Selecting a business structure is one of the initial choices an entrepreneur must make when starting a business. A company’s organizational and management structure, as well as its legal and tax requirements, are determined by its business structure. Limited Liability Companies (LLC) and sole proprietorships are two common business formats. However, entrepreneurs could also think about filing a Doing Business As (DBA) name.
A DBA, commonly referred to as a trade name or fake name, permits a business to conduct business under a name different than its legal name. A DBA is helpful for businesses that want to grow without forming a new legal company or use a different name for branding reasons. The corporation is nonetheless liable for its liabilities even though registering a DBA does not turn the business into a different legal entity.
The use of “Inc.” with a DBA name is a question that business owners frequently ask. No, is the response. The legal term “Incorporated,” a particular kind of business organization, is abbreviated as “Inc.” Only businesses may use the word “Inc.” in their name. However, if the business is set up as an LLC, a DBA may use the designation “LLC”.
The legal and tax ramifications of each structure must be taken into account when choosing between an LLC and a sole proprietorship. The simplest type of business structure is a sole proprietorship, which has just one owner and only one employee. However, the proprietor is liable for all debts and liabilities of the business personally. In contrast, an LLC protects the owner’s personal assets from business obligations by separating their personal assets from the company’s liabilities. Additionally, LLCs are subject to different tax laws than sole proprietorships and can have many owners.
A business must submit a Colorado business tax return if it is registered there. The business structure and revenue determine the kind of tax return. While LLCs submit a separate tax return, sole owners include business income and costs on their personal tax return. Additionally, Colorado businesses are required to register for local and state taxes like the sales tax.
A company can renew its DBA name online through the Secretary of State website. However, if the DBA has been revoked, the company is not permitted to use that name going forward. Legal problems and customer confusion might result from using a business name that has been canceled.
In conclusion, a DBA may use “LLC” if the business is registered as an LLC even though it cannot use the word “Inc.” in its name. The legal and tax ramifications of each option should be taken into account when selecting a business structure. Businesses in Colorado are required to register for state and local taxes as well as file a business tax return. Online renewal of a DBA name is available for businesses, however names that have been canceled cannot be used.