LLC business. The long answer to the DBA vs LLC question is spelled out here and will hopefully serve as a guide when making the important decision about the business entity structure for your new business. A DBA allows an individual or business to operate under a name that is different from its legal name.
In most states, DBAs are filed at the county level where the business is located. If this is not the case, then the DBA application or fictitious name certificate is filed at the state where the business is incorporated.
Having a limited liability company established, or LLC, means that a business is operating as a distinct and separate legal entity from its individual owners.
An LLC must be managed by members or a manager. Members are the owners of the company, while a manager, may or may not be a member. The LLC structure also includes more tax flexibility, as the LLC can choose to be taxed as a sole proprietor, partnership, or corporation. To form an LLC, business owners must file articles of organization at the state level and adopt a Member s Operating Agreement.
Filing a DBA allows a business owner to use a name other than their legal name to operate their business. An individual who files for a DBA to operate their business is operating their business as a sole proprietor — not as a business entity.
The business, and all of its assets and liabilities, belong to the individual who files for the DBA. Filing for a fictitious name can be beneficial to a business entity is possible as well. When a DBA is filed for by either an individual or a business entity, it allows the individual or business owner to open a business bank account in the fictitious name so payments may be made payable to the fictitious name of the business.
It allows the public to know and have the contact details of the person handling the business. A fictitious name has the same meaning as a DBA, and both terms are interchangeable. Here are some of the benefits of having a DBA in business:.
Your business needs a DBA if it is operating under a name different from yours. For example, you don't need a DBA if your name is Patrick Munchy and you operate a mechanic shop under Patrick Munchy Auto Care as your name shows you own the business.
The same applies to a corporation operating different subsidiaries in multiple locations under different names. The corporation will need to file for DBAs for each of these businesses to show the public it owns the entities.
But if you operate a business entity like an LLC, partnership or corporation, it means you are legally registered to do business in that state. Remember, DBAs are filed at either the county or state level, not both. County DBAs for unincorporated businesses are prepared same or next business day and then emailed to you for signing. In these counties, the filing is quick i.
How long does it take to form a Texas LLC? The maximum length of time a Texas assumed name certificate will be effective for is 10 years from the date of filing. The DBA may be abandoned at any time before the expiration date by filing a Certificate of Abandonment or similar document. If you decide to change the name of your business, you can technically keep the name of your LLC and file an assumed name certificate DBA. DBAs are only valid for 10 years and would need to be re-filed if the business continues to use the assumed name longer than 10 years.
As such, it may be better to file a Certificate of Amendment with the State and simply change the LLC name permanently. Either way, the business's EIN would stay the same and the contracts will remain in effect.
What are the rules for naming a Texas LLC? The filing of an assumed name certificate or DBA does nothing to protect the business owner s from the obligations and liabilities of the business. If you are a sole proprietorship that uses a DBA i. John Doe doing business as Longhorn Management Company you will still be personally liable for the liabilities of the business.
Yes, there is no limit to the number of DBAs a business uses. Each assumed name certificate would need to be filed in accordance with the Texas Business and Commerce Code. Every person or business entity that conducts business or provides services under an assumed name must file an assumed name certificate often referred to as a DBA.
DBAs serve two main purposes: 1 inform the public who is doing business under the assumed name and 2 claim of ownership to the assumed name i. What is an assumed name aka DBA? How much does it cost to file a DBA? DBAs are filed at either the county or state level, not both, depending on the type of business.
Where is a DBA filed? LLC, corporation, limited partnership, limited liability partnership, foreign filing entity that regularly conducts business or renders professional services in Texas under a name that is different from its legal name MUST file an assumed name certificate aka DBA with the Texas Secretary of State. As of September 1, , an incorporated business is no longer required to file a DBA at the county level. What is the difference between state and county DBAs? Some state laws also specifically prohibit DBA or assumed names that include "corp.
Many states provide searchable business name databases to help business owners determine name availability. Some state laws require business owners to file application forms or other documentation with the state agency that has jurisdiction over business or with the specific counties where the fictitious name will be used.
You may need to pay a fee to register an assumed name. Be aware that registering an assumed name is not the same as registering for trademark protection. You may wish to consult with a business law attorney in your state to determine if it makes sense to take additional steps to protect your assumed name.
The name you choose for your business, whether a legal name or an assumed name, is one of the most important decisions you will make. Whether you choose to use your legal name or decide to use an assumed name, your customers will form first impressions about your business simply based on the way you hold yourself out.
Some states allow businesses to reserve potential assumed names for a period of time, which can offer some protection while you make a final decision about what name to use.
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