DBAs are perfect for business owners who would prefer not to use their real name or for businesses who would prefer not to use their registered business name. New business statistics from the United States Census Bureau show that in August 2021 alone, more than 427,842 new business applications were filed in the US. Obtaining a DBA would ensure that a new business stands out from the crowd.
Most states require businesses to register a DBA, and luckily the registration and filing process is simple across all 50 states. For entrepreneurs looking for more information about the filing processing in their specific state, The Really Useful Information Company (TRUiC) is able to offer more information. This article will explore which state is best for getting a DBA.
What is a DBA?
Many entrepreneurs ask themselves, “What is a DBA?”. A DBA, which stands for “doing business as”, is a business form often used by sole proprietors who would like to use a business name different to their individual name. The process of filing for a DBA allows the startup process of the business to be simple and it reduces costs. It prevents the need of record-keeping requirements, which LLCs and corporations require for formalities and maintenance. But, DBA owners do have the option of converting their business into a LLC or corporation once the business is established and is producing profits. Cofounders of partnerships also choose to use this business form. It offers the business a marketing identity separate from the owners’ names.
Corporations and LLCs are also able to use this business form. If the corporation or LLC, which is already incorporated, would like to use a different business name, they would be able to register a fictitious business name. Corporations and LLCs may choose to do this if they operate in multiple states and want to use those states as part of their business name. In most states, using a DBA allows the business owner to use a fictitious name. But by using this business form, business owners need to keep in mind that it is not the same as a corporate structure legally. DBAs do not offer the limited liability or legal protections which LLCs and other types of business structures offer businesses.
Which state is the best state for getting a DBA?
The state in which the business owner is based, and where the business will be based, is the best state for obtaining a DBA. Business owners should always consider getting a DBA in the state of business operation because this is simply the most cost-effective and convenient route to follow. Business owners will be familiar with state laws, the government offices are easily accessible and they would likely know who to contact for information.
But there are states which have attractive DBA formation conditions. Most states in the US require some form of filing when businesses obtain a DBA. But, there are 14 states which do not have any state-level filing requirements at all. For business owners who file in these states, especially startups with a limited budget, this benefit will prove to be extremely beneficial. The states which do not require state-level filing are:
- Alabama
- Alaska
- Arizona
- Delaware
- Florida
- Hawaii
- Kansas
- Maryland
- Mississippi
- New Mexico
- Nebraska
- Ohio
- Wisconsin
- Wyoming
Once a DBA has been obtained, businesses will be able to enjoy a range of benefits. Firstly, DBAs offer flexibility for businesses. By obtaining a DBA, businesses are offered the opportunity to expand into other areas. For example, if the business is named “Clothing Incorporated LLC”, obtaining a DBA will allow the owner to open several other branches, all under a different name.
Secondly, DBAs offer privacy protection for businesses. The owner of the business will have their privacy protected seeing that their business will not have their personal name attached to it. But not all businesses are able to enjoy this benefit. Business individuals, such as real estate agents or motivational speakers would not be wise to obtain a DBA, seeing that their name should be the first thing clients and customers see.
Thirdly, DBAs offer targeted branding. When businesses obtain DBAs, they will be able to brand in different target markets. Businesses which have different lines of business are able to use DBAs to create multiple brand names to target their specific markets.
Finally, DBAs offer easy legal compliance to businesses. Not all states require a DBA, but most do. If a business operates under a fictitious name without having set up a DBA, they could face a lawsuit which would incriminate them for fraud.
The bottom line
Acquiring a DBA in the right state may prove to be beneficial for businesses, but not for all types of businesses. Business owners need to always keep in mind that the state of operation will always be the best state to obtain a DBA in. But besides this, before business owners decide to obtain a DBA, they need to factor in what type of business they own and what the long-term goals are.
