What’s A Fictitious Business Name (FBN) / Doing Business As (DBA)?
What’s A Fictitious Business Name (FBN) / Doing Business As (DBA)?
Monday, April 15th, 2024
What’s A Fictitious Business Name (FBN) / Doing Business As (DBA)?
It’s no secret that the name you choose for your business will have a significant impact on its success.
What you name your business can and should tell your customers what services and products your company offers, which is vital when looking to stand out among your competitors.
It’s unlikely that one name will be able to encompass all the services and products you offer, and this is where a fictitious business name (FBN) / doing business as (DBA) can help.
The terms fictitious business name and doing business as are interchangeable. You may even hear some use “assumed name”, and all mean the same.
A DBA is a name other than your legal, registered company name that you can legally use to promote your company’s offerings.
There are numerous reasons why having an FBN can benefit your business; however, before diving into that, let’s briefly discuss the filing process.
Filing Requirements & Must Knows When Filing
Filing requirements vary from state to state, county to county, and city to city. With that said, one main similarity is that you’ll need to fill out an application.
The application can be as little as one page to a few pages. In addition to filing the application, you may be required to notify the public of your FBN via an advertisement in the local paper.
As you’ll probably guess, the application and advertisement usually have filing fees, and the usage of the assumed name is limited to a set period (in most cases).
This means that at some point you may need to refile for the same assumed name to keep using it. It helps to know that you can file for multiple names simultaneously, which can be cost-effective, too.
You can have an FBN for any business structure (sole proprietorship, LLC, partnership, & corporation).
There are limitations on the names you can use, so be sure to check with the appropriate office to know what those limitations are.
Lastly, once you’ve completed the filing for the assumed name, you’ll want to ensure the name is added to your business bank account so you have no issues with payments written to that name.
Now, let’s explore the benefits of filing for a DBA and factors to keep in mind if you’re thinking about filing for an assumed name.
Benefits:
1. Brand Awareness & Marketing
As your company grows, especially into different sectors or even subsections of an industry, it’s almost impossible for one name to encompass all the company’s products and services.
By having a DBA, you can market and promote different products with a business name that appeals to your desired customer base.
For example, if your registered business name is ABC Worldwide LLC and you begin selling auto paint under a different, appealing brand name, then filing a DBA can help market that product.
2. Privacy
Nowadays, with information readily available upon a quick search on Google, a DBA can add some degree of privacy.
More so for sole proprietors, and even for LLCs, partnerships, and corporations, operating under an assumed name can shelter your legal name.
This isn’t to say that you shouldn’t want your customers to know your registered business name; rather, it can help guard against unscrupulous individuals looking to harm your business name.
3. Professionalism
An FBN can put you ahead of the competition by making you appear more professional.
Companies that appear more professional can earn a consumer's trust more quickly than companies that lack this attribute.
Especially for those who operate as sole proprietors, a DBA can show your target customers that you’re a legit, capable business.
4. Multiple Assumed Names Can Be Filed
The ability to file for multiple assumed names is beneficial for various reasons, beginning with the number of products and services your business offers, currently or eventually.
More specifically, a DBA can help you market a product with a unique name that resonates with a population within a geographic region; therefore, you may use different names for the same product.
You may also find out that another company has a similar legal name, and using a variation of your legal name can help distinguish between your competitors and you.
Factors To Consider:
1. Filing & Renewal Costs
Although the costs are minimal compared to filing for a new business overall, they’re still an expense that needs to be accounted for.
Some states or counties may occasionally require you to renew the DBA, so you’ll have to account for those costs, too.
Record keeping will also be necessary since specific business processes may require it, so some light administrative action will be required.
2. No Exclusive Rights To DBAs/FBNs
Unless the DBA is trademarked, any other business or individual can legally use the same assumed name, providing the filing is completed.
This may result in another business utilizing the same name to market their services and even cause confusion among customers.
You can navigate this situation by searching the name you want to use and seeing if it’s currently being used.
3. Provide No Legal Protection
An FBN provides no legal protection. It’s different from an LLC, corporation, or partnership, business structures that provide legal protection when used correctly.
This is key to know, particularly if you’re a sole proprietor. If this is you and you want to protect your assets in case of litigation, then it’s worth considering another business structure.
The critical detail to note here is that a DBA is simply a fictitious business name you’re using and just that.
4. FBN Filings Only Go So Far, Geographically Speaking
An assumed name only applies to the geographic region you’re filing it in, meaning that your filing has no weight outside of said region.
Because of this, you may feel the need to file for the FBN in several regions or states, if necessary, since this is rarely needed.
This will inevitably lead to additional initial and renewal costs, where applicable, and more administrative work.
Should You File A FBN/DBA?
Whether you should file for a DBA or not is entirely situational. For example, sole proprietors who don’t want to use their name as the business name should.
Sole proprietors will appear more professional, and it’ll help with marketing. If you want to receive checks under a different name for a specific service, then filing an FBN will be ideal.
If your business name encompasses all your products or services, then an assumed name isn’t needed. If the goal is asset protection, then a DBA won’t be helpful either.
Of course, there will be a number of scenarios outside of this, so it helps to think it through before deciding whether to file a DBA.
Final Thoughts
A fictitious business name serves several useful, vital purposes for any business, regardless of industry.
Even if the benefits don’t fully help your business, it’s still worth knowing how a DBA functions and the process.
In any case, the presence of an assumed name can open the doors to many opportunities, from marketing to privacy to brand awareness.
Considering the primary reason for the DBA will ultimately help you decide whether you should file for it.
Do you currently have an FBN? If so, why or why not? Do you think you’ll ever need a DBA at some point?
Let us know your thoughts in the comment section below as we look forward to reading what you have to say!
Thank you for reading, and remember to Stay Financially Invested!
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