If you start a business in South Dakota or already own one, the business name that you use can impact a lot of different things. Not only does your legal business name play a key role in many processes like opening a business bank account or filing taxes, but it’s also your company’s public identity and key part of its marketing and branding.
But what if you want to use a name that’s different than your legal business name? In this case, South Dakota law generally requires you to file a fictitious name statement (a DBA) first (SDCL 37-11-1). Thankfully, the process is quick and simple!
To help you decide if obtaining a DBA is the right choice for your South Dakota business, we’ll walk you through everything you need to know about filing a DBA in South Dakota, including what a DBA is, the benefits and cons of using one, and a step-by-step guide on how to file your DBA online with the South Dakota Secretary of State or on paper with a county register of deeds.
What is a DBA?
A DBA (also known as an “assumed name” or “fictitious name”) is essentially nothing more than an additional name that your business can use. Businesses in South Dakota can use DBAs for all of the same business activities that they use their legal business names for. This includes things like invoicing customers, opening a business bank account, and marketing your company. With a DBA, you still get to keep your legal business name as well and are free to continue using it for all of the same activities.
As for why a business might want to use more than one name, there are numerous different reasons. Many businesses will file for a DBA when they are undergoing a rebrand so that they can create a new identity for the company without actually having to form a new company. Other times, businesses will file for a DBA when they are expanding into new markets or launching a new line of products/services. For example, a business named “Jack and Jill’s Diner” might file for a DBA to go by the name “Jack and Jill’s Catering” if it wishes to begin offering catering services
Another common use of DBAs is to appeal to a specific market segment. Let’s say, for example, that a business called “Plumbing and Electric Plus” has numerous locations throughout South Dakota. To distinguish these locations and appeal to local customers, the company might use DBAs like “Plumbing and Electric Plus of Rapid City” and “Plumbing and Electric Plus of Deadwood”.
The final important thing to know about DBAs is that they can be used by all business types. This includes sole proprietorships, partnerships, LLCs, and corporations.
Benefits of a DBA
The main benefit of having a DBA is that it lets you create a new public identity for your business. We’ve already looked at several of the scenarios where using a different business name can be beneficial, and there are plenty of other scenarios that exist as well. But before you can legally conduct business under a name that’s different than your legal business name, filing a fictitious name statement is required, unless the name includes the true surname of each owner (SDCL 37-11-1).
Another benefit of DBAs is that, in some cases, you don’t even need an EIN to obtain one. Since sole proprietorships and single-member LLCs without employees generally aren’t required to have an EIN, an EIN is not required for these businesses to get a DBA either.
Disadvantages of a DBA
There aren’t a lot of disadvantages to having a DBA, as long as you use the new name appropriately. Aside from the effort and small fee that the filing process requires, the only real downside to using a DBA is that it can sometimes be confusing to customers and hurt your branding. Using multiple business names without a clear reason or purpose can make it difficult to grow brand awareness and may also frustrate your customers. That’s why it’s important to use DBAs strategically and always consider things like branding and marketing when choosing a business name.
It’s also important to remember that DBAs do not offer any personal liability protection; all they are is a business name. For this reason, most South Dakota business owners are better off forming an LLC or corporation rather than operating as a sole proprietor with a DBA.
Consequences for operating with a DBA without registration
What you call your company may not seem all that consequential, but it’s something that the state of South Dakota takes very seriously. You never want to conduct business operations under any name besides your legal business name without first filing for a DBA. If you don’t file, you can’t bring a lawsuit in the business name or recover money from business claims until you file the statement (SDCL 37-11-5). Filing a DBA also doesn’t limit your personal liability for the business’s obligations (SDCL 37-11-4).
Tax considerations
Using a DBA does not affect how your company is taxed in any way, and, when filing taxes, you’ll still need to use your legal business name. A DBA is just an alias or additional name for your company, and it doesn’t change its structure or how it is taxed. A DBA also doesn’t replace any licenses and permits your South Dakota business needs.
Filing for a DBA in South Dakota
If you’d like to start using a different name for your South Dakota business, filing for a DBA is your best bet. Here is a step-by-step guide on how to do this:
Name requirements
Keep the following points in mind when choosing a DBA in South Dakota:
- South Dakota’s fictitious name law doesn’t require a DBA to be unique, and registering one doesn’t give you exclusive rights to it. Search existing names and trademarks first to avoid confusion with another business.
- Avoid designators such as “LLC” or “Corp” unless your business is that type of entity, and avoid words like “bank” or “insurance” unless you’re licensed in that industry, since these can mislead customers and are restricted by industry regulators.
Begin with a South Dakota Assumed Name search
Before you file, check whether another business already uses the name. Search the Secretary of State’s DBA records and the business entity search tool provided by the South Dakota Secretary of State. No results means no one has registered that exact name, but it doesn’t guarantee you’re free to use it. If the search returns another business that’s already using the name, then you’ll have to alter it or pick a different one. For a walkthrough of the search tools, see our South Dakota business search guide.
Steps to register your South Dakota DBA
Once you’ve confirmed that the DBA you’d like to use is available, you can file for a DBA through the South Dakota Secretary of State. Here is a step-by-step guide to completing this process:
Step 1: Prepare your information
Gather all the necessary information for your DBA application, including the DBA you want to use, the name and address of each owner (or the owner’s Secretary of State Business ID if the owner is a company), and your business’s main office address. All of this information will be required to complete the application form.
Step 2: File the registration form
Once you have all of the necessary information on hand, you can file for a DBA online at the South Dakota Secretary of State website. You can also file a paper fictitious name statement with any county register of deeds, which enters it into the Secretary of State’s system (SDCL 37-11-1, 37-11-3).
Step 3: Pay the filing fee
When filing for a DBA in South Dakota, you’ll be required to pay a $10 filing fee. This fee is paid at the end of the online application process, and it can be paid via credit or debit card. See our South Dakota LLC cost breakdown for other state fees.
Renew or update your DBA
Your DBA registration lasts five years. You can renew it for $10 within 90 days before it expires. An expired DBA can’t be renewed and has to be registered again as new. If 25% or more of the business’s ownership changes, file an updated statement ($10). Canceling a DBA you no longer use is free.
Conclusion
Filing for a DBA in South Dakota is a simple and affordable way to operate your business under a different name without having to form a new business or change your business structure. By following the registration process carefully, you can ensure that your DBA is legally recognized so you can begin operating under the new name without fear of penalties.
FAQ
No, businesses in South Dakota are not required to have a DBA and are free to use their legal business name alone. However, if you want to use any other name besides your legal business name, then filing for a DBA is a necessity.