The Differences Between A DBA Filing And Incorporating A Business
If you are a sole proprietor and you want to establish a business name different
from your own, you can either register an assumed business name (aka DBA) or
incorporate your business (corporation or LLC).
If you remain a sole proprietor and simply file a DBA, you are just assigning a
business name to yourself. So, if you have a lawn care service and file a DBA called
“Tidy Lawns”, you are then John Doe DBA Tidy Lawns. Just by having a DBA, you are
not protected personally from any debts or obligations of your business.
You can only get that type of protection when you
incorporate a business. When you incorporate a business you are establishing
an entity separate and apart from you. Generally speaking, the debts and obligations
of the corporation (or LLC) do not pass through to the owners of the company.
Incorporating a business costs more than just filing a DBA, but some business owners
believe the benefits of incorporating
are worth it.
Corporations and LLCs can file DBAs. So, let’s say XYZ, Inc. is starting a new division,
it can file an assumed business name, but still operate within the same corporate
structure. So, XYZ, Inc. DBA Acme Storage, Inc. is how this may look.