When you wish to conduct business without using the names of all of the owners, you must create a new legal entity (a corporation or a limited liability company) or you must use an “assumed business name," also known as “doing business as" or “dba," or a “fictitious business name." In New Jersey, where my office is located, they call it a “trade name." I will simply use the term “dba" throughout this post because that’s the term most people use.
Using a dba allows a sole proprietor to use a business name rather than his personal name when he is conducting business. Many sole proprietors use their name plus words that describe the type of business (such as “Molly’s Cupcakes" or “Bergen County Plumbing"). When you want to open a new business and you don’t want to create a legal entity, using a dba is the cheapest way to start doing business under a business name.
If you are a corporation, limited liability company or limited partnership, you may want to register dbas for other names that you will use for each different business without creating a new corporation for each business. When does a corporation or LLC want to use a dba? Perhaps the same entity will be running a restaurant, a store selling prepared food and a catering service. Each different business could have its own different business name.
In New Jersey, if you are a sole proprietor, you must file a form with the clerk of the county in which you are conducting business. The form requires that you describe the name of your business, your business address, the type of business that you are conducting and the names and addresses of all of the owners. There is also a filing fee that must be paid. When a legal entity uses a dba, it files a form with the New Jersey Division of Revenue. The filing is good for five (5) years and then it must renew its filing of its trade name.
It is advisable to check county or state records to see if the name you want to use is already taken. If it has, you should find another name. You do not want get into a fight with another company about whether the name under which you are conducting business has already been trademarked or is already in use. Once you find a name that is not being used, you need to register the dba you want to use before you actually use it to ensure that no one else takes the name that you want. Once you or your company have filed the proper forms, you can open bank accounts, print business cards and marketing materials and start conducting business using your dba. If you are a corporation that is using a dba, you must use both the legal entity name and the dba name when signing documents. This reinforces the limited liability protection that a corporation has under the law.