DBA vs LLC: Differences, Costs and Using Both

A DBA ("doing business as") is a registered trade name: it lets a person or a company do business under a name other than its legal one, and it creates nothing else. An LLC is a legal entity that keeps business debts away from its owners. A DBA is cheaper and protects nothing; an LLC costs a state fee of $35 to $520 and protects your personal assets. Many businesses use both.

The confusion is understandable, because both give a business a name. But they answer different questions. A DBA answers "what are customers allowed to call us?" An LLC answers "who is legally responsible for this business?" This guide compares them, explains where DBAs are filed, and walks through adding a DBA to an LLC.

What a DBA is

DBA goes by several names depending on the state: assumed name, fictitious business name, fictitious name or trade name. Whatever it is called, it is a public record that connects a business name to the person or entity actually behind it. If a sole proprietor sells candles as Harbor Light Candles, the DBA filing tells customers, courts and banks who Harbor Light Candles really is. That public record is the main reason states and counties require one: consumers can find out who they are dealing with.

Anyone doing business under a name that differs from their legal name can need one: a sole proprietor using anything other than their own name, a partnership, or an LLC or corporation trading under a name other than the one on its formation filing. Filing a DBA does not create a business, change how it is taxed, give it a separate tax number or shield anyone from liability. A sole proprietor with a DBA is still a sole proprietor, personally responsible for every debt of the business. A DBA also gets no EIN of its own: the number belongs to the person or entity behind the name (more at llc-ein.com).

What an LLC is

An LLC is a business entity created by filing a formation document with the state and paying its fee. It owns its own assets, signs its own contracts and is responsible for its own debts, so a claim against the business generally stops at the company's assets. It has a legal name, which must end in LLC or an allowed variation and be distinguishable from other names on the state's record. For federal tax it is a pass-through by default. The full picture is in what is an LLC.

DBA vs LLC, side by side

Where DBAs are filed: county or state

There is no single answer, because each state sets its own system. In some states the trade name is registered with the Secretary of State or a similar state office for everyone. In others it is filed with the county clerk where the business is located, and a business that operates in several counties may file in each. And several states split it by who is filing, with LLCs and corporations registering at the state and sole proprietors at the county. Some also ask for a newspaper notice of the new name, and many make the registration expire after a set number of years unless it is renewed.

California is an example of the county model. Its Secretary of State's FAQ says that fictitious business names are filed with the county in which the principal place of business is located, not with the state. So a California LLC trading under a second name files that name with its county, even though the LLC itself was formed with the Secretary of State. The quickest way to find your own state's rule is the business section of the Secretary of State's website, or your county clerk's page on assumed or fictitious names.

Does a DBA protect your business name?

Not much. A DBA records that you use a name; in most places it does not stop someone else from using the same or a similar one, and some filing offices accept duplicates outright. An LLC's legal name gets more: the state will not form or register another entity under a name that is not distinguishable from yours on its records. But that protection stops at the state line and at the state's own records. Real protection for a brand comes from a trademark, which is a separate filing. What the state requires of an LLC name, and how to check one before you file, is in LLC name rules.

How to add a DBA to an LLC

An LLC can register as many trade names as it needs: a contractor LLC might trade as one name for roofing and another for gutters, each with its own sign and website, all under one company and one bank account. The steps are much the same everywhere:

1. Confirm the LLC is active. The trade name is registered by the LLC, so the LLC needs to exist and be in good standing. Look it up on the state's business search; if a report is overdue, file it first.
2. Check the name. Search the state's business records, the trade-name records where you will file, and the federal trademark register for anything identical or confusingly similar. Many states do not accept a trade name that suggests a different kind of entity, such as one ending in Inc. or Corp. for an LLC. Check the domain and social handles while you are at it.
3. Find where the LLC files. Find out whether your state takes an LLC's trade name at a state office, at the county where the business is located, or both (see the section above).
4. File the registration and pay the fee. The form goes by the state's term: an assumed name certificate, a fictitious name registration, a trade name registration. It typically asks for the LLC's exact legal name, the trade name, the business address and sometimes the counties where you will use the name. Most filing offices take it online or by mail, with a fee they set.
5. Publish a notice if your state requires one. Where the state or county requires a newspaper notice of the new name, the filing office says how long it must run and how to file the proof. Skipping it can leave the registration incomplete.
6. Add the name at the bank. Banks usually want the filed registration before they accept checks made out to the trade name into the LLC's account. The account stays in the LLC's legal name, and the EIN stays the LLC's.
7. Use the name correctly and renew it. Contracts are still signed by the LLC, in the form "Harbor Light LLC, doing business as Harbor Light Candles", so the legal party is always clear. Note the renewal date the filing office sets, and file a cancellation or withdrawal when you stop using the name.

One LLC with several DBAs, or several LLCs?

Several DBAs under one LLC give you several brands with one set of books, one tax return and one state report. What they do not give you is separation between the brands: they are all the same company, so a lawsuit over one reaches the assets of all of them. Separate LLCs cost a formation fee and a recurring report each, but a claim against one stays with that one. Owners usually keep related, low-risk lines of business under one LLC with DBAs, and put a riskier venture, or one with different owners or valuable assets such as real estate, in its own LLC. Some states also offer the series LLC, a middle path explained in what is an LLC.

Which do you need?

• A DBA alone fits a sole proprietor or partnership that wants to trade under a brand name and is comfortable with personal liability for now.
• An LLC alone fits a business happy to trade under the LLC's own legal name (Harbor Light Candles LLC), which needs no DBA at all.
• An LLC with one or more DBAs fits a company that wants liability protection and a brand, or several brands, that differ from its legal name.

If you already run a sole proprietorship under a DBA and want the protection of an LLC, the steps for moving the business over, including what happens to the old DBA, are in sole proprietorship to LLC.

The LLC route in the ten largest states

A DBA's fee is set by the state or county that takes it. The LLC's fees are the state's, and here is what the ten most populous states charge to form one and keep it in good standing.