If you are looking for learning what is a DBA license? You are in the right place.
This is an alternate business name to your corporate name.
Starting a small business takes more than a good idea and a lot of drive. Small business owners must comply with state and federal laws: which usually include business registration and licensing.
In most cases, this means registering and getting licenses. But… which one should you get: DBA vs. business license? Here we will cover how to obtain DBA License to make sure that you don’t run afoul of any laws when starting your business.
When comparing DBA vs. business license, it’s important to note that a DBA is not a business license per se, even though many call it a “DBA business license,” “fictitious business name license,” or “fictitious business name statement.”
|Table of Contents|
|1. Everything you need to know about DBA’s|
|2. How to fill out a DBA|
|3. Why do states require a DBA license?|
|4. Benefits of having a DBA|
|5. Everything you need to know about business licenses|
|6. DBA vs. Business license: Now you know|
Everything you Need to Know About DBA’s (Doing Business As)
To understand the difference between DBA and business license, first, let’s dive into DBAs.
What is a DBA License?
A DBA is when you register a name that you are “doing business as” with the state or local government. Sole proprietors most commonly use them.
What is a DBA? Well, in other words, it’s the legal name of your business. Many people think it’s a business structure, but it’s not.
Let’s see an example: let’s say that Joe Johnson has a small business providing plumbing services. He can register his business under “Johnson Plumbing” to avoid any legal complications.
When comparing DBA vs. business license, the simplest way to put it is that a DBA license is a fictitious business name that allows you to do business with a name different from your own.
A DBA prevents businesses from hiding or changing their name in order to avoid lawsuits from consumers.
How Does DBA Work?
A DBA, short for Doing Business As, is also called a fictitious, assumed, or trade business name. It’s a name different from the one the business owner registered.
Many business owners register their business under their legal name (some because that’s the requirement for their type of structure), but they can use a trading name to do business.
For example, Bob Smith has a business registered under his name that installs fences. Now, he wants to register it under the DBA “Fences by Bob.” Once registered, Bob uses that name rather than his legal name to conduct business.
Mostly sole proprietors and general partnerships register their businesses using a DBA, but other legal entities can do this too to develop a specific line of products and services.
When Do You Need a DBA?
DBAs are very important if you have a sole proprietorship because if they do not register a DBA, any business they do will be under their business name. That means that, in the case of any legal problems, the government can go after personal finances or other properties (especially if you lose a case in court). DBAs work as legal protections.
You also may want to file a DBA if you want to change the legal name of your business or if you want to start a business separate from your main one.
You may also need it if you have a sole proprietorship and you want to open a business bank account.
Some states require you to file a DBA even if you have a partnership or a corporation, so you’ll need to make sure you are aware of the requirements in the state you are doing business in.
How to Get a DBA License?
Typically, you have to file with your County Clerk’s office (the state one, not the federal one). This involves giving information about your business and paying some registration fees.
You can also file online using a site called LegalZoom. Get here the information you need to file your DBA with LegalZoom.
List of DBA license costs
|California||$40 – Additional fee of $7.00 for each additional owner or Fictitious Business name listed on the same statement|
|Connecticut||$5 to $10 – varies by town|
|Indiana||About $25: varies by county.|
|Iowa||$7 Sole proprietors and partnerships, $5 corporations and LLCs|
|Kansas||No requirement for registering DBA|
|Michigan||$10 to $25 depending on entity structure|
|Minnesota||$30 by mail, $50 in-person, no online filing available|
|New Jersey||$15 – $50 fees vary|
|Texas||$15 to $25 – varies per county|
Do you Have to Renew a DBA?
Your DBA will not expire in some states until you file a different business name. In other states, you must renew your DBA after a certain number of years. This all depends on where you live, so be sure to go to your Secretary of State’s website to find out the specific rules on DBAs in your state.
Check this article to have an in-depth vision on DBA
How to Fill Out a DBA form
Each state has different forms and requirements. Obtain the correct form online or in person from your county or state office.
Typical information requested includes:
- business owner name
- physical business address location
- requested DBA name
- entity type, such as sole proprietorship, corporation, LLC, etc.
Then, sign the form and pay the requested filing fee. Officials may require a notary to witness the signatures depending on the state.
Once approved, you can officially use the DBA to operate your business.
Why Do States Require a DBA License?
States require a DBA license to protect consumers from faulty products and services. If the business doesn’t act responsibly regarding a complaint, a consumer can contact the state agency that registered the DBA to hold the business owner liable.
On the flip side, a DBA protects the business owner when someone tries to use their DBA to promote a similar product or service or fails to honor an enforceable contract.
Benefits of Having a DBA
Many business owners use a DBA regardless of their business structure to give their businesses credibility in the marketplace.
Equally important is that most DBA names reveal what product or service the business owner offers, which provides free advertising.
Once you register your DBA, you can open a business bank account to separate business and personal expenses and receive checks payable to the DBA for deposit.
Everything You Need to Know About Business Licenses
Now it’s time to understand business licenses if you are a small business owner.
What is a Business License?
Business licenses can get a bit complicated simply because you will require many different permits for the type of business entity.
In certain states, business licenses are broad and mandatory. Other business licenses are for very specific uses, aircraft, food, or liquor licenses.
There are even business licenses to sell motor vehicles.
You need to be very careful to acquire all licensing and permits required by your state, or you risk the state fining your business or possibly shutting it down altogether.
In most states, you will require to publish in a local newspaper that you intend to use the name.
They can expire, so you need to keep your business licenses up to date.
*In most states, you will require to publish in a local newspaper that you intend to use the name.
What Does a General Business License do?
While there are some licenses and permits for a specific purpose, any business will have to obtain a general business license before conducting business in their state.
A business license covers much more than a DBA. Generally, a business license allows the state to track your business, collect on sales tax and other fees, keep a list of your number of employees, and ensure transparency to consumers who want to look up your business.
Different types of business licenses
When asking yourself “What is a business license?” you might have realized that there are many types of business licenses.
Every state requires different types of licensing, but there are some universal licenses you will need depending on your type of business:
- General Business License: A general business license allows businesses to operate in a certain geographic location. Any business will likely require one of these.
- Occupational Licenses: You will require an occupational license in order to operate your business in certain fields like medicine, law, or tax preparation.
- Health Permits: Any business serving and preparing food or drink will have to undergo routine health inspections and acquire health permits that guarantee the safety of any customer eating or drinking at the business.
- Tax Licensing: Many states require businesses to obtain tax licensing in order to pay sales tax on what they sell and thus collect sales tax.
- Fire Department Permits: If your business involves the use of any flammable liquids or will be outdoors, you may need a Fire Department to permit to ensure that you will prevent any fires or harm to the public.
- Zoning Permits: You will require a zoning permit before you build or use an existing building for your business. In some cases, you may need to present in front of your cities planning commission before building.
Bear in mind that this list doesn’t end here: there are many other business licenses that depend on the types of business you want to operate. For example, cleaning businesses have very specific licenses.
How to Get a Business License?
Once you know what business licensing requirements you need, gather the documents each license requires and apply with the State, City, and County Governments.
Get here more information on business licenses and how to acquire them
DBA vs. Business license: Now you know
We hope this article has given you a better idea of what is a DBA and a business license.
If you have a sole proprietorship and thinking of doing business as a DBA, be sure to check your state and local government’s required registration, licensing, and permits.
It may seem like a tedious aspect of starting a business, but it is crucial to get the right license and registration if you want to avoid any legal complications.
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Is a DBA a business license?
No, they are different.
A business owner acquires a business license which some people refer to as a business certificate from the local state, county, or government agency to operate their business.
That same registered business can apply for one or more DBAs to promote separate product lines or services.
Does a DBA need a business license?
Anyone that operates a business legally needs to have a license or permit required by their state. Registering a DBA is a separate filing process from getting a business license.
What Is An Occupational License For Business?
An occupational license is for businesses that provide a specific professional service, such as electricians, lawyers, counselors, nurses, cosmetologists, etc.
Is a Business Certificate The Same As A DBA?
Each state issues a business certificate or business license, indicating that a business can operate legally.
DBAs permit business owners to conduct business using a name other than their entity’s legal name.