Are you starting a new company and are on your way to becoming a new business owner? If you are, it will help to know the difference between DBA and LLC. An LLC protects your assets from liability, while a DBA lets you use a different name from your legal name. However, several differences exist between the two options, as this article will tell you.
What are a DBA and LLC?
In short, a DBA is a business name that differs from your legal name. It’s usually used when running a business with a name different from the owner’s. An LLC, or limited liability company, is a business structure that offers the owner protection against personal liability.
If your LLC gets sued and ends up owing money or having to pay damages because of a court ruling, an LLC will not be able to come after you for those debts.
And that is because if your business is an LLC, it’s considered a separate legal entity from you (the owner). The most common type of LLC is “single-member,” which means only one member—the person who started the company.
An LLC is a more formal business structure
A limited liability company (LLC) is a more formal business structure that separates your assets from your company’s. You may have heard of the Limited Liability Company or LLC, a business structure that protects you and your assets if something goes wrong with the company.
An LLC also has some significant benefits over a DBA:
- It’s cheaper to set up than an S-Corp or C-Corp because there are fewer tax filings and reporting requirements.
- You don’t need approval from the government to form an LLC like you do when starting other types of businesses.
DBA doesn’t provide any additional protection
Doing business as (DBA) name is not the same as a limited liability company (LLC) or corporation. It’s simply a way to conduct business under a name that’s different from your legal name.
A DBA doesn’t provide any additional protection for your assets, but it can help you set up credit accounts in your new business name, which can be helpful if you’re starting.
When should you obtain a DBA?
You are only required to obtain a DBA if you’re using a name that differs from the one on file with your state government when you formed your LLC or corporation.
Doing business as (DBA) is the legal name of your business. If your LLC or corporation has a different name than the one used to establish it, you’ll have to file a DBA with your state government to use that alternate name.
For example, if you’re named John Smith when you form an LLC but want to use a different name—like Bob Jones, Inc.—for doing business, then you can file a DBA under that new name with your county clerk’s office (or whatever equivalent exists in your jurisdiction).
The above information will clear up any confusion about the difference between DBA and LLC. If you decide on an LLC as your business structure, many online legal services can help guide you through the process step by step at no cost. You can also contact websites that offer ready-made templates with bells and whistles if all this sounds overwhelming.
