Difference between dba and business license

You must obtain a business license from the city where you provide services to clients in order to operate. DBAs allow you to do business under a name other than your own; DBAs differ from your registered business name and your legal name as the owner of the business. In most cases, new businesses must register with their state or local government as well as obtain licenses. Your business can be opened and operated with the license you have obtained. But what is the difference between DBA and business license?

It is important to understand that these are two separate requirements, each of which requires different steps to complete. They are most commonly used by sole proprietors. There are many people who mistake it for a business structure. You may have never heard of a DBA if you are new to the business. DBAs may appear complicated at first glance, but they are actually very simple concepts. DBAs prevent businesses from hiding or changing their business names in order to avoid lawsuits from consumers.

A DBA is very important for a sole proprietorship because if they do not have a DBA, any business they do will be under their business name. Hence, in the case of any legal problems, the government is able to go after personal finances or properties especially if you lose in court.

A DBA serves as legal protection. If you want to change the legal name of your business or if you want to start a business separate from your main one, you may also need to file a DBA. It may also be necessary if you have a sole proprietorship and want to open a business bank account. There are some states that require you to file a DBA even if you are a partnership or a corporation, so make sure you are aware of the requirements in the state where you are doing business. If you have to file with a Secretary of State the state one, not the federal one , you should do so.

In addition, you will not be able to form a separate business entity without a DBA. If, for example, your business has several locations, you will not be able to create a parent corporation and use the same DBA for all of them. It is illegal to operate under an assumed business name or fictitious business name without a DBA, which is a legal requirement. It is not possible to use your DBA until you have received certification.

Your business name can play an important role in your strategy, allowing you to expand and reach new customers by using it. California requires a DBA for all businesses that wish to operate under their own name or sign legal documents. In the state of California, a DBA is usually required for sole proprietors. By registering for a DBA, you can conduct business under a fictitious name instead of your real one. Open a business bank account with your bank and you will need a DBA number. Companies can register a DBA in order to conduct business under their domain names.

Having a DBA registration keeps you in compliance with the law as a whole. A middle name, an abbreviated name, or a nickname might feel more natural and fitting. The commercial version of this is called:. In the U. The DBA is also called a fictitious business name or assumed business name.

It lets the community know exactly who is behind a business. Needing a DBA name is tied closely to the type of business structure your business operates under. In general, there are two reasons a business in the U. The reason for this is that, as a business entity, a sole proprietorship and general partnership are unincorporated ways to conduct business.

Though they do still need to acquire the necessary business licenses and permits. Basically, the business owner and the business are one and the same entity, which means they have the same name, too — unless they file a DBA.

A quick refresher on what business structures like corporations and limited liability companies LLC entail:. An LLC is a hybrid of a corporation and a sole proprietorship. Like a corporation, owners of an LLC will not be held personally responsible for liabilities, but the company will not live on if an owner dies or the business declares bankruptcy.

Filing a DBA sounds like a lot of extraneous paperwork, yet there are actually important reasons to get your DBAs in order:. You can create a separate professional business identity without having to form an LLC or corporation.

He can create a corporation with a relatively generic name and use a DBA for each individual business. If your business is an LLC or corporation, you enjoy certain legal protections. As we know, a sole proprietorship is an unincorporated legal entity owned by a single person and is the simplest kind of business structure.