Operating under multiple brand names is a common strategy for entrepreneurs looking to diversify their services or products without the complexity of managing multiple legal entities. If you already have a Limited Liability Company (LLC) and want to launch a new venture, you can use a DBA (Doing Business As), also known as an assumed or fictitious business name.
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What is a DBA?
A DBA is essentially a nickname for your LLC. It does not create a new legal entity; rather, it notifies the public and the government that your existing LLC is conducting business under an additional name. This allows you to open bank accounts, sign contracts, and accept payments under the new brand name while maintaining the legal protection and tax structure of your original LLC.
Step-by-Step Guide to Adding a Second Name
- Conduct a Name Search: Before settling on a name, search your state’s business registry to ensure the name isn’t already taken or restricted.
- Verify Compliance: Check with your local Secretary of State or county clerk to confirm the naming requirements. Some states prohibit certain words or require specific identifiers.
- File the Registration: You must file the necessary paperwork with your state or county agency. This often involves a filing fee, which varies significantly depending on your jurisdiction.
- Meet Publication Requirements: Certain states (such as New York or California) require you to publish a notice of your DBA in a local newspaper for a set period.
- Update Your Records: Once approved, ensure your business licenses, bank accounts, and marketing materials reflect the new name correctly alongside your LLC’s legal name.
Should You Use a DBA or Form a New LLC?
While a DBA is cost-effective and easy to manage, it may not always be the best choice. Consider these factors:
- Liability Protection: A DBA does not provide separate liability protection. If your new business venture carries significant risk, you might prefer a separate LLC to keep liabilities isolated.
- Branding: If the two businesses are in completely unrelated industries (e.g., graphic design and livestock management), separate entities might be cleaner for accounting and professional branding purposes.
- Complexity: Managing one LLC with multiple DBAs is simpler than managing multiple LLCs, which require separate tax filings and annual reports.
Important Considerations
Consult Professionals: Before proceeding, speak with an accountant or attorney. They can help you evaluate the tax implications and legal risks of grouping your activities under one LLC versus forming a new, separate entity.
Ongoing Compliance: Remember that a DBA registration often requires periodic renewal. Failing to keep your registration current can lead to fines or the inability to legally operate under that name. Always check your state’s specific renewal timeline to stay in good standing.
Adding a DBA is a powerful tool for growth, allowing you to expand your business reach while keeping your administrative overhead low. By following these steps and keeping your filings current, you can effectively manage multiple brands under the umbrella of your established LLC.
