Small-business management may be challenging, particularly when it comes to taxes. You are liable for paying taxes on your business income as a sole owner doing business as (DBA). We will walk you through filing taxes under a DBA in this article and provide some associated information.
Depending on their income and region, a DBA should set away a different amount for taxes. It is advised to set aside 25–30% of your business’s income for federal, state, and local taxes as a general rule. In states with higher tax rates, this proportion might be higher. A tax expert should be consulted to determine the precise amount you should set aside.
Due to the fact that a DBA and an LLC are two distinct legal entities, it is advised to keep their financial affairs separate. A DBA may, however, make use of the same bank account as the person’s personal account. To minimize confusion and potential tax problems, it is crucial to maintain proper records and keep track of all business expenses and profits.
Even though both firms are owned by the same individual, it is not advisable for them to share a bank account. It can be simpler to manage spending and income for tax purposes and less confusing to establish different bank accounts for each firm.
While creating an LLC has several benefits, like limited liability protection and management freedom, there are some drawbacks as well. The cost of establishing and running an LLC, which can be more expensive than a sole proprietorship or partnership, is one of the main drawbacks. In addition, LLCs must submit yearly reports and pay state fees, which can raise the cost of doing company.
As a DBA, it is crucial to maintain accurate records of your business’s earnings and outlays, as well as to set away a portion of your income for taxes. Even though it could seem alluring, it is advised to maintain your personal and corporate accounts separate in order to avoid confusion. Despite some drawbacks, creating an LLC may be a viable choice for entrepreneurs seeking flexibility in managing their firm and limited liability protection. For further details, speak with a tax expert or business lawyer.
DBA names are not always safeguarded. When a DBA name is registered, the business owner is only granted permission to use it in that region. It offers no legal defense against trademark infringement or other firms using the same or a similar name. It is advised to file a DBA name for trademark protection with the United States Patent and Trademark Office (USPTO).
If you want to safeguard your brand and stop others from using the same name, you can trademark your DBA. It’s crucial to remember that registering a DBA does not automatically grant trademark protection. To receive legal protection, you would have to register your trademark separately with the United States Patent and Trademark Office (USPTO).