Choosing the right legal form is crucial when launching a new company. A sole proprietorship is the easiest choice for many business owners and entrepreneurs. However, even as a sole proprietorship, you might still need to take further actions, such submitting a DBA. We’ll address the primary query right here: do you have to submit a DBA to the IRS? We’ll also go over related topics including how much it costs to form a sole proprietorship in New Jersey, whether or not a sole trader is allowed to use a trading name, and how to use a trading name.
Let’s start by defining what a DBA is. The acronym DBA stands for “doing business as.” A trade name or fictional name are other names for it. A DBA, if you’re a lone proprietor, is essentially a name you use for your firm that differs from your given name. You might register a DBA, for instance, if your name is Jane Smith and you own a bakery named Sweet Treats, in order to legally operate under that name rather than “Jane Smith’s Bakery.”
Do you have to submit a DBA to the IRS then? No, is the response. You are not particularly required to file a DBA with the IRS. However, if your company operates under a trade name, you must use that name on your tax filings. The Schedule C (Form 1040), which is used to report revenue and expenses for a sole proprietorship, must therefore include your DBA. Depending on where you are located, you might additionally need to register your DBA with your state or local government. If you’re launching a sole proprietorship in NJ, you must adhere to the state’s unique regulations for business registration. A Business Registration Application must be submitted to the NJ Division of Revenue as one of these requirements. This application will request details regarding your company, including its legal name (if applicable), address, and personal data. Additionally, you must say whether you’re employing a trade name and, if so, what it is. The current filing fee for this application is $125.
The answer to the question of whether a solo proprietor can use a trading name is yes. In reality, a lot of sole proprietors adopt a trade name to distinguish themselves from rivals or to make their company more recognizable. It’s crucial to confirm that no other company is already using your trading name. Additionally, you must utilize your trade name consistently in all of your marketing materials and register it with your state or local government.
Finally, how should a trade name be used? You can start using your DBA or trade name on your business cards, website, signs, and other items once you’ve registered it. On formal papers like contracts and tax returns, you must use your legal name (for instance, Jane Smith). On your website or other materials, it’s a good idea to make it clear that your trade name is a DBA for your legal name.
In conclusion, even if it isn’t technically necessary, you might need to register your trade name with your state or local government. Starting a sole proprietorship in New Jersey requires submitting a Business Registration Application along with payment of a fee. Additionally, be sure to regularly and accurately use your trade name on all of your business materials if you are using one.
Yes, two businesses may have a trading name, but it’s vital to keep in mind that if they are in the same field and region, it may cause customer confusion and even legal problems. Before deciding on a trading name, it is advised to do a comprehensive search of already-used company names and trademarks to prevent any conflicts. Furthermore, registering a DBA (Doing Business As) with the state or local government might aid in differentiating your company and stop others from utilizing the same name. However, as the IRS is not an organization that oversees business names, it is not necessary to file a DBA with them.