We recommend that every business owner opens a business bank account separate from their personal bank account. That's because separating your business and personal finances will protect your personal assets in case of a lawsuit, preserve your personal credit score if your business fails, make your bookkeeping and taxes that much easier and generally make you look more professional in the eyes of your clients and small-business lenders. And without an EIN, you can't open a business bank account.
Owners of LLCs or corporations have certain legal protections such as safeguarding the owner's personal assets if the business is sued.
And although a DBA doesn't provide you with legal protections in itself, it does further separate you from your business. In the unlikely scenario that your business is sued, for instance, you could offer up your DBA as evidence that your business and its assets are an entity separate from you and your assets.
Additionally, some clients might require that you have a DBA in order to contract with you, or some business lenders might require that you have one before extending any small-business loans to your business. Your brand name is the public's first impression of your business. Ideally, your business's name should reflect your product or service, and give people a reason to become paying customers.
And why would they feel compelled to walk into that shop at all? Registering a DBA allows businesses to operate multiple firms under one ownership, without having to form a separate business entity each time they expand. Note that if your business expands to other states, you'll need to file a foreign qualification in each new state to avoid steep penalties. Your business's legal name in the states where you qualify will be the name on your company's certificate of authority.
If you want to use a different name, you'll have to register a DBA in that state. You can file a DBA in order to transact business under your company's domain name.
This is useful in the event your company name is not available as a domain name, or if you want to expand your business into e-commerce. It's also relatively inexpensive. No, a DBA is not a legal entity. If you register a DBA without first forming some type of legal entity, your state will automatically recognize your business as a sole proprietorship. Your business structure will determine how often your business has to file taxes. Sole proprietorship file taxes annually. Partnerships, LLCs and corporations submit annual tax returns to the IRS but may also have to pay quarterly taxes if they expect to owe taxes at the end of the year.
Businesses must also submit tax returns to their state, and some states may require quarterly or annual tax returns. This article originally appeared on JustBusiness, a subsidiary of NerdWallet.
Which businesses need a DBA? Compare Cards. How to file a DBA name. Advantages of filing a DBA. The bottom line.
Show More. In life and business, things are not always as they seem. Some people change their names for personal or professional reasons. A middle name, an abbreviated name, or a nickname might feel more natural and fitting.
In the U. The DBA is also called a fictitious business name or assumed business name. It lets the community know exactly who is behind a business.
An LLC is a hybrid of a corporation and a sole proprietorship. Like a corporation, owners of an LLC will not be held personally responsible for liabilities, but the company will not live on if an owner dies or the business declares bankruptcy. Filing a DBA sounds like a lot of extraneous paperwork, yet there are actually important reasons to get your DBAs in order:. You can create a separate professional business identity without having to form an LLC or corporation.
He can create a corporation with a relatively generic name and use a DBA for each individual business. If your business is an LLC or corporation, you enjoy certain legal protections. Many sole proprietors prefer the simplicity of starting a business under their personal name. But others want some privacy, and separation between themselves and their business. Many companies give their businesses a name that matches the product or service they provide.
Who can blame Elon Musk for naming his business after pioneering engineer Nikola Tesla, or Sara Blakely for the clever and oddly evocative Spanx business name? Many banks require sole proprietors and partnerships to have a DBA before they open a business bank account.
Many banks ask to see the DBA filing or assumed name certificate as proof of registration for the name. Online sales can be huge for any business. Rather than trying to make one website be everything to everyone, you can segment your online market by filing DBAs for different subsets of products or services. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.
By Jane Haskins, Esq. Here's what you need to know. Business Names vs. In a sole proprietorship, you don't have to file a DBA if you use your own personal name as the name of your business.
In a general partnership, you don't need a DBA if you use the partners' last names as the business name. When you have multiple businesses. For example, your business might operate two restaurants or provide two types of services that you want to market under different names. However, it's best to consult a lawyer if you have multiple businesses. Sometimes you need separate LLCs to minimize your liability exposure.
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