- Understand the meaning of DBAs and how to utilize them when a company uses a name other than its legal name.
- Learn how using a DBA may benefit branding and marketing even though it doesn't create a new law practice.
- Learn about the limitations of DBA names in California and why it's crucial to make sure the name is both legal and pronounceable.
- Before applying for a DBA, consider how crucial it is to consider the potential legal and tax ramifications and, if required, seek advice from an attorney or accountant.
What is DBA?
Business owners must understand the many terms and ideas that could arise daily. For instance, you may be familiar with DBA or "Doing Business As." In its simplest form, this phrase describes a scenario in which a company uses a name different from the one it initially registered with the state of California. Although DBA is the most typical title for this idea in many countries, it may also go by several other names in other places, so it's essential to keep that in mind. These include "fictitious business name," which expresses the same basic notion. The phrase "fictitious" is used in this case, which is crucial since it emphasizes the fact that the name being used is only a pseudonym for administrative purposes and not the actual legal name of the company.
Why do you need a DBA?
There are several reasons a company would decide to utilize a DBA. For instance, a business could want to develop a brand name that better captures the essence of its goods or services. A firm may stand out from its rivals and attract more clients using a memorable or unusual name. Similarly, a company can enter a new market under a different name to reduce confusion or create a distinct brand.
A firm may also need to alter its name due to a merger or acquisition or decide to rebrand for strategic purposes. For instance, a firm could adjust its name to reflect a change in its business strategy or to separate itself from a bad reputation or relationship.
It's crucial to comprehend the legal ramifications of utilizing a DBA, regardless of the exact cause. In most states, businesses must file a DBA with the appropriate state or local government entity. Failure to file a DBA can result in fines and legal consequences and expose a company to litigation and other legal issues.
It's also crucial to understand that employing a DBA does not establish a new legal business. A DBA is only a trade name or alias a company uses to conduct business. Therefore, companies must adhere to all applicable laws and rules while utilizing a DBA, including filing taxes and acquiring all required permissions and licenses.
How to set up a DBA in California
Determine a DBA name
A name for your DBA, or "doing business as," is one of the initial choices you'll need to make when beginning a new firm. Although it may seem straightforward, picking a name available in California that satisfies the state's standards for a DBA name is crucial. The California Secretary of State's business name database must be searched to determine a name's availability, which might be challenging to navigate.
File a fictitious business name statement
The next step is to submit a statement under a fake business name to the county clerk's office where your company is situated. In California, this is a necessary legal obligation. Thus, it's crucial to complete it correctly. The statement must contain the owner's name, address, and company name. Although giving all this information may appear excessive, it is vital to let the public know who is responsible for the operation.
Publish the statement
You should file an affidavit of publication with the county clerk after submitting a fictitious business name declaration and publishing it in a newspaper with wide distribution in the county where the business is situated. It is crucial to finish this step since it confirms that you have followed the law's need to publish the statement.
Obtain any necessary licenses and permits
Depending on your business, obtaining licenses and permissions from state and municipal organizations might also be necessary. Depending on the specifics of your organization, it's crucial to verify with the relevant authorities to find out what licenses and permissions you require.
Update your business records
Updating your business documents to reflect your new DBA name once you have submitted the fictitious business name declaration and secured any required licenses and permissions is crucial. This can entail changing your website, business cards, and other materials. Ensure all your business documents are current and that your customers and clients know your new name.
California DBA name restrictions
You must know several limitations while selecting a DBA name in California. The name cannot, first and foremost, be used by another company in the state. This is crucial to avoid customer misunderstanding and safeguard other companies' intellectual property rights.
Additionally, the name cannot contain any words or phrases that imply the company participates in an unlawful activity or is connected to a government entity. You cannot, for instance, use the terms "FBI" or "CIA" in your DBA name since this may mislead customers and result in legal problems.
The name cannot contain any terms exclusive to a certain class of enterprises. For instance, firms involved in banking or financial activity are referred to by terms like "bank" or "trust." Similar to how "college" and "university" are only used to refer to educational institutions.
Finally, unless they are an essential component of the business name, the name cannot contain certain punctuation or letters, such as periods or ampersands. This will ensure that people can easily find and recognize the name.
Forms needed to file a DBA in California
Name Availability Inquiry Letter
You must confirm that the name you want is accessible before applying for a DBA. You can accomplish this by sending the California Secretary of State's office a Name Availability Inquiry Letter. The letter has to provide your desired DBA name, an outline of your company's operations, and a check for the filing fee.
Fictitious Business Name Statement
You must submit a Fictitious Business Name Statement to the county clerk's office where your business in your preferred DBA name is already taken. You must fill out this form with your company name, address, and the owner's name and address. The paperwork also has to be notarized and bears your signature.
You must pay a filing fee when submitting your Fictitious Business Name Statement. The cost varies according to the county in which your company is located.
Affidavit of Identity
The county clerk's office may occasionally request that you submit your Fictitious Business Name Statement and an Affidavit of Identity. Your name, address, and social security number must be entered into this form in order to confirm your identification.
California DBA filing & registration
It is vital to remember that certain steps must be followed to successfully register a Doing Business As (DBA) in California. Carefully selecting a name not already being used by another business within the California jurisdiction is the first step. To check whether the requested name is available, using the company name database kept by the California Secretary of State is useful. The selected name must also meet the requirements set out by the state for a DBA name.
You must remember that there are specific procedures you must take to effectively register a Doing Business As (DBA) in California. The first step is carefully choosing a name not already used by another company within the California jurisdiction. It is helpful to consult the company name database maintained by the California Secretary of State to see whether the requested name is accessible. The chosen name must also adhere to the standards established by the state for a DBA name.
It is crucial to publish the fictitious business name declaration in a widely read newspaper in the operating county after the statement has been successfully submitted. An affidavit of publication must be presented to the county clerk's office, and this publication must be made once a week for four weeks. It could also be essential to get a license and authorization from state and municipal authorities, depending on the nature of the firm. The proper regulatory agencies can be contacted to learn more about these criteria.
Furthermore, after all the required rights and licenses have been obtained, it is crucial to amend the business records to reflect the newly selected DBA name. This procedure could entail updating various papers, including the company website, business cards, and other pertinent ones.
California DBA tax considerations
It's crucial to consider tax ramifications when registering a DBA (Doing Business As) in California. Usually, registering a DBA does not establish the business owner as a distinct legal entity. Thus, the owner's Social Security or employer identification number (EIN) will continue to be used for tax purposes.
In contrast, if the company is a partnership or corporation, it might need to apply for a new EIN before registering a DBA. In addition, it can be required to reassess the company's tax categorization if the DBA signifies a significant modification to how the organization is structured or operates. Additionally, it's critical to confirm that the company has a valid registration with the California Franchise Tax Board and is paying all applicable taxes, such as income tax and sales tax. Penalties and legal repercussions may occur from improper tax filing and registration. A tax expert's advice may assist in making sure that your company is legally registered and following all tax laws and rules.
How much does a DBA filing cost in California?
Depending on the county where the firm is situated, a DBA (Doing firm As) in California might cost different amounts. Depending on the jurisdiction, the cost to file a fictitious company name statement might be anywhere from $10 and $100 or more.
The publication of the statement in a newspaper with broad distribution and securing any licenses and permissions required for the firm may also incur costs.
It's vital to remember that some counties could charge more for quicker processing. For detailed fee information and to confirm approved payment methods, it is advised to contact the county clerk's office where the business is situated. Overall, registering a DBA in California is not prohibitively expensive, and there may be advantages to registering a company name that offset the expenditures.
In conclusion, firms wishing to strengthen their brand identification and marketability may find registering a DBA name valuable. Although completing a false company name declaration in California may first appear complicated, most businesses find it straightforward and economical. To achieve compliance with all applicable requirements, company owners must do extensive study and consult with legal and financial professionals.
Businesses may present a more professional image while avoiding any legal problems resulting from utilizing unregistered names by registering their DBA names. Companies may set themselves apart from rivals, increase their market share, and enhance their standing with clients and consumers by choosing the correct DBA.
We can help!
At Levy, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most — your business.
Like our content?
Subscribe to our blog to stay updated on new posts. Our blog covers advice, inspiration, and practical guides for early-stage founders navigating their start-up journeys.
Note: Our content is for general information purposes only. Levy does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.