DBA for dummies?
May 13, 2016 9:07 AM   Subscribe

Doing Business As, not Database Administrator...

I am a consultant, self-employed. I now have enough clients that I am considering filing for a DBA and opening a business bank account to make it easier to track my income. I live in New York. I have been doing research (Googling mostly) for information on how to register for a DBA/what I need to know for tax purposes and the information out there is dense and overwhelming to me. Is there something like a DBA for Dummies guide, or some other resource that outlines step-by-step what to do and what I need to know with a minimum of non-layperson jargon or advertising for services that will handle this process for me (WITH ONLY ONE PAINLESS PAYMENT OF $$$$$!!!!!) ?

If anyone out there has gone through this process (sole consultant setting up a DBA) I welcome personal anecdata as well.

And yes, I know YANML and YANMTaxAdviser. (Do I need to speak with one or both for this?)

posted by thereemix to Work & Money (9 answers total) 3 users marked this as a favorite
I did this in New York when I first started working for myself 15 years ago. I got a DBA so that I could open a business checking account using the business's name. I remember going to the county clerk's office on Centre St., looking through these big books to confirm that no one else was using my business's name... I hope it's a little more technologically advanced by now, but I have no idea! I just Googled on DBA and 60 Centre Street (where I went) and found lots of how-to links. Here's one as an example:

posted by lgandme0717 at 9:12 AM on May 13, 2016

nah it's easy and (from some states but not yours) all online. the phrase you are looking for (yes DBA is accurate for forms etc but not for the thing you have to do) is called "fictitious name registration"

here is the ny dept of state website where you do that.

just print the form, fill it out according to instructions, make the credit card payment online and away you go.

some free advice:
form an LLC instead of a Ficticious Name/DBA/Sole Proprietor. It's not much harder, only a bit more money initially. I say this because the tax implications are huge and much more advantageous for you personally.

good luck!!
posted by chasles at 9:36 AM on May 13, 2016 [1 favorite]

and of course that website refers to it as "doing business under an assumed name" but i only found the official website by searching for fictitious name registration... go figure.
posted by chasles at 9:39 AM on May 13, 2016 [1 favorite]

form an LLC instead of a Ficticious Name/DBA/Sole Proprietor. It's not much harder, only a bit more money initially. I say this because the tax implications are huge and much more advantageous for you personally.

I would recommend against forming an LLC unless you have good reasons for doing so. There are no particular tax savings and the complications are unnecessary for a simple consultancy.

You should be fine with a DBA sole proprietorship unless your clients actually demand that they deal only with a corporation.
posted by JackFlash at 10:03 AM on May 13, 2016

This is only tangentially related to your question, but I'll throw it out there in case you might find it useful. When I was starting up as a contractor, I read "Working for Yourself" by Stephen Fisherman, and I found it to be amazingly helpful in deciding how to structure my business and addressing the ins and outs of self-employment. In my case, it worked out best to just set up a DBA, which is simple and quick in Oregon. But depending on your business, an LLC or an S-Corp might be advantageous for tax purposes, and there are implications to registering first as a DBA and then changing later, so if you're considering one of those, it might be worth reading through the relevant chapters of that book.

Congratulations on building your business!!
posted by slagheap at 10:20 AM on May 13, 2016

I have registered a "fictitious business name" and had a business bank account to go with it. I did this in California.

As I understand it, fictitious business name means something you made up for the business unrelated to your name. So, you do not necessarily need to register it if it is your name. In other words, "My name trucking" or "My name and sons" is typically viewed as you doing business under your name. But "My neighborhood's name trucking" or "Widgets and doodads of my city" are things you would need to register.

I filled out paperwork at the county office, paid a few bucks and opened a business checking account. Most people just register a name and go the sole proprietorship route. I don't know enough about LLCs etc to suggest when that is useful and when it is not.
posted by Michele in California at 10:49 AM on May 13, 2016

I'll leave the decision between DBA and LLC with you and your lawyer, but I can tell you to be very careful with the LLC option. With the research I did, an LLC in New York State has a Publication Requirement that means you have to spend $$$ to run a classified ad in multiple papers for a certain length of time. Online tools (like LegalZoom, for example) don't always mention this requirement, and if you fail to do it, you're not afforded any of the protection of the LLC.
posted by Wild_Eep at 11:17 AM on May 13, 2016 [2 favorites]

There is no tax benefit to a DBA filing. DBA filings are for the prevention of fraud and abuse.

The main benefit of an LLC comes with the "L"s -- limited liability. This makes it much harder (but not impossible) for your clients and vendors to sue you personally. Vendors will generally work around this by demanding personal guarantees, but clients usually will not. Whether that is worth the associated costs ($1k or $2k a year is a fair estimate) really depends upon how much liability you are accruing.
posted by MattD at 2:39 PM on May 13, 2016

The limited liability aspects of an LLC are vastly overrated and commonly misunderstood. For someone providing services like a consultant, the LLC provides no liability protection for mistakes that you make personally. For that you need Errors and Omissions or personal liability insurance. The only protection that the LLC provides is liability for company debts and most LLCs do not have company debts because no bank will loan to you without a personal signature. In other words you are on the hook personally for debts regardless of the LLC.

If you are worried about being sued, you need insurance, not an LLC. An LLC provides you no protection. For most small sole proprietors working as contractors, for example a coder or web designer or a copy writer or tech writer, you really don't need either. Nobody is going to take away you home.

Don't make the mistake of setting up an LLC for lawsuit protection. It doesn't work that way for most small service businesses.
posted by JackFlash at 4:14 PM on May 13, 2016 [7 favorites]

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