subscribe for quick legal & business tips
Using a fake driver’s license to get into the club—illegal. Filing a false police report—illegal. Giving an officer a fake name—you guessed it—it’s also illegal.
Yeah, don’t do that. But I digress. There is a legal loophole for business owners.
Most states will allow a business to set up a business using a phony name. It’s not shady or illegal.
Let me explain. A DBA allows a business to operate legally under a fake name or a different name.
DBA means “doing business as.” DBA is also sometimes referred to as a fictitious name or trade name. You can also think of DBA as a nickname or alias.
Let’s answer some questions that can keep you up and night.
Yes. However, it’s important to use your business name exactly how it’s registered with your state and/or county.
For example, Lisa and Bobby open up a coffee shop. Lisa and Bobby are two separate people.
However, if they open a business together, then Lisa and Bobby are considered a general partnership.
Taking it a step further, Lisa and Bobby name their business “California Coffee Champs Cafe” So, Lisa and Bobby are doing business as “California Coffee Champs Cafe.”
On a side note, general partnerships don’t require you to register your business with the state. However, you will need to register your DBA name with your state and/or county.
No, not in the technical sense. Let me explain. A DBA is not an actual business. It’s just a type of business name.
So, an LLC, sole proprietorship, general partnership, limited partnership, corporation, etc. would count as a business. These are actual business structures or business entities recognized by most states.
Thus, a DBA will not give your business any legal protection. It’s just a name. That’s it.
Yes, a business can open a bank account using the DBA business name.
It’s not required to have a separate account. However, it’s helpful if you keep your personal money and business income separate.
When it’s time to file your taxes, it will be easier to figure out which expenses are business-related if you use a separate account.
Usually, you’ll need an EIN to open up a business account. Getting an EIN is a free service and can be done online.
Yes, if you’ve legally registered your DBA with your state and/or county, then you can use your DBA on any of your business checks.
A DBA will not have any legal effect on your taxes. Instead, your business structure will affect how much or how little taxes you will owe at the end of the year.
For example, a sole proprietor must pay both self-employment tax and income tax. Also, an S corporation doesn’t have to pay federal income tax, but a C Corporation does have to pay federal income tax.
Does my DBA need an EIN?
Since a DBA is only a business name, you won’t need an EIN for your DBA. However, you will need an EIN if your business fits any of these descriptions:
- It has employees.
- It’s a corporation or partnership.
- It will have to file tax returns for firearms, alcohol, employment, excise, or tobacco.
- It will withhold taxes on income for a non-resident alien; this doesn’t include wages.
What does a DBA do for a business?
It’s really just a marketing tool. It also allows you to not have your government name as your business name. So, you can brand your business around your product or service instead of your name.
Remember, Susan and Bobby in the example above. Would you prefer “California Coffee Champs Cafe” or “Susan and Bobby’s Coffee Shop”?
Yeah, “California Coffee Champs Cafe” for the winner—pun intended.
Calm down, Sylvester. I was getting around to this point.
In some situations, you may want to use your government name. For example, your name may be your brand, e.g., you’re a well-known public figure or social media influencer.
Then, you may want to have your government name be your business name.
How to write a company name with a DBA?
You will have to spell out your DBA exactly how it’s registered with your state and/or county.
Here are some examples of how to properly write it:
- Sole Proprietorship:
- Brittany Johnson dba BJ Services. (Get your mind out of the gutter. It’s Brittany Johnson’s initials)
- Partnerships:
- Brittany Johnson and Michael Smith dba BM Services. (No toilet jokes, please).
Will I need a business license?
Each state will have its own set of rules. A business license is not the same thing as a DBA.
Rather, a business license allows your business to operate legally in a certain state, city, and/or county.
If you’re required to get a business license, it’s usually required for each (different) business name.
Also, you should only advertise your business using the exact business name that appears on your business license.
Will you be keepin’ it real or using a fake name?