One of the most prevalent types of business ownership is the sole proprietorship. It offers total control over the firm and is simple to set up and administer. Many individuals aren’t clear, nevertheless, whether they must register their sole proprietorship.
Depending on where you live and the kind of business you are running, the answer to this question will vary. The majority of the time, sole proprietors do not need to register their company with the government, but they may need to do so in order to function legally.
Obtaining a DBA, or “doing business as” name, is one of the most typical needs for solo proprietors. This name, which is used to identify the company but differs from the owner’s legal name, is used. For instance, John Smith would need to file a DBA if he wanted to operate a business under the name “John’s Pizza” rather than under his own name.
To open a business bank account, obtain a business license, and file taxes, a DBA is often necessary. DBAs do not establish a separate legal company or offer the owner any legal protection, which is a key point to remember. This implies that a sole proprietorship’s owner is individually responsible for all of the company’s debts and liabilities.
Whether two firms can use the same name is a crucial topic that comes up while forming a DBA. No, is the response. A DBA name cannot be used by two different firms. This is so that businesses may be distinguished from one another using the DBA. Two firms operating under the same DBA name might confuse customers and run afoul of the law.
The correct approach to write your legal name for a DBA is to utilize your complete legal name. This means that if you want to add a descriptive phrase, your DBA would be “John Smith” or “John Smith Enterprises” if your legal name is John Smith.
In conclusion, even if sole owners are exempt from the requirement to register their companies with the government, they might need to get a DBA in order to conduct business legally. For the purpose of identifying the business, a DBA is necessary in order to file taxes, create a business bank account, and get a business license. It’s crucial to pick a distinctive DBA name and register under your entire legal name. The owner is individually liable for all of the company’s debts and responsibilities, and a DBA offers no legal protection for them.