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Is it necessary for your eCommerce store to obtain a DBA? That is dependent on the situation. Do you want to operate your business under your legal name or establish a "alias" that will help you target the proper market and brand your product or service? If you choose the latter, you'll need to run your eCommerce firm under a different name than your formal company name. You'll need to register your company as a DBA, or Doing Business As, in order to do so. A DBA, also known as a false business name, assumed name, or trade name, allows you to conduct your business under a different name in each state, assuming the name you choose is accessible.
Small business owners and solopreneurs who want to do business under a name other than their formal business name, which is often their personal name, should file for a DBA (ex: John Smith). It will also help your company stand out from the crowd and link your product or service with the people who are looking for it.
You can still create a DBA if your company is already incorporated as a Limited Liability Corporation (LLC). This is especially useful if you intend to expand your company's product and service offerings.
If you want to do business under a name other than your legal business name, you'll need a DBA. Contact us today.
What is a DBA's Role?
A DBA allows you to run your business under a different name than your legal name or the name of your LLC. It will also help your company stand out and connect with its target market.
Your company's branding can also be established with the help of a DBA. And, whether your company is physical or virtual, your customers will be charged by those companies, rather than receiving a confused invoice with the owner's name — let's use John Smith as an example — as the legal business name or the name of an LLC.
In the county or state where you filed your application, registering your business as a DBA may also protect your fictitious name. Because some states prohibit several businesses from using the same DBA name, you'll be the only Cosmic Comics or Lava Burgers location in your county or state. (Assuming, of course, that you wanted to do business under those two extremely great names.) However, someone forming a formal company entity, such as an LLC or S Corp, can obtain a DBA name.
Is a DBA Required for My Ecommerce Store?
But what if you don't have a physical location? What if you ran your company entirely online, with clients and customers from all 50 states? Is it still necessary to register as a DBA for ecommerce, or can you operate without one? As previously noted, it all depends. Are you satisfied with the name under which you are now operating? Does John Smith work for you as a business name? You won't need a DBA if this is the case. However, if you wish to work under a business name other than your own, you'll need a DBA.
A DBA can assist a company that wants to have an online presence but does not want to use the owner's legal name (John Smith). This is also perfect if the business owner intends to expand their product line and wants to be recognized to customers by a different name than their registered business name (again, John Smith). You can establish extensions of your firm and set up another DBA for Cosmic Mugs if you're an ecommerce business and already have your fictitious name of Cosmic Comics under your legal name (John Smith). This branding will appeal to the target audience, which in this case will be those who want to buy super-sized drinking cups rather than comic books. However, just because you are the sole firm operating under your DBA in your state does not mean that another ecommerce company can claim the same name in another state or in your own state with a legitimate corporate entity.
Using a DBA to Start an Ecommerce Business
You can open a business account under your fictitious name once you have your DBA. Payments can then be made or received through your company. To assist underline the relationship between your trade name and your legal name, you might use your fictitious name on letterhead, invoices, contracts, marketing materials, and any other firm stationery. You can do business as a DBA even if you already have an LLC. The following are some additional pros and downsides of having a DBA:
Pros:
It can safeguard your privacy by concealing your true identity and preventing you from using your real name.
You can have several DBAs working for the same firm.
A DBA name might help your company get credibility.
A DBA can assist in the identification of your firm with the business as well as product and service branding.
Cons:
A database administrator (DBA) is not a recognized business organization.
A DBA is an extension of your firm, not a separate business organization.
It does not safeguard your name or brand. (To get that level of protection, you should file a trademark application.)
If you're a solopreneur without an LLC or insurance coverage for your small business, you could be held personally accountable if it's sued.
The Following Steps
Registering your ecommerce firm as a DBA will make your website stand out among the multitudes of other comparable websites. However, if you're looking for true security, forming an LLC is the best option. Your personal money will be protected from any liabilities associated with your business if you incorporate your company as an LLC. Our articles and learning center can help you learn more about DBAs and how to form a business entity like an LLC.
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