DBA vs. LLC: What’s the difference?

Selecting your company’s legal structure is one of the most crucial decisions you’ll make when launching a new firm. A “doing business as” (DBA) and a limited liability company (LLC) are two well-liked alternatives. Even while they both have advantages, there are also big contrasts between the two. DBA: What exactly is it?

A DBA enables a company to trade under a name other than the owner’s legal name. This is frequently used by solo proprietors who want to give their company a more expert-sounding name. For instance, if John Smith owns a landscaping company and wishes to conduct business as “Green Thumb Landscaping,” he must submit a DBA.

The fact that a DBA is affordable and simple to set up is one of its key advantages. Simply submit a form to your state or local government, along with a nominal fee. The business owner is not legally protected by a DBA, though. The owner’s personal assets may be at risk if the company is sued. LLC: What is that?

In contrast, an LLC is a distinct legal entity from its owners. This indicates that the company is able to sign contracts, own property, and bring legal actions on its own behalf. An LLC’s owners are not individually responsible for the debts or legal troubles of the business.

An LLC also gives the company a more official organizational structure, which is another advantage. This may make it simpler to get finance, hire staff, and draw clients. However, establishing an LLC might be more expensive and time-consuming than registering a DBA. You will have to pay a filing fee and submit your articles of organization to your state government. Do I need to obtain a DUNS number for my LLC?

An exclusive nine-digit identification for businesses is called a DUNS number. Businesses use it to monitor the financial and credit data of other businesses. Even though a DUNS number is optional, many companies decide to obtain one.

If your company is an LLC, you can apply for a DUNS number using the name and address of your company. By doing this, you may develop credit for your company and streamline the loan or credit card application process. Can I obtain a DUNS number without forming an LLC?

Yes, even without an LLC, you can still apply for a DUNS number. You must submit details about your company, including your name, address, and phone number. You can also be asked to disclose information about your sector and earnings.

A business that has a single owner is known as a sole proprietorship. A sole proprietorship can be managed by an unlimited number of people, but there can only be one owner. This implies that a solitary proprietorship is not permitted to have shares or partners.

What type of organizational structure is the simplest to create? A single proprietorship is the most straightforward type of company to set up. This is due to the lack of formal paperwork that must be filed and the limited legal requirements. The only thing left to do is to begin operating under your own name or a DBA. The owner’s private assets are not legally protected by a sole proprietorship, nevertheless.