You’ve filed your DBA…What’s Next?

Last week was full of confessions for me.  I told you about everything from my D+ on a high school English assignment to my poorly planned recruiting business.  When I started Back’nGrooveMom, I still had my LLC from my first biz in good standing, so it made sense to continue to use it.  I only needed to file for a DBA (Doing Business As).  

I filed for my DBA myself which resulted in it coming back and needing to be resubmitted :).  You can believe that the next time I need to do this, I will hire Nellie Akalp from CorpNet.com, who would have saved me the time that it took for me to file twice for a DBA.  I am so excited to feature Nellie on the blog again today to chat about LLC’s and DBA’s and what happens after they have been CORRECTLY FILED: 

You’ve filed your DBA…What’s Next? by Nellie Akalp

When many moms start out in business, they form an LLC (Limited Liability Company) and then find it necessary to file a DBA (also known as a “doing business as” or a “fictitious business name” filing) in order to conduct business under a different name. Other moms file their DBA first, then decide they need to also form an LLC to protect their personal assets. Both are big steps in the life of any business.

Over the course of my career, I’ve helped hundreds of thousands of small business owners and entrepreneurs file their DBAs, Incorporate a business, and form an LLC. And I’ve put together some of the more commonly asked questions to help you navigate all the steps after filing your DBA.

Q: I filed my DBA, then decided I needed to create an LLC or corporation. What happens to my DBA? 

A: If you create the Corp/LLC under the same name as your sole proprietorship, you can start conducting business under the Corp or LLC. In this case, you can cancel the DBA (Doing Business As) that you had set up with your sole proprietorship, or just let it lapse.

Of course, closing the books on your sole proprietorship and opening them in your Corp/LLC can have some pretty hefty tax implications, so you should consult with your CPA/tax advisor on this best time of the year to do so.

Q: After filing for a DBA, should I open a bank account in the DBA’s name? Or the LLC’s name? 

A: If your DBA has not been filed by the LLC and is strictly registered by yourself (as a sole proprietor), then you will need to open up a bank account under then DBA name.

If your DBA is filed under an LLC, then you should open the bank account under the LLC name. This is the best route, since the DBA falls under the umbrella of the LLC. When you open the account, you should show the bank that the LLC is doing business under different names and have them put this on record. This way, your business can accept checks written to either the LLC or DBA name without any hassle.

Also, if you opened a ‘business bank account’ for your sole proprietorship and have since formed an LLC or Inc, you’ll need to close the original account and open a new bank account under the LLC or Inc.

Q: Can I have more than one DBA under the same LLC? 

A: Yes. If like most businesses you’re going to be operating under any variation of your official company name (i.e. CorpNet vs. CorpNet.com vs. CorpNet, Inc…), you will need to file DBAs for each of the variations. If you have an LLC or Inc, you should have your Corporation/LLC file the DBAs so they operate underneath your Corp/LLC.

The same holds true even if you’re going to operate multiple ventures (for example selling handmade soaps, knitwear, jewelry…) under the same company. You can establish one main company (i.e. Susy’s Corp) and then have Susy’s Corp file multiple DBAs for each of the specialized brands (i.e. Susy’s Soaps, Susy’s Knits…). This way each of the smaller companies can reflect the branding and presence best for their specific markets, yet still enjoy the legal protection of the main holding company.

Q: I used to be a sole proprietor and I had a Federal Tax ID number. Do I need to get a new Federal Tax ID number now that I’ve incorporated/formed an LLC? 

A: The answer here is yes. An LLC or corporation is its own separate entity (an LLC or Corp can sue, be sued, get a loan…) and as such, it needs its own federal tax ID number, also known as an Employer Identification Number (EIN). Think of business formation like the birth of child. Once a child is born, it needs its own social security number. The same holds true for your business.

As a sole proprietor, you’re able to identify your business either with your social security number or an EIN. However, if you’re operating your business as an S Corporation, LLC, C Corporation or other legal entity, you must obtain an EIN for that entity. Otherwise, you will not be able to open up a business bank account or file your business tax returns properly.

Hope that helped and stay tuned for more including a series of in-depth articles on forming an LLC and other legal aspects of running your business. 

 

Nellie Akalp is a passionate entrepreneur, small business advocate and mother of four. As CEO of CorpNet.com, an online legal document filing service, Nellie helps small business owners form an LLC or incorporate a business in order to start and protect their new business ventures the right way. To learn more about Nellie, watch informative videos and see how she can help your business, please visit here.

 


{ 9 comments… add one }

  • Suzanne Torres October 27, 2014, 9:17 PM

    Hi Rachel! Just starting out by doing some research and there seems to be SO much data to absorb! I did get a tax ID number, have not formed a DBA or LLC. What is your suggestion as far as a 1,2,3 move? Do the LLC first THEN Doing Business As with the county/state? I really don’t want to re-accomplish steps if I just do it right the first time! Much appreciated!

    Reply
  • Nellie Akalp October 28, 2014, 12:12 PM

    Hi Suzanne – Great question! Thanks for reading and commenting! 🙂

    Many new business owners believe that they are required to file a DBA, when in reality, a DBA is only required when the business will be doing business under a different name or variation of their full, legal, LLC name. When a DBA is needed, generally the LLC will be filed first, so that when the DBA is filed, the owner of the DBA is listed as the LLC, rather than the individual. Hope that helps! If you have any other questions, please feel free to call my company for a free business consultation. You can ask directly for Katie Hendrix at 888-449-2638 x110 and she will help answer any other Qs.

    Thanks!
    -Nellie

    Reply
  • Paris May 7, 2015, 10:42 AM

    Nellie your site was very helpful. I applied for an EIN, then decided to file for an LLC. Do I need to reapply for an EIN? Do I need to apply for DBA since I will be only using and operating one name at this time?

    Reply
    • David May 27, 2015, 3:44 PM

      Hey Paris,

      Unfortunately, even if you have already received your EIN for the dba, you will need to apply again under the LLC . An LLC is considered another entity whereas a DBA is not. although you got an EIN number for it, as you’ve probably discovered by now, depending what state you’re in, chances are you had to release the DBA and had it transferred to the LLC (I only assume because you posted 20 days ago.)

      A somewhat easier way to think of it, aside from the child analogy that Nellie , pointed out, is that if in a worst case scenario, u go out of business under the dba , vendors, banks and financial institutions can go after ur personal accounts and assets. Whereas with an LLC , it offers some shielding from them going after ur personal assets. however, if you only file for an LLC but you did not incorporate, then you’d still be liable . Hopefully you already got it sorted it out since its been a little while now, in Any case, best of luck to you!

      Reply
    • Nellie Akalp April 29, 2016, 2:49 PM

      Hi Paris,

      Sorry for the late response! Whether or not you will need to reapply for your EIN will depend on how you applied for the EIN originally. If it was not specified that it would be for an LLC, chances are you will need to reapply. As far as a DBA, typically that would only be required if the business will have multiple names. If you have any other questions or need assistance with your EIN, please contact Katie Hendrix in my office for a free business consultation at 888.449.2638 x110.

      Reply
  • JP July 31, 2015, 8:39 PM

    I hope you’re still answering questions posted here. So last year I filed a DBA for my graphic design company. I have another brand that makes shirts and I market it as “Clothes” by GRAPHC X or sometimes just “Clothes”. I want to get this LLC done but I’m confused if I need to file an LLC for GRAPHC X and another for CLOTHES or if I can/should just file one for GRAPHC X and then dba CLOTHES? Then can I trademark my work for CLOTHES and be protected or does that have to be it’s own LLC?

    I hope that makes sense and hope to hear from you soon.

    Reply
    • Nellie Akalp April 29, 2016, 2:51 PM

      Hi JP,

      Great question, and sorry for the late reply! There are so many ways in which this can be structured. I would recommend contacting Katie Hendrix in my office for a free business consultation at 888.449.2638 x110. She’d be happy to outline all your options for you, and can even assist you with the filings if you’d like!

      Reply
  • Diane-Marie April 29, 2016, 4:16 AM

    Should I list both the DBA in the Corporation name on my checks for my checking account

    Reply
    • Nellie Akalp April 29, 2016, 2:52 PM

      Hi Diane-Marie,

      As long as the bank has a copy of both your filed Corporation documents and filed DBA documents, you will be able to deposit checks made out to either business name. If you have any other questions, please contact Katie Hendrix in my office for a free business consultation at 888.449.2638 x110.

      Reply

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