Contractors often need to retool their branding to better represent their services or reach new customers. Sometimes the best way to do so is to operate all or part of your company under a new name. This is where a “doing business as” (DBA) filing becomes a viable option.
What’s that?
Do you introduce yourself to people using the full name on your birth certificate or do you use a shortened version or a nickname? The one you give probably depends on the setting and audience.
The commercial version of this is called a “doing business as” — also known as a “trade name,” “assumed name” or, rather misleadingly, “fictitious business name.” Filing a DBA allows you to conduct business under a name other than your own or your legally registered company name.
Sole proprietorships and general partnerships whose business names differ from the owners’ legal names (what’s on their birth certificates) should be well versed with DBAs. However, there are times when incorporated businesses need — and benefit from — DBAs as well.
Why should I?
You need a DBA to legally operate under any kind of variation from your registered company name. It’s also the simplest and least expensive way to operate multiple businesses without having to launch separate corporations or limited liability companies. In addition, a company must file a DBA to transact business under its domain name (website address) if that doesn’t match its registered business name.
Filing a DBA ensures your construction business’s existing legal protections extend to the new name. For example, if your company is incorporated as “Apples and Oranges Construction,” but you have signed contracts under “A&O Contractors,” those agreements may not hold up in court should a dispute arise.
There are other reasons to file a DBA. You might want to register multiple website domains to segment your services into different subsets (for instance, use the word "concrete" in one URL and "asphalt" in another), so you can market to customers with specific needs. Also, businesses with names that are long, hard to spell or not search-engine friendly can benefit from using a catchier trade name.
Last, banking institutions sometimes require individuals to make a DBA filing (and obtain an employer identification number, which is assigned when you file) to open a business banking account or apply for a commercial loan.
How's it done?
DBA requirements, fees and payment methods vary by state, county and city. Generally, you must provide a certificate of good standing, which can be requested from the Secretary of State. You also often need to announce your DBA in a local newspaper to notify the public of who’s behind the name.
If information in your filing changes, such as your address or business partners, you must either file an amendment or register all over again. You’ll likely have to renew the registration periodically anyway, usually every five years.
Bear in mind that you can’t add “Inc.,” “Corp.” or “LLC” to the end of your DBA if the business isn’t incorporated or a limited liability company. And, in some states, a DBA filing doesn’t prevent another business from registering the same name.
Who can help?
A DBA may come in handy under the right circumstances. Consult a qualified attorney to walk you through the process and to help ensure that you’re following all legal requirements.
The content featured in this article originates from our bi-monthly Contractor Newsletter. Subscribe below and stay in the know.
