In Rhode Island, creating an LLC costs $150. It costs this amount to submit articles of organization with the Secretary of State of Rhode Island. Additionally, LLCs must submit an annual report to the Secretary of State of Rhode Island. This study costs $50 to purchase. Although establishing an LLC in Rhode Island is more expensive than establishing a DBA, the legal protections and tax advantages that an LLC offers may make it a wise investment.
For companies that do not wish to use their legal name but still conduct business, a DBA, or “doing business as,” is a more convenient and affordable choice. Operating as a DBA does have certain drawbacks, though. The fact that a DBA offers no legal protection for the business owner is one of the main drawbacks. This implies that the owner’s personal assets may be at stake if the company is sued. Additionally, since the firm owner is still regarded as a sole proprietor and is so required to pay self-employment taxes, a DBA does not offer any tax advantages.
You are self-employed if you use a DBA, thus yes. This means that you are liable for paying self-employment taxes, sometimes known as the employer and employee components of Social Security and Medicare. When weighing the advantages and disadvantages of working as a DBA, it’s critical to keep this in mind.
A DBA is easier and less expensive to set up, but an LLC offers the business owner legal protections as well as potential tax advantages. An LLC is most certainly the best choice if you run a firm that has a larger chance of being sued, such a construction company. A DBA, however, can be a more cost-effective choice if you run a smaller, less risky organization.
It is extremely advised for a DBA to have a separate bank account, even though it is not necessary. It can be easier to manage your money and file taxes if you have a separate bank account for your business. As proof that you are running your business as a separate organization, it can also help safeguard your personal assets in the event of a lawsuit.
In conclusion, even if founding an LLC in Rhode Island is more expensive than forming a DBA, the legal protections and tax advantages that an LLC offers can make the expense worthwhile. It’s crucial to assess the advantages and disadvantages, as well as take your company’s unique requirements into account, when deciding whether to operate as an LLC or DBA.
You can indeed register a business name even if you never use it. It is crucial to remember that even if you do not use the registered name, several states may still compel you to submit annual reports or pay taxes. Additionally, if a business name is registered but not used, it may prevent other businesses from using the same name. This could be useful if you decide to use the name or sell it to another company in the future.
The same DBA name cannot be used by two different businesses. Each DBA name must be distinct and unregistered with another company in the same state. Businesses that attempt to use a DBA name that is already in use risk legal repercussions.