Starting a small business takes more than a good idea and a lot of drive. Any business is required to comply with state and federal laws: that usually includes some sort of business registration and licensing. In most cases, this means registering a DBA (“Doing Business As”, in other words, the legal name of your business) and acquiring a business license. It is important to understand that these are two separate requirements, and each involves different steps in order to be completed. Here we will cover how to go about obtaining both a DBA and business license, so you can make sure that you don’t run afoul of any laws when starting your business.
Filing for a DBA
What is it?
If you are new to the business world, you may have never heard of a DBA. A DBA may seem a complicated concept at first sight, but actually, it’s very simple. A DBA is when you register a name that you are “doing business as” with the state or local government.
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.
In other words, a DBA is a fictitious name that allows you to do business with a name different from your own. Also, this way the government can keep track of your business, and prevents businesses from hiding or changing their name in order to avoid lawsuits from consumers.
When do you need it?
DBAs are very important for sole proprietor’s because if they do not register a DBA any business they do will be under that person’s 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). Some states require a DBA to be filed by other forms of businesses like partnerships and corporations, so you’ll need to make sure you are aware of the requirements in the state you are doing business in. 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.
How do you file for a DBA?
Typically, you have to file with your Secretary of State (the state one, not the federal one). This typically 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.
Do you have to renew a DBA?
In some states, your DBA will not expire until you file a different 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.
Getting a Business License
What is it?
Business licenses can get a bit complicated simply because there are many different licenses required for different types of businesses. In certain states, business licenses are broad and mandatory. Other business licenses are for very specific uses, like licenses to use aircraft, serve food or liquor, or 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. Remember that a DBA is not a business license, and acquiring one is not enough to be in compliance with local laws.
What does a general Business License do?
While there are some licenses and permits that are for a specific purpose, any business is going to 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.
What types of Business Licenses will I need?
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: An occupational license is required in order to operate 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 permit to ensure that you will prevent any fires or harm to the public.
- Zoning Permits: Zoning permits are required 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.
Get here more information on business licenses and how to acquire them.
We hope this article has given you a better idea of the differences between a DBA and a business license. If you are thinking of starting up your own business, 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 for your business if you want to avoid any legal complications.
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