Decoding the DBA in Texas: Your Guide to Doing Business As
So, you’re in Texas. Time to start your business. But, your legal name? It sounds very corporate. Or, you want to create a brand under an existing company. Enter DBA. DBA means “Doing Business As.” It’s your business nickname. Customers will know you by this name. In Texas, it’s called an Assumed Name Certificate. Let’s explore what a DBA is in Texas.
1. What’s the Deal with a DBA? (Definition and Purpose)
- A DBA, Assumed Name, or fictitious name means the same thing. It’s your public notice that your business operates under a name that is not its legal name.
- Why get a DBA? Say your LLC’s name is “Acme Global Innovations LLC.” You want to open a bakery called “Sweet Surrender Bakery.” A DBA lets you use this customer-friendly name.
- DBAs help with marketing and branding. They let businesses, especially LLCs, show different names for different products or services. It’s like business camouflage but legal.
- If your LLC wants another name outside its registrant name, you must file for a DBA. This is officially called an Assumed Name Certificate, with Texas’ Secretary of State. It’s mandatory for compliance.
2. DBA vs. The Business Structure Zoo
- A DBA is not a business structure. Think of it as a name tag. You still need a structure below it, like an LLC or sole proprietorship.
- An LLC protects your personal assets from business debts and lawsuits. A DBA is just a form stating that “Acme Global Innovations LLC” is also “Sweet Surrender Bakery.” It offers no liability protection.
- If you skip the LLC or corporation and just get a DBA, you are a sole proprietor in Texas. This means you and your business are the same entity. It’s easy but risky if someone sues “Sweet Surrender Bakery.”
3. Texas DBA: The Checklist (Requirements)
- Want a DBA in Texas? File an Assumed Name Certificate. Where? It depends on your business type.
- Incorporated (LLCs, Corporations): Go to Texas Secretary of State. They keep corporate names in Texas.
- Unincorporated (Sole Proprietorships, Partnerships): Visit your local county clerk. File in the county where the main office is based.
- Incorporated entities should grab Form 503 – Assumed Name Certificate from the Secretary of State’s website. This is your DBA application.
- What’s on the form? Here’s what to include:
- Your Assumed Name (DBA). This is your business nickname.
- The Legal Name of your Business (e.g., Acme Global Innovations LLC).
- Business Entity Type (LLC? Corporation? Sole Proprietorship?). Choose.
- State/Country of Formation (Where was your entity formed? Likely Texas).
- Principal Business Office Address (Where do you operate?).
- DBA Duration (How long do you want this name? Up to 10 years in Texas).
- Counties of Use (Where will you use this DBA in Texas?). Be specific.
- Filing for (Incorporated): Submit your completed Form 503 and fee to the Texas Secretary of State. You can mail it, fax it, or deliver it in person.
- Filing for (Unincorporated): Take your form and payment to the county clerk’s office. They manage local DBAs.
4. Show Me the Money (DBA Costs and Fees)
- Good news! Texas DBAs are cheap. For LLCs and corporations, the fee for an Assumed Name Certificate is $25. Great deal!
- Sole proprietorships and partnerships? It depends by county. It’s likely cheaper than your morning coffee.
- The $25 fee for LLCs and corporations is solid. Pay online with a credit card and you’ll see a small “convenience fee” of about 2.7%.
- You can file online via the SOSDirect website or choose the paper method. Decide how you want to do it!
5. DBA Lifespan (Validity and Renewal)
- Texas DBAs have limits. They last for 10 years maximum from the filing date. Think of it like a lease on a business name.
- Your Assumed Name Certificate shows how long it’s valid for, not exceeding 10 years. Texas laws are straightforward.
- Mark your calendar! Renew your assumed name every 10 years if you wish to keep using it. Don’t let your DBA expire; avoid brand confusion.
6. Keeping Your DBA Shipshape (Maintaining a DBA)
- Filing a DBA doesn’t give you ownership in trademark terms. It’s notice to the public. Others may still try using a similar name. Do a name search first. The Secretary of State has a business entity search tool.
- Finished with your DBA? Ready to drop it? You need to file a Statement of Abandonment. File it with the same office where you filed the DBA certificate to officially cancel it.
- Got an info change? Moved your business address? You must file a new Assumed Name Certificate within 60 days. Don’t delay; keep things current.
7. EIN and DBA: Friends or Foes?
- A DBA is just a name. It doesn’t change your business into a different legal entity. It’s simply a name, not a structural change.
- Starting January 1, 2024, everyone must have an EIN, no matter the structure. Sole proprietors must also get an EIN. Check the IRS website for updates.
- Your DBA does not get an EIN. The EIN is tied to the legal entity – your LLC, corporation, sole proprietorship, etc. The DBA just accompanies it.
8. DBA Finances: Bank Accounts and Taxes
- Yes, you can have a bank account under your DBA! Opening a business checking account under your DBA name is why many register one.
- A DBA registration allows you to open a checking account in that name. Keep personal funds separate from your business funds. It’s better for both accounting and your peace of mind.
- Your DBA is not a tax haven. No separate tax entity or tax loopholes here. Sorry.
- DBA income and expenses are reported on your personal tax return, usually via Schedule C of Form 1040. The IRS views it as your income that is taxed appropriately.
- If you operate under a DBA, expect self-employment taxes! Your profits face taxes from both income tax and that delightful 15.3% self-employment tax (Social Security and Medicare).
- You only need one EIN even if you have several DBAs under one entity. No need for a separate EIN per nickname. The IRS keeps it simple.
9. Running the Show with a DBA
- You can hire employees under your DBA. “Sweet Surrender Bakery” can employ bakers and cashiers, even if the legal company is “Acme Global Innovations LLC.”
- But if you forget to file that Assumed Name Certificate with Texas’ Secretary of State, issues may arise. You could face troubles enforcing contracts linked to your DBA until you file it properly. Plus, Texas might impose penalties.
- Be aware of costs and fees for operating under an unregistered assumed name. This step matters!
- Texas law is quite lenient. You can sue or be sued under your DBA name. For instance, “Sweet Surrender Bakery” can enter court or face action, even as a DBA of “Acme Global Innovations LLC.”
10. DBA: Pros and Cons – The Weigh-In
- DBA Advantages:
- Low Cost and Simple: DBAs are much cheaper and require less paperwork than starting a new LLC. Simple name, less stress.
- Flexibility: Want to explore a new brand? A DBA allows you to do this without legal barriers.
- DBA Disadvantages:
- Tax Complexity: DBA income goes on your personal 1040 tax return. Simple for some; may not work for complex situations.
- No Liability Protection: Important note! A DBA provides no personal protection. If “Sweet Surrender Bakery” gets sued, personal assets are at risk.
11. DBA Name Game: Play it Smart
- First rule: check if the name is taken. Visit the Texas Secretary of State’s site for a business entity search before you get attached to a name that’s already in use.
- Texas has rules. Don’t use banking terms unless you’re a bank, or anything resembling a government agency when you’re not. Avoid impersonating the IRS.
- DBA names do not have state-level trademark protection in Texas. Filing a DBA doesn’t stop others from using similar names, especially in different markets. Look into trademarks if name safety is important.
12. DBA: When is it Necessary?
- Texas law states: If your LLC wants to use another name, a DBA is required. No exceptions.
13. Extra Nuggets of DBA Wisdom
- Note: An LLC cannot become a DBA. They’re separate. An LLC is a structure, while a DBA is just a name.
- Registered Agents? Needed for LLCs and corporations. Not for DBAs. If you have an LLC with a DBA, one Registered Agent suffices.
- Again, remember: DBA profits equal income tax plus 15.3% self-employment tax. Taxes are a key aspect in business.
- Advice: Register your DBA locally before applying for an EIN. It simplifies the process.
- Sole proprietors, rejoice! DBAs offer a name without the need for a corporation or LLC. Keep it simple, keep it named.
That’s the breakdown on DBAs in Texas. It’s straightforward, yet understanding the details can prevent issues later. Get your documents in order, choose a unique name, and start your business as who you want to be!
