What You Need to Know About DBA
Tried starting a business? Aside from getting a brilliant idea that is sure to bear fruits and getting adequate capital, there are a few legal requirements you must fulfill. Proper business registration is on top on the list.
Registering your business is important if you want to stay on the right side of the law. Also, with a registered business, accessing credit becomes easy.
There are several ways to register a business. You can register your business as a sole proprietorship, general partnership or as a limited liability company. All these options come with their pros and cons and you need to consider all factors before deciding on how to register your business.
What is a DBA?
Regardless of your choice, chances are your first step will be to file a DBA (“Doing Business As”), in other words, a fictitious name that allows you to do business under a name different than your personal name.
For a small business, DBA comes with a number of benefits. For one it allows your business to have a separate name than yours. You can open an account for your business, take a loan using the business account and do business without your name ever interfering with your business. DBA also gives you a chance to come up with an innovative name that will represent your brand.
Let’s see an example
Consider the case of Raul, a Latino businessman who runs a web design business. With nothing but his knowledge and a burning desire to succeed, this young man started his business. After doing a few web design gigs, he realized that he needed to register his business for a number of reasons. One, he needed to attract corporate clients. He also had to hire a full-time employee to help with some designing work.
After careful consideration, he decided to get a DBA. Thanks to this, he was able to meet the minimum requirements most corporates had for contractors. With a DBA, drawing up a binding contract with his employee was easy.
The DBA application process was quite straightforward. All he had to do was to complete the right paperwork at the county offices. It helped that it was also inexpensive and he spent less than $50 for the name setup.
Aside from the fact that most partners started taking his business seriously, he was able to maintain a separate account for his business. Over time, this translated to increased income, thanks to better financial management.
Do you have a small business that you think would benefit from a DBA? Check this article by Camino Financial to find all the information you need to understand what is a DBA. You will also get to know whether you need one and the steps you should take to file a DBA for your business.