Don't make me smack you—file a d.b.a.
April 26, 2012 2:03 PM Subscribe
Why so few who file a "doing business as"?
I always thought it was imperative to file a "d.b.a." certificate with the County Clerk (or Secretary of State, depending on one's state) when you develop a new business. And yet I find, among my acquaintances who are in similar businesses (pet care) that very few people have done this. Why on earth? When I ask, I get answers ranging from, "oh, that...I'll get around to it" to "oh, that's not necessary" to "what's a d.b.a?"
Are you kidding me? Isn't that absolute FIRST thing you do when starting a new business? Isn't this what ADULTS do to distinguish themselves from just another lemonade stand?
Please shed some light on this, if you can.
I always thought it was imperative to file a "d.b.a." certificate with the County Clerk (or Secretary of State, depending on one's state) when you develop a new business. And yet I find, among my acquaintances who are in similar businesses (pet care) that very few people have done this. Why on earth? When I ask, I get answers ranging from, "oh, that...I'll get around to it" to "oh, that's not necessary" to "what's a d.b.a?"
Are you kidding me? Isn't that absolute FIRST thing you do when starting a new business? Isn't this what ADULTS do to distinguish themselves from just another lemonade stand?
Please shed some light on this, if you can.
I can't speak to the legal necessities of registering a d/b/a in your jurisdiction, but I can tell you as a consumer of services, I really don't care whether my service providers have a d/b/a. Honestly, some of the d/b/a names I've seen are so dumb, that they make the owners seem less professional than had they just used their name.
Again, separate from the legal requirements (and the liability shield of forming an LLC or corp), but I don't think registering a d/b/a is as important as you think it is.
posted by Admiral Haddock at 2:16 PM on April 26, 2012
Again, separate from the legal requirements (and the liability shield of forming an LLC or corp), but I don't think registering a d/b/a is as important as you think it is.
posted by Admiral Haddock at 2:16 PM on April 26, 2012
Part of my job is registering DBAs. I am not a lawyer. I, quite literally, am in the midst of the somewhat byzantine process of getting some Texas county-level DBAs done (you have to do it both on the state and county level there) and it's almost like they don't actually want you to do this. Someone at the county clerk's office had to fax me the forms, and they are 100% generic.
Basically, there's not a lot of followup. Unless you're really screwing around on your taxes or get reported, I don't think checking what it says on the side of someone's truck is a priority. Especially on the county level, as counties tend to barely have the resources to keep things in check, much less do a bunch of diligence on practices that generally don't hurt anyone. So why spend anywhere between $20 to $150 for a DBA no one is going to bother to check if you're using?
posted by griphus at 2:26 PM on April 26, 2012
Basically, there's not a lot of followup. Unless you're really screwing around on your taxes or get reported, I don't think checking what it says on the side of someone's truck is a priority. Especially on the county level, as counties tend to barely have the resources to keep things in check, much less do a bunch of diligence on practices that generally don't hurt anyone. So why spend anywhere between $20 to $150 for a DBA no one is going to bother to check if you're using?
posted by griphus at 2:26 PM on April 26, 2012
Perhaps they have filed, but if it's a pretty low-key business, they may be choosing to take payments by check in their personal name rather than the business name, in a (misguided) effort to keep it all under the table and pay less taxes?
As a consumer this throws up a red flag. If I write out a check to "John Smith" instead of "ABC Yard Clearing", if ABC Yard Clearing says I haven't paid an invoice, all I have is a canceled check made out to John Smith. If I can't write a check made out to the company, it's extremely unlikely I'll ever do business with you again.
posted by xedrik at 2:26 PM on April 26, 2012
As a consumer this throws up a red flag. If I write out a check to "John Smith" instead of "ABC Yard Clearing", if ABC Yard Clearing says I haven't paid an invoice, all I have is a canceled check made out to John Smith. If I can't write a check made out to the company, it's extremely unlikely I'll ever do business with you again.
posted by xedrik at 2:26 PM on April 26, 2012
Also, are you sure they haven't incorporated or formed an LLC? You don't need a DBA if you have.
posted by griphus at 2:27 PM on April 26, 2012
posted by griphus at 2:27 PM on April 26, 2012
Perhaps they have filed, but if it's a pretty low-key business, they may be choosing to take payments by check in their personal name rather than the business name, in a (misguided) effort to keep it all under the table and pay less taxes?
When I sold software as a teenager, that was the only way my payment processor would let me take payment of the sales revenue. I had to give them a tax ID to use for tax purposes, but I just gave them my own SSN. Since I was underage I also had to get one of my parents to co-sign the contract. I used a made up business name rather than my real name for everything else and didn't file a DBA (I hadn't even heard of them back then). I also didn't have any problems cashing the checks, even though at one point I think did get some checks made out to the company name rather than my name.
posted by burnmp3s at 2:38 PM on April 26, 2012
When I sold software as a teenager, that was the only way my payment processor would let me take payment of the sales revenue. I had to give them a tax ID to use for tax purposes, but I just gave them my own SSN. Since I was underage I also had to get one of my parents to co-sign the contract. I used a made up business name rather than my real name for everything else and didn't file a DBA (I hadn't even heard of them back then). I also didn't have any problems cashing the checks, even though at one point I think did get some checks made out to the company name rather than my name.
posted by burnmp3s at 2:38 PM on April 26, 2012
The purpose of a DBA is to delineate that the business name is not the true and legal identity of the business owner and, secondarily, to prevent two companies from operating under the same name in the same jurisdiction. A DBA is nothing like a business license and confers few if any rights or responsibilities. (I'd argue that securing a business license for your county and/or city is the first thing you should do when starting a new business.) It also lacks the power of securing a trademark.
In many jurisdictions, there is no registration for a DBA. I am a sole proprietor, so on my business checks, I have it listed as "[the wrong kind of cheese]/DBA [my cheesy business name]" but that's merely how I had my checks printed. My bank (a huge national bank, not a mom & pop type) said that as long as I wasn't incorporated, I could put whatever I wanted on the checks. In my county, my city and my state, there's no registration process, and since there's no WAY to register as a DBA, there's no obligation to do so.
posted by The Wrong Kind of Cheese at 3:01 PM on April 26, 2012 [1 favorite]
In many jurisdictions, there is no registration for a DBA. I am a sole proprietor, so on my business checks, I have it listed as "[the wrong kind of cheese]/DBA [my cheesy business name]" but that's merely how I had my checks printed. My bank (a huge national bank, not a mom & pop type) said that as long as I wasn't incorporated, I could put whatever I wanted on the checks. In my county, my city and my state, there's no registration process, and since there's no WAY to register as a DBA, there's no obligation to do so.
posted by The Wrong Kind of Cheese at 3:01 PM on April 26, 2012 [1 favorite]
I'm curious what you think a DBA confers, legally. It lets you cash a check with some other name on it, and probably makes the city/county a few bucks, but it's not an LLC or anything.
I guess my perspective is from technology freelancing, where operating under something other than your own name is a pain in the ass (we dissolved our company and dba and my husband went sole prop, on our accountant's advice). I don't know about the pet sitting world, we do write checks to our (pain'n'theass to write out) sitter's company's name, but frankly her name is easier to spell and has less apostrophes, so I wouldn't complain.
posted by Lyn Never at 4:09 PM on April 26, 2012
I guess my perspective is from technology freelancing, where operating under something other than your own name is a pain in the ass (we dissolved our company and dba and my husband went sole prop, on our accountant's advice). I don't know about the pet sitting world, we do write checks to our (pain'n'theass to write out) sitter's company's name, but frankly her name is easier to spell and has less apostrophes, so I wouldn't complain.
posted by Lyn Never at 4:09 PM on April 26, 2012
Response by poster: @Lyn Never and Admiral Haddock:
That's just the thing...I'm not sure what I think it conveys legally. It may be nothing more than my sense of propriety (imagine C. Aubrey Smith sputtering, "but, but, that's the way it's done, m'boy!")
@griphus: The fact that some of these businesses are, in fact, LLCs never occurred to me.
Thanks to everyone for their helpful and enlightening answers! I think that wraps up this case.
posted by BostonTerrier at 4:20 PM on April 26, 2012
That's just the thing...I'm not sure what I think it conveys legally. It may be nothing more than my sense of propriety (imagine C. Aubrey Smith sputtering, "but, but, that's the way it's done, m'boy!")
@griphus: The fact that some of these businesses are, in fact, LLCs never occurred to me.
Thanks to everyone for their helpful and enlightening answers! I think that wraps up this case.
posted by BostonTerrier at 4:20 PM on April 26, 2012
It is in fact, fairly expensive. I believe the last time I did this it cost me $80, and then you have to file taxes for the business, even if the business did not make enough money that would cause YOU as a person to need to file.
In other words, it's a headache and money that should go into supplies for the business, advertising yourself, and feeding and keeping yourself up while it takes off, if it ever does. When your business is something like dogsitting, which you used as an example, and $80 filing fee can be steep.
And as you noted, some people may not even know how this works. Where do you learn it? Most people don't learn it in high school or college unless they're business majors. The people I know who HAVE registered learned about what they should do by talking to other people.
There are also some weird conventions surrounding a "business" name. Before I registered a name, no one expected me to be bonded and insured. They figured they were tossing someone a few bucks for something they didn't want to do. There was more of a weird favors/under the table feel to it (which may be what you're objecting to)/ After I registered, I was often asked if I was bonded and insured. And once again, that's a pretty big expense. It's great to do if you can afford it, but when you're buying supplies and advertising, even when it's only papers run off at Kinko's, it can be tough to figure out where to get the money.
(I just checked, and in the city where I'm located now, the fee is up to $100).
posted by thelastcamel at 5:43 PM on April 26, 2012
In other words, it's a headache and money that should go into supplies for the business, advertising yourself, and feeding and keeping yourself up while it takes off, if it ever does. When your business is something like dogsitting, which you used as an example, and $80 filing fee can be steep.
And as you noted, some people may not even know how this works. Where do you learn it? Most people don't learn it in high school or college unless they're business majors. The people I know who HAVE registered learned about what they should do by talking to other people.
There are also some weird conventions surrounding a "business" name. Before I registered a name, no one expected me to be bonded and insured. They figured they were tossing someone a few bucks for something they didn't want to do. There was more of a weird favors/under the table feel to it (which may be what you're objecting to)/ After I registered, I was often asked if I was bonded and insured. And once again, that's a pretty big expense. It's great to do if you can afford it, but when you're buying supplies and advertising, even when it's only papers run off at Kinko's, it can be tough to figure out where to get the money.
(I just checked, and in the city where I'm located now, the fee is up to $100).
posted by thelastcamel at 5:43 PM on April 26, 2012
Well, I see why more people don't file for them—people don't know about them and/or don't need them to do business—but since I do know about them, I'm always surprised when someone starts a new business and doesn't file for one. Trademark filing and/or filing as a corporation or LLC are expensive and a whole other story, but in my state, at least, getting a DBA name is a super easy, super cheap process that you can complete online, including paying the required $7 or so. I'd guess that a lot of the people who never bother to register a DBA name are cash-only and/or have never gone through the awful process of having their lawyer write letters and rethinking their branding when someone else comes along who fancies their business's name. I've never used my DBA name (a pen name), but I keep it registered just in case.
posted by limeonaire at 5:45 PM on April 26, 2012
posted by limeonaire at 5:45 PM on April 26, 2012
It depends on the state, but when I did it in Illinois I had to run an ad in the paper for a week, which costs money, and pay some filing fees etc. Every time I move I have to file a change of address form with the city. Some people probably don't do it out of laziness, others don't want to pay. It's amazing how fees and procedures very by state/county in the U.S.
posted by Bunglegirl at 7:00 PM on April 26, 2012
posted by Bunglegirl at 7:00 PM on April 26, 2012
I think the sum total of the answer is: Requirements may vary by jurisdiction, but in most cases where it's not necessary people don't do it.
In most states or business cases, I would recommend spending whatever it costs to incorporate... the liability protection is significant. And those people won't be doing business as except in places where you have to separate your 'lines of business' for the state -- by NAICS/SIC code. I think Oregon was that way. Let's say you sold insurance to consumers, wrote software, and provided child daycare. The way the Oregon DRS (who are some of the most rabid jackals I ever met) recommended setting up that business structure was that the corporation was registered under a NAICS/SIC code for a holding company, and then you had a DBA that was registered with each of the other codes. This was so they could tax things properly.
Back on the other hand, it doesn't make sense to file a DBA here in Texas because it's nearly impossible to do so; and it doesn't make sense to incorporate (at least at my level of business, which is less than $10k per year) because then I'd have to pay franchise tax on top of the SUTA that I collect.
posted by SpecialK at 10:09 PM on April 26, 2012
In most states or business cases, I would recommend spending whatever it costs to incorporate... the liability protection is significant. And those people won't be doing business as except in places where you have to separate your 'lines of business' for the state -- by NAICS/SIC code. I think Oregon was that way. Let's say you sold insurance to consumers, wrote software, and provided child daycare. The way the Oregon DRS (who are some of the most rabid jackals I ever met) recommended setting up that business structure was that the corporation was registered under a NAICS/SIC code for a holding company, and then you had a DBA that was registered with each of the other codes. This was so they could tax things properly.
Back on the other hand, it doesn't make sense to file a DBA here in Texas because it's nearly impossible to do so; and it doesn't make sense to incorporate (at least at my level of business, which is less than $10k per year) because then I'd have to pay franchise tax on top of the SUTA that I collect.
posted by SpecialK at 10:09 PM on April 26, 2012
I have an LLC with a name that nobody knows (until they get a check or a 1099), and a common name that's the name the company's known by. We have never filed a DBA for the common name because it's too boring and why bother! Running a business is time-consuming and it's like 409th on the list.
posted by RJ Reynolds at 5:03 AM on April 27, 2012
posted by RJ Reynolds at 5:03 AM on April 27, 2012
In very rare occasions, usually with solo truckers who don't have a non-home office, the clerk won't accept a DBA filing because there's an implication that someone's going to be keeping a truck in a residential area. This has happened maybe twice in the four years I've worked with funding small businesses in the northeast US.
But usually it's ignorance. Based on the paperwork I've seen, most of my customers don't know the real legal name of their company. You don't need to be a rocket surgeon to run a business. Even a successful business.
posted by giraffe at 7:28 AM on April 27, 2012
But usually it's ignorance. Based on the paperwork I've seen, most of my customers don't know the real legal name of their company. You don't need to be a rocket surgeon to run a business. Even a successful business.
posted by giraffe at 7:28 AM on April 27, 2012
This thread is closed to new comments.
2) They are taking checks/payments with the business name and their bank is lax or unscrupulous. This is less likely, but I've observed it.
posted by michaelh at 2:07 PM on April 26, 2012