What is an Assumed Name and How Does it Work?

An assumed name, often called a fictitious name or a trading name, is the name under which a corporation or its owner does business and differs from their legal names. It allows companies to operate under a moniker that is more catchy, evocative, or appealing to customers than their official name. For instance, John Smith, the proprietor of a business, can decide to go by the moniker “Smith Consulting” rather than his own name.

An assumed name is not a corporation or a limited liability business, which are legal entities. It is merely a method for conducting business under a different name. The company or its owners are not legally protected by an assumed name. It is crucial to remember that utilizing a fictitious name does not free a company from following federal, state, and local rules and regulations. People frequently inquire as to which is preferable: an LLC or a DBA.

Doing business as (DBA) and limited liability company (LLC) are two distinct commercial legal forms. A DBA is merely a technique to do business under a different name, whereas an LLC is a distinct legal corporation that shields its owners from liabilities.

The decision between a DBA and an LLC is based on the particular requirements and objectives of the business owner. A DBA might be the ideal choice if the business owner wants to use a different name while yet maintaining a separate legal organization. An LLC might be a preferable option, though, if the business owner wants to safeguard their personal assets from corporate responsibilities and establish a separate legal organization for tax and legal purposes.

Taking this into account, what distinguishes an LLC from a DBA? A DBA does not offer limited liability protection to its owners, whereas an LLC does. This is one of the key distinctions between a DBA and an LLC. In contrast to the owners of a DBA, an LLC’s owners are not held personally accountable for the debts and obligations of the company. Legal entity: Unlike a DBA, an LLC has a separate legal identity from its owners. In contrast to a DBA, an LLC is able to enter into contracts, hold property, and bring or receive legal proceedings in its own name. Taxation: An LLC has the option to select its tax classification, whereas a DBA does not. Depending on the needs of the business, an LLC may be taxed as a sole proprietorship, a partnership, a S corporation, or a C corporation. A DBA is merely a new name for a business and is not taxed differently.

The sort of business and the business’s location will determine the answer. The majority of firms in Michigan must register with the state and get a certificate of business registration. Additionally, certain business kinds could need licenses and permits from regional and municipal authorities. It is crucial for business owners to do their homework on the particular criteria for their sector and area.

Yes, you can file for a DBA online using the state’s company registration website in the majority of states, including Michigan. Typically, the procedure include completing an application and paying a fee. The business owner can begin using the assumed name in business operations as soon as the application is granted. It is significant to remember that using an assumed name could necessitate additional filings and registrations with state and municipal entities.