While many people know that in the business world DBA stands for “doing business as,” far fewer understand how and when to use a DBA. In fact, in Wisconsin it’s highly possible many people are using DBAs without even knowing it.
That’s because Wisconsin is a state that does not require entities to file anything in order to conduct business as a DBA, and many sole proprietors offer goods and services under a name that is not their own personal full name. It’s the difference between calling your business Samuel A. Charles, III, and Sam’s Landscape Service.
While DBAs are common among sole proprietors to build name recognition, DBAs also allow corporations and limited liability companies (“LLC”) to operate multiple businesses without creating a separate legal entity for each one. It allows Sam’s Landscape Service LLC to also do business as Sam’s Snow Removal, Sam’s Sprinkler Installation, Sam’s Tree Service and so on.
That means Sam’s Landscape Service LLC files just one tax return, needs just one insurance policy and requires only one bank account. It could also mean completing paperwork just once for workers compensation and unemployment insurance. And for businesses that require special licenses or permits, they’ll need only go through that process one time.
That doesn’t mean, however, DBAs are right for every entity. Consider a person or business that wants to form a new entity in partnership with another business or person. That would be a time when a new LLC or corporation might make more sense.
If you decide a DBA is right for you, you’ll want to be sure its use doesn’t compromise the liability protection provided by a corporate structure. You’ll need to be careful to indicate on business cards, letterhead, websites, contracts, etc., that the DBA is a subsidiary of the LLC or corporation. So every time Sam uses the Sam’s Snow Removal moniker, he’ll need to add somewhere “A subsidiary of Sam’s Landscape Service LLC” to make sure third parties know up front they are dealing with an LLC.
If you’re wondering whether a DBA is right for your business, an experienced corporate lawyer can help you determine the direction that’s best for you and your business goals.