Businesses can operate under a name different than their legal name with the help of LLCs and DBAs. While an LLC is able to use a trade name that is different from its official legal name, a DBA allows a partnership or sole proprietorship to use a chosen business name that could be more descriptive or marketable.
What is DBA?
The abbreviation for DBA is doing business As. A DBA name could be called a trade name, an assumed name, or even a made-up company name. It is a separate name from your company's legal name, not a different kind of commercial entity or structure. So, rather than using their legal business name, your LLC a memorable DBA that is simpler to market.
What is LLC?
A state-registered limited liability company (LLC) is a recognized legal entity. Whatever name appears on its formation paperwork is its formal legal name. An LLC may choose to use a fictional name as its legal name, it need not contain the names of its owners. An LLC that chooses to utilize a fictitious name as its legal name is exempt from completing the DBA file since the company name is properly registered upon approval of the LLC's article of organization.
LLC Vs DBA | Difference between LLC and DBA
Taxation
An LLC's members have the option of being taxed as a corporation, partnership, or sole proprietorship. Social Security and Medicare taxes are due by LLC members. However, they can be paid using their self-employment tax form. An LLC owner may be able to claim certain tax deductions that are not available through a DBA on the other hand, the owner must pay taxes in line with its own filing status because the DBA does not grant a special income tax position.
Protection from liability
You will have the same protection against personal liability whether you operate under the name of your LLC or a false one. This is so because a DBA is only a different name for your company, it doesn't affect the kind of business entity that your firm is organized as.
Remember that a DBA does not offer personal liability protection on its own. An entrepreneur may choose to register a DBA name for their sole proprietorship, for instance, but doing so will not reduce their obligation. The only entities immune from personal liability are corporations and LLCs.
Trademark protection
Although filing formation documentation to your state prevents other local companies from utilizing your LLC's name for their own businesses, it does not grant you the only right to use the name. You must obtain federal trademark protection from the United States Patent Trademark Office if you wish to hold the exclusive rights to your LLC or DBA name.
Business identity
Businesses can operate under a name different than their legal name with the help of LLCs and DBAs. While an LLC is permitted to use a trade name that is different from its official legal name, a DBA allows a partnership or single proprietorship to use a chosen business name that may be more descriptive or marketable.
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