What is a DBA (“Doing Business As”)?
A DBA is also known as a trade name or fictitious business name that you can use for your business after you’ve registered it. In Texas, the DBA is called an assumed name. A Texas LLC, corporation or other registered entity files an assumed name certificate with the Secretary of State. Sole proprietors and general partnerships file with the county clerk.
It applies to all business entities and can be used whether you’re an LLC, corporation, sole proprietorship, limited partnership or limited liability partnership. The DBA is typically used when you want to use multiple names after you’ve gone through the process of how to start a small business in Texas, or when you are a sole proprietor or partnership that wants to use a different name than your legal name.
Benefits of a DBA
A DBA filing allows you to rapidly start using a name even if you do not have a formal business entity. Informal business structures like sole proprietorships and other partnerships can use a DBA for basic business functions, such as banking and marketing.
A DBA doesn’t change your Employer Identification Number (EIN) requirements. A sole proprietor or single-member LLC without employees often doesn’t need an EIN, with or without a DBA, but a bank may ask for one to open an account in the business name.
You can also have multiple DBAs within one business entity. For example, if you have different online businesses, you can use a DBA for each one without creating a separate business structure, such as an LLC for every site. From a marketing and branding strategy, this creates tremendous efficiencies; you can establish different brands and position them by using DBAs within a master LLC structure.
A DBA doesn’t change how your business is taxed.
A DBA can also make it easier to open a bank account and accept payments under your business name.
Disadvantages of a DBA
There are several disadvantages to using a DBA. A DBA doesn’t provide any tax advantages.
A DBA on its own gives you no liability protection. A DBA is not a business entity. It merely allows you to operate under a name other than your company’s actual name. If you’re a sole proprietor, you stay personally liable for business debts. If your LLC files the DBA, the LLC’s liability protection still applies, because the DBA is just another name for the LLC.
Is having a DBA in Texas a must?
No. You do not need to use a DBA. However, many business owners find it a good optional strategy to deploy if it fits with their overall business strategy.
Filing for a DBA in Texas
Filing a DBA in Texas takes several steps related to the name you choose and how you use it, depending on your business structure.
Name requirements
You want to choose a DBA that will be memorable and catchy. Remember, you’ll likely be using your DBA for everyday business operations, meaning it may appear in signage, ads and other marketing materials.
Texas doesn’t check assumed names for conflicts with other businesses, and filing one doesn’t give you exclusive rights to it. It still makes sense to avoid names that are already in use or trademarked, and to avoid words like “bank” or “insurance” that are regulated in some industries.
Begin with Texas assumed name search
To begin the process, you need to determine if your desired name is already taken within the state of Texas.
Before you file, run a Texas entity search: search the Secretary of State’s business records in SOSPortal (each search costs $1) or the Comptroller’s taxable entity search to see if another business already uses the name. You may also contact the Secretary of State’s office directly to ask about a name.
You will then file your assumed name certificate with the state.
Register your Texas DBA
To register, you will need to submit Form 503 (Assumed Name Certificate). The form asks for the following information:
- Assumed Name. The name desired to use for your business
- Legal Name. Name of the entity filing the assumed name and the business type
- File Number, if the Secretary of State has provided one
- State, Country or Jurisdiction where the entity is formed
- Principal Office Address
- Period of Duration. You may choose the timeframe under which your DBA is valid: 10 years, any number of years up to 10 years from the date of filing or a specific date
- Counties, which lists the counties under which the DBA will be used
You can renew the name by filing a new certificate within six months before it expires. To stop using it early, file Form 504 to abandon it.
File online
You can file an assumed name certificate through SOSPortal, the Secretary of State’s online filing system. The fee is $25. Card payments add a convenience fee of $0.25 plus 2.25%; ACH is also accepted. See our Texas LLC cost breakdown for the other state fees.
File by mail
To mail your application, you can send it to:
Secretary of State
P.O. Box 13697
Austin, TX 78711-3697
Mail and in-person filings are paid by check or money order.
If submitting in person, the application should be delivered to:
400 W. 15th St.
Austin, TX 78701
Consequences for operating with a DBA without registration
If you don’t file, your contracts stay valid and you can still defend a lawsuit, but you can’t bring a lawsuit in Texas over business done under the assumed name until you file the certificate. A court can also make you pay the other side’s costs of finding and serving you (Bus. and Com. Code §71.201).
Intentionally violating the assumed name law is a Class A misdemeanor (§71.202).
Tax considerations
There are no tax implications to filing a DBA as it is not a legal business structure. A DBA also doesn’t replace the licenses and permits your Texas business may need.
Conclusion
There are many advantages to having a DBA as an LLC. The process allows you to use a more recognizable name, an assumed name in Texas, that is different from your legal name. While there are no tax benefits to creating a DBA, there are decided marketing and operational advantages to using this important tool. If you’re just getting started, it’s helpful to first understand how to form an LLC in Texas, since your LLC has to exist before it can file an assumed name certificate.