DBAs, or “doing business as,” are names that companies employ in place of their legal names. This is frequently utilized by lone owners or partnerships who desire to conduct business under a name other than their own. However, a limited liability corporation, or LLC, is a sort of business organization that shields its members from personal liability. But what if you wish to operate your LLC under a DBA? This is how you do it:
You must first register your LLC with your state in order to link a DBA to it. This include submitting the required paperwork, making a payment, and acquiring any required licenses or permits. You will receive a certificate of organization or other similar document once your LLC has been registered.
Step 2: Select your DBA name The DBA name you want to utilize for your LLC must then be decided. This name needs to be original and unclaimed by another company. To find out if the name is accessible, contact the state department in charge of business registration.
After deciding on your DBA name, you must register it with your state’s or local government. This entails completing a form and making a payment. Your state may also compel you to publish your DBA name in a neighborhood newspaper.
You must amend your LLC’s state-registered records in order to link your DBA to your LLC. This could entail amending your LLC’s operating agreement or submitting an amendment to your LLC’s articles of incorporation. To make it official, you must use your DBA name in these documents.
The drawbacks of a DBA
Although operating your business under a DBA can be handy, there are some drawbacks to take into account. A DBA, for instance, offers no protection against personal liability. Your personal assets may be at danger if your company is sued. Additionally, since you will still be required to pay taxes as a single proprietor or partnership, a DBA does not provide any tax advantages. Is It Worth It to Get a DBA?
The needs of your particular organization will determine whether or not acquiring a DBA is worthwhile. A DBA can be useful if you want to conduct business under a name other than your legal name. However, you might want to think about creating an LLC or another type of company entity if you are worried about your personal liability or want to benefit from tax advantages.
A DBA does not submit a different tax return. Instead, the owner’s personal tax return is used to detail the business’s earnings and outlays. a DBA is not a distinct legal entity from the owner, which explains why.
You must pay self-employment taxes as a sole owner, which include contributions to Social Security and Medicare. The self-employment tax rate is 15.3% at the moment. Depending on your unique circumstances, you should set aside at least 30% of your income for taxes. To be sure you are allocating the proper amount, it is always a good idea to speak with a tax expert.
No, an LLC is not required to obtain an EIN (Employer Identification Number). Any business form, including sole proprietorships, partnerships, corporations, and LLCs, can get the EIN, a special nine-digit number provided by the IRS to identify a business entity. However, if you want to create an LLC, securing an EIN is a vital step in starting your firm because it will be necessary for tax calculations and other commercial dealings.
Yes, a single person may hold an LLC. We refer to this as a single-member LLC. In a single-member LLC, the owner has total authority over all business decisions and financial matters. The owner’s personal assets are shielded from the obligations and debts of the business. Additionally, single-member LLCs have the same pass-through tax benefits as multi-member LLCs, which means the owner’s personal tax return is where the company’s income and losses are reported.