Obtaining a business name is a bit more confusing than it may initially seem. There are several steps that you need to take to set up your business name to ensure it is legal and recognized by the state.
The first thing to know is that you will need to choose a business name to use on your articles of organization, if you plan to start an LLC in California. This is your legal business name. In the state of California, it typically has to make some mention of your business being an LLC. However, many businesses need to operate under a different business name that is easier to brand or provides a better level of identification for their customers.
If you plan to operate your business under a name different from what is on your articles of organization, or without establishing an LLC at all, the state of California requires that you register that name, which is called a “fictitious name” or a “DBA” name, with the state.
It is illegal to operate your LLC under a name different from what is on your articles of organization unless you pursue a DBA. So, what is that, and how does it work in your situation?
Once you register your LLC in California, you then have the ability to create a Doing Business As (DBA) name for your organization. This is also called a fictitious business name in the state of California. It is not at all uncommon and is often used as a way to differentiate your business. In short, this is another name that your LLC goes by outside of what it created as your business name in your LLC.
In California, the DBA is not considered your legal business name like your LLC name. However, it is linked to your LLC registered name. This process allows for the state to know that the name you are operating your business under is linked to the LLC registered name you created.
Any type of business can create a DBA, including those who are a sole proprietorship, partnership, LLC, or corporation.
If you’re planning to start a California business, now would be a good time to get to know the different business structures available to you.
If this is not your legal name, why should you have one? There are a few key reasons why many businesses choose to file a DBA. Remember, too, that you do not have to do it unless it makes sense for your business to do so. Some benefits of the DBA include:
Other benefits may exist for your organization. The key to remember here is that this is a viable solution for many business owners.
While there are a lot of benefits, there are also some disadvantages you need to keep in mind when setting up a DBA in California, including the following:
No, there is no legal requirement for any business to set up a DBA. That is important to know. If you want to use your LLC name as you use it for any other need, that is fully OK to do. Keep in mind that the decision to do so is often dependent on your business strategy. Considering the benefits of a DBA, it may be beneficial to set one up for many business owners.
In order to use a DBA in California, there are a few steps you have to take to register it. This process does not have to be complex, but it has to be followed properly to ensure there is proper registration. Here is a look at that process.
The first thing that has to be done is to determine what name you can use. Just like your LLC designation, you cannot register your DBA without first ensuring it is original in the state. You can create a name that fits most of your needs, but it cannot be the same or too similar to another business name in the state.
As with your LLC name, there are a few things to keep in mind. First, you cannot use any name that makes it seem like your business is somehow connected to the state government or any authoritative service.
Specifically, the state says that all names have to be distinguishable from other companies in the state, and they cannot be misleading. You do not have to use the LLC designation as a component of your DBA.
Once you have some ideas of what you want your DBA name to be, you then need to search the California database of company names to ensure the one you have selected is unique. Be sure that there are no other names that may be similar to the one you are interested in using for your business.
The process in California is a bit different from what could be expected in other states. In California, the process of creating a fictitious business name (FBN) is handled at the county level rather than at the state level. This is done at the Registrar-Recorder or County Clerk’s office of the county in which your business will be located when it is in place.
California law states that a DBA is necessary for any LLC that is doing business under a name that is different from the one stated in the Articles of Incorporation or the Articles of Organization that has been filed with the California Secretary of State. Also, note that creating an FBN establishes a rebuttable presumption that the first registrant has the exclusive right to use that name.
There are a few things to note:
If your business is already in operation in other states but is not in California, you need to register with the Clerk of Sacramento County with your DBA.
If you plan to operate your LLC in California and you want to complete a DBA, you need to do so at the county level. Here are a few examples of how to do so.
Visit the Sacramento County Finance website. There, use the e-FBN Online Search to find out if there are any other businesses using the name you hope to use. There, click on the link to complete the Fictitious Business Name Statement. This form requires you to provide all information about your LLC. You will then need to mail it to:
It is also possible to deliver it in person. You will need to pay a $44 fee to submit the form.
Start by visiting the County of Los Angeles website. There, you can click on the link to do a name search for the county. This is the first step and needs to be completed prior to moving forward.
From there, you can access the Application for FBN Statement. You can file it in person or through the mail. You can also use a third party to complete the DBA for you. Once you do that, you will click on the filing type you plan to use (there are several listed on this page) and then follow the steps to complete the form as well as to download and print the required document.
You can then mail in your statement to:
Follow the same process for any county you plan to operate your business in. Most county websites offer steps to help make the entire process as streamlined as possible.
Perhaps you did not mean to do so, but you failed to set up your DBA before you started operating in the state. You may find that it is not legal for you to operate your business at this point. Keep in mind that you do not have to have a DBA as long as you use the same name that is on your Articles of Organization. However, if you plan any deviation from that, the state should know about it.
There may be several consequences if you do not register your DBA with the state of California. First, note that it is not possible to open a business account in a business’s name that does not have a DBA if it is operating under a different name. Also, the enforceability and validity of any contracts you set up during that time period where you do not have the necessary DBA is at risk.
Also, if you are not registered as a DBA, you and any members of your DBA could be held personally liable for failing to disclose the surname of the business owner.
The state may issue warnings and fines for those who fail to take these steps as an initial penalty. In some situations, they may also require the closure of all business operations. They have the legal ability to close down a business operating without the necessary requirements in place.
Your DBA is not a type of business structure in California. That means that there is no bearing on completing your DBA and your taxes. There are no changes to your taxes based just on your filing of a DBA. It is important to work with an accountant, so you understand the rules required for your LLC when it comes to taxes. Your DBA has no bearing on the taxation for your business.
Filing a DBA with the state of California does have advantages, whether your business is officially an LLC or not yet at that stage. However, it’s important to understand the disadvantages and if having a DBA is something you need. Once you’re ready to officialize your business, check out California LLC page to learn more!
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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