as key as it maybe once was. If you want brand protection, for sure get your FBL, but don’t stop there. You need an attorney to do your trademark.
Choosing a DBA is different in three types of circumstances.
(1) When you have a sole prop or a general partnership you either do or do not need a DBA depending on your chosen business name. It’s a yes/no circumstance.
(2) Once you have an LLC, it’s more of a business decision. What do you want your registered name to be in comparison to your operating name?
(3) As your business/businesses start to expand, it’s a business decision as to whether you want to have multiple DBAs under one entity or form separate entities. That decision should be made only after considering both the marketing and liability concerns. The liability issue is a big one and should be carefully considered.