Exploding the DBA Myth
It is so common for me to hear new entrepreneurs talking about DBA’s.
“Can I put this business under my DBA?”
“Can’t I just do a DBA?”
“Isn’t that the same as a DBA?”
I guess maybe nobody really knows what a DBA is or what its used for. So let’s explore the DBA and what it is used for. In short, it’s nothing.
Well, that’s probably taking it too far. DBA stands for “doing business as” and is more properly called “fictitious business name.” It’s a form that, in California, is filed with the county your business operates in along with a small fee. By law, some California businesses are required to make this filing. You should check with a lawyer if your specific business should. But that’s it. It’s like a business license or a car registration. It’s a requirement that does nothing for your business besides fulfill a legal obligation.
A DBA does not provide you with limited liability. Limited liability protects your personal assets, like your house and your retirement, from your business debts. Corporations and LLCs provide limited liability. A DBA does not. If someone sues your DBA, you are personally liable and your personal property is at stake.
A DBA does not protect your brand or trade name. Yes, it registers the name with the County, but the legal protection for your business’ name and brand are trademarks, which are protected under other parts of the law and require a separate registration. In fact, if a competitor were to register a name similar to yours as a trademark and it was approved, you would have to stop using the name regardless of the DBA. It’s even worse than that – if a competitor is using a similar name elsewhere, they are building common law trademark rights in the name that could prevent you from using that name in their location. Again, the DBA you filed does little or nothing on this point.
A DBA does not reserve a name for your exclusive use. That is, once again, trademark.
You can run whatever business you want under any DBA you want (with some minor limits). Or as many different businesses as you want. Because the DBA does not have a legal or practical effect. It’s just a form you file with the County.
Smart entrepreneurs will stop thinking about a DBA as anything related to their business. Of course, you should file the paperwork if you are required to, but it is virtually meaningless outside of that.
Come to Tumer & Sharif if you are starting a new business. We will help you avoid unnecessary cost and wasted time and guide you to a successful launch of your business. If you have been relying on a DBA to protect you, schedule a free consultation so we can help you get the protection that you need.