Do Business Partners need a DBA?
Do Business Partners need a DBA?
Generally, if you operate your business in the names of the partners, you do not need to file a fictitious name registration. For example, if George Smith and John Green form a partnership and run a lawn maintenance business under the name “Smith & Green Landscaping,” they do not need to register their name. However, if they do business under a name such as “S & G Landscaping” or “Smith Greenlawns” or “The GreenSmiths,” then they may need to register.
Your partnership will need to decide whether to conduct business in the names of the partners, or adopt a name for your business. Such as business name is known as a doing business as name (or abbreviated as dba, d/b/a, or DBA name), a fictitious business name, or an assumed name.
Do You Need to File a Fictitious Name Registration?
Whether you are required to register a fictitious business name for a business depends upon where you conduct business. Some states require registration and some do not. You should check with your state and possibly your local government to find out if you need to register. This will most often be the Secretary of State’s office or one of its subdivisions. It may also be a county or city clerk. Be sure to inquire about the use of a fictitious name for a general partnership, because there may be filing requirements for corporations, LLCs and limited partnerships that do not apply to general partnerships.
Why Do Some States Require Registration?
The main reason for mandatory registration is for the protection of consumers. The partners in a general partnership are personally liable for partnership debts. Registration is required so the partners can’t attempt to avoid personal liability by hiding behind a business name. Anyone doing business with a partnership should be able to find out the identities of the owners of the partnership. For example, if you hire ABC Plumbing to replace your water heater, and the plumber breaks pipes and floods your house, who do you go after to pay for the damage? If your state requires registration of fictitious names, you could contact the registration agency and find out the names and addresses of the partners who are operating ABC Plumbing.
For comparison, in most states, if ABC Plumbing is incorporated, it is required to use “Incorporated,” “Corporation,” “Inc.,” or “Corp.” in its name. If the advertising, sign on the truck, or invoice reads “ABC Plumbing, Inc.,” you know that it is a corporation. The same applies to limited liability companies. In our example, the name would read “ABC Plumbing, LLC.” These designations put you on notice that you are dealing with a corporation or a limited liability company, and therefore, that the owners of the business are not personally liable. However, there is no legally required way of clearly designating a business as a general partnership. Unless registration is required, it may be difficult to identify the general partners.
Effects of Failure to Register
If you are required to register and fail to do so, there can be several results. Most seriously, in some states it is a criminal offense to fail to register a fictitious name. Other possible effects of failing to register are that your business will be denied access to the courts if it needs to sue someone, you will be unable to use the business name in advertising, and you will not be able to open a bank account in the business name.
Aside from any legal requirement to register a fictitious name, there are other good reasons to do so. You will be able to use the name in advertising and will be able to open bank accounts in the business name. It is usually possible to do a DBA search at the registering agency to see if there are any other businesses using the same name. If there is another business using the name, you may want to choose another name to avoid confusing potential customers. However, while some states may not allow two or more businesses to register the same name, some states do allow it. So there may not be any guarantee that someone won’t register the same name after you.
Why Use a Business Name?
Unless your partnership is a type of business that is commonly conducted under the names of the partners (such as law firms or accounting firms), a fictitious name is usually a better choice for marketing purposes. The choice of a good business name can help to make your business more memorable to potential customers. It can also more clearly identify the nature of your business.
There is also a good reason to not use your own name. If you use your own name as part of the business name, you may lose the right to use your own name in a future business should the partnership split up. For example, Ivan, Jane and Sue form a partnership to make and sell chocolate chip cookies. They decide to call their business “Famous Ivan’s Cookies.” After a few years, cookie sales have soared, and Famous Ivan’s Cookies have truly become famous. But Jane and Sue keep outvoting Ivan on business decisions, and Ivan decides to leave the partnership and open his own cookie business. Jane and Sue form a corporation under the name “Famous Ivan’s Cookies,” and also register the name as a trademark. They want to continue to take advantage of widespread public recognition of the business name. When Ivan starts his own business, he finds that he can’t use his own name because of the prior corporation and trademark registration.
Where to File
In some states, fictitious name registrations are filed with the Secretary of State, or some other division of the state government. In other states, registrations are filed with a local government agency, such as a county, township or city clerk. You can also register a DBA online.
What Does Filing Involve?
A typical registration will involve filling out a simple form and paying a fee, usually less than $100 and sometimes less than $25. The form typically includes information such as the name and address of the business, the names and addresses of the owners, and the type of business that will be conducted. All of the partners may need to sign it and it may need to be notarized. You may also need to place a notice in a newspaper. If this is required, there is often a local small newspaper that specializes in legal notices. This is must less expensive than publishing in a larger, general circulation paper. The agency where you register may be able to tell you the name of such a newspaper, or you may be able to find one at your local courthouse.
Relationship to Business Licensing
Even if you are not required to register a fictitious name, you may still be required to obtain one or more types of business licenses. For example, your county, township or municipality may require a license for any individual, partnership or other entity doing business in that locality. More specific licenses may be required for certain types of businesses. Most states have some type of agency that provides such information to those starting up new businesses.
As stated above, the registration of a fictitious name will not prevent others from using the same name for their business. If you want to prevent others from using your business name, you may apply for a trademark. If you are only going to do business in your state, you may be able to register the trademark with your state government. This will only protect the use of the name in your state, however, not nationally.
If you are planning to do business in more than one state in the near future, you may want to file for federal trademark registration. You need to state either that you have already used the name in more than one state, or that you intend to do so. If you register on the basis of intent, you must begin using the name in your business within six months and file an affidavit certifying use. Federal registration will protect the name in all states.
You can file a DBA yourself—or have it done for you. With LegalZoom’s DBA service, you simply fill out a questionnaire form and we complete and file your DBA application with the proper government office. We’ll also publish your DBA notice in a local paper (if required).