"Do I need a DBA for an LLC?" you might wonder once you've done setting up your LLC.
Adding a DBA to an LLC isn't absolutely necessary, but it can be a terrific way to extend and diversify your business. Some people even use a single LLC to run many DBAs. Some DBAs are created for the purpose of advertising, while others are created to limit liability. Let's take a look at what's available.
How can I set up a DBA for my limited liability company?
Do you want to know how to set up a DBA for your LLC? Are you worried about the time and money it will take? Not at all: It is neither difficult nor expensive to provide your Limited Liability Company (LLC) a "Doing Business As" (DBA) name. Creating a DBA for your LLC is actually a simple three-step process.
1. Pick a name
LLCs are named after the owners. This can result in a corporate name that appears clumsy in print or on signs. Jane Doe LLC is a name that says nothing about what the company performs. A DBA tradename comes in handy in this situation. A DBA is a fantastic marketing tool: The perfect tradename can pique people's interest in your business while also clearly explaining what you do or offer. A more oblique DBA tradename might evoke a fascinating feeling of mystery, especially in a busy, in-demand market, if you want it to. Assigning a DBA to your LLC is a wise marketing option in either case. Keep in mind that you'll probably want to make a list of names in case the one you like is already taken. A company name availability check might help you figure out what's available. To do so, you — or, better still, a company lawyer — must:
Make a simple search engine query.
Use Whois.com or another registrar to look up a domain name.
Look up the name you want on county and state websites to discover whether it's already taken.
Look up existing DBAs in your Secretary of State's database.
Look for name matches on the website of the United States Patent and Trademark Office.
Before appointing your DBA, make sure you've done your homework: A duplicate DBA is an infringement on someone else's intellectual property that will almost certainly result in a lawsuit.
2. Make a name for yourself.
You'll need to register your tradename after you've carefully chosen it. This entails filling out many forms, depending on the requirements of your state, county, or municipal. You may be able to register your DBA name online depending on where your firm is located. The cost of registering with the DBA varies based on where you register and at what municipal level. A DBA notice may also be needed to be published in an approved publication, such as a newspaper or a local-events magazine.
3. Register your name as a trademark.
Trademark your tradename after you've registered your DBA. After all, you've worked hard to perfect it; it's your intellectual property, after all, and it deserves to be safeguarded as such. To do so, go to the website of the United States Patent and Trademark Office.
Is it possible for an LLC to have numerous DBAs?
Multiple DBAs can be connected with a single LLC. Each DBA must be registered independently using the processes outlined above. Two or more LLCs, on the other hand, cannot have the same DBA.
Is it necessary to have a separate bank account for a DBA?
If you have many DBAs registered under a single LLC, you may wish to provide each one its own bank account to make cash flow tracking easier. Many banks, in fact, demand that you divide different DBAs into distinct accounts. If your bank, on the other hand, does not require you to separate your DBA accounts, you can combine them into a single account. Just make sure you have a solid bookkeeping system in place: Tracking cash flow accurately can help you avoid problems with customers, lenders, and the IRS later on.
Is a DBA considered a sole proprietorship?
Sole proprietorships are most usually connected with DBAs. You are not obligated to provide your sole proprietorship a DBA. You and your sole proprietorship, on the other hand, are one and the same: You not only share full duty, but also a name. This can place you in an awkward marketing position; a DBA tradename simplifies and standardizes a firm's namesake, yet christening it with a proper name may create confusion about what your company does.
Is it possible to have many DBAs under the same EIN?
Each registered proprietor is given an EIN (Employee Identification Number). As a result, a single EIN is associated with a single LLC. You can register several DBAs under a single LLC, as previously stated. As a result, several DBAs can be registered under a single EIN, in the sense that multiple DBAs are affiliated with a single LLC, each with its own EIN.
Is having many LLCs or DBAs better?
You may want to register numerous LLCs or DBAs under an existing LLC, depending on your company plan. Each method has advantages and disadvantages.
Advantages of Having Multiple LLCs
If your businesses provide a variety of services that aren't related, it's a good idea to form many LLCs. If you want to register your IT firm, a restaurant chain, and a fleet of private ambulances, for example, establishing each as an LLC rather than a DBA of Jane Doe LLC makes it apparent that the three services you offer don't overlap, which helps customers and clients understand what they're getting. Another benefit of having many LLCs is that each one is protected from risk. If Jane Doe LLC I is sued, neither Jane Doe LLC II nor Jane Doe LLC III are held responsible.
The disadvantages of having multiple LLCs
To keep numerous LLCs afloat, you'll have to pay a variety of fees, some of which will recur during the life of your business:
Fees for each LLC's initial formation
Maintenance fees are assessed on an annual basis by the state or municipal government.
Individual business license and EIN fees
The cost of filing taxes for each LLC separately.
Operating several LLCs is simply not feasible for some people due to the costs involved.
Advantages of Having Multiple DBAs
Operating several DBAs under a single successful LLC looks nice to customers and clients from a marketing aspect. The issue here is one of branding: Jane Doe's IT firm, restaurant chain, and ambulance fleet all come under the Jane Doe LLC umbrella if they operate under several DBAs rather than as three separate LLCs. Jane Doe LLC—her brand—becomes a mark of excellence, which she stamps on future DBAs if her initiatives are successful. In other words, her brand does all of the heavy lifting in terms of marketing. If she handled each company as a separate LLC, it would be difficult for a cohesive brand to emerge, denying her a big marketing opportunity. Other advantages of having many DBAs over having multiple LLCs include:
You'll save money on annual fees.
Each DBA enjoys the same legal protection as the LLC as a whole, ensuring that your assets are protected.
You can declare all DBA income as a single LLC on your tax return.
The disadvantages of having several DBAs
The most significant disadvantage of operating several DBAs under a single LLC is that if one DBA is sued, all DBAs registered under that LLC are held accountable. Multiple LLCs, on the other hand, are distinct companies, so a lawsuit against one would have no bearing on the others. Contact Legal Shield for more information on all of your options.