"Doing Business As" (DBA) refers to a trade name or fictitious business name that a sole proprietor (or other business entity) uses to operate their business, which is different from their legal name. For a sole proprietorship, a DBA allows the owner to conduct business under a name other than their personal legal name without forming a separate legal entity, like an LLC or corporation.
Meaning in the Context of a Sole Proprietorship:
- Definition: A DBA is an alias or assumed name registered with a local or state government, enabling a sole proprietor to use a business name for branding, marketing, or legal transactions instead of their own name.
- Example: If Jane Smith operates a sole proprietorship but wants to run her bakery under the name "Sweet Treats Bakery," she would register "Sweet Treats Bakery" as a DBA.
- Purpose:
- Branding: Creates a professional or marketable business identity.
- Banking: Allows the sole proprietor to open a business bank account or accept payments under the DBA name.
- Contracts and Transactions: Permits the use of the business name in legal documents, contracts, or advertising.
- Legal Status: A DBA does not change the legal structure of the sole proprietorship. The owner remains personally liable for all business debts and obligations, as a sole proprietorship does not offer liability protection like an LLC or corporation.
- Registration: Requirements vary by jurisdiction. In the U.S., most states or counties require sole proprietors to register a DBA with a local government office (e.g., county clerk or state agency) if they operate under a name other than their legal name. Some jurisdictions may also require publishing the DBA in a local newspaper.
- Tax Implications: A DBA does not affect tax status. The sole proprietor reports business income and losses on their personal tax return (e.g., Schedule C in the U.S.), using their Social Security Number or an Employer Identification Number (EIN) if obtained.
- Cost: Filing a DBA is relatively inexpensive, typically ranging from $10 to $100, depending on the state or county.