The acronym "DBA", which means "Doing Business As", refers to an official nickname for your company. A DBA, called an Assumed Name in Texas, enables your company to accept payments, open bank accounts, and transact business under an additional assumed name other than its true or legal business name.
A DBA is not a separate legal entity from your business and does not provide any type of asset protection. This means that if you are conducting business as a sole proprietorship or partnership with a DBA, you still have no personal liability protection against lawsuits and other liabilities arising out of the operation of your business.
Furthermore, since a DBA is not a separate entity from your business, it will not affect how you pay taxes. You will still file taxes the same way your business would if it did not have a DBA.
Why File a DBA in Texas?
One reason to file a DBA in Texas is that Texas requires any company (domestic or foreign) that does business under any name other than its legal name to file a DBA with the Texas Secretary of State or the county where it transacts business.
Without a DBA, your company will not be able to accept payments, open bank accounts, enter into contractual agreements, or pursue litigation in Texas under any name other than its true or legal business name.
What’s more, a DBA can be useful to your company in many other ways, most notably when it comes to changing the name under which your business operates for practical purposes or rebranding, and when expanding your business into areas that you would like to treat separately.
A Name Change
As a sole proprietor, your business name is your surname by default. Likewise, the default business name for a general partnership consists of the surnames of all of its owners, which can be very cumbersome and impractical for a business with many partners. If a sole proprietorship or general partnership wants to operate under a business name that does not include the names of its owners, it will need to file a DBA.
Similarly, if you want to rebrand your corporation or LLC by doing business under an abbreviation or acronym of its current legal name, or under a completely different name altogether, you can simply file a DBA with the new name. Filing a DBA to rebrand your business or change its name is a much simpler process than applying for a legal name change.
Business Expansion
A DBA can also be useful when expanding your business or adding new products and services to your business model that you would like to treat separately.
For example, if your burger restaurant, “Bob’s Burgers”, starts selling frozen burgers through supermarket chains, you might want to brand them differently from your restaurant, “Bob’s Frozen Burgers”, for example.
To this extent, you may file as many DBAs for your company as you like. But, the more DBAs your company has, the more maintenance and marketing costs it may have as well.
Also, remember that a DBA is not a separate entity from your company. So, more DBAs do not mean more liability protection.
So, using the example above, if a liability arises due to the retail sale of your frozen burgers under the assumed name Bob’s Frozen Burgers, your restaurant Bob’s Burgers will still be held liable. Because of this, it is sometimes better to create separate LLCs when you desire to expand your business into new areas.
How to File an Assumed Name in Texas
- Choose an Acceptable Business Name - The first thing you want to do when filing an assumed name in Texas is to choose an acceptable name following Texas Business name requirements.
- Perform a Name Search - Next, you should perform a name search at the Secretary of State's website and the Texas Comptroller of Public Accounts’ website to see if the name is available to be used in Texas. After that, you should perform a quick web search to see if the URL is available. Even if you don't plan on creating a website today, you may want to purchase the domain to keep someone else from buying it.
- Register Your DBA - Once you have chosen an assumed name and have confirmed that it is available to be used in Texas, depending on your company’s legal business structure, you will need to register your DBA with either the county where your company transacts business or with the Texas Secretary of State.
Registering a DBA for Sole Proprietorships or Partnerships in Texas
Informal business entity structures like sole proprietorships and partnerships are only required to register an assumed name with the appropriate county clerk’s office(s).
If your business has physical premises, then you need to register in the county(s) where the physical premises are located.
If your business has no physical premises, then you must register in any county where you will be doing business.
The cost of registering an assumed name at the county level varies from county to county, but is usually about $15 per county.
Filing an Assumed Name Certificate for a Texas LLC or Corporation
To register an assumed name in Texas, LLCs, corporations, and other formal business entity structures must file Form 503 - Assumed Name Certificate with the Secretary of State, which can be downloaded from its website.
Filling out Form 503 will require you to have ready certain information regarding your new DBA and your business, including:
- Your company's entity structure and file number;
- Where your company was formed;
- Your company's principal business address;
- How long you intend to use the assumed name (up to 10 years from the filing date); and
- Each county where the assumed name will be used.
You must then submit a copy of Form 503 with the Secretary of State and keep the original for yourself. The form does not need to be notarized and can be submitted either online, by mail, or in person.
The fee for filing an Assumed Name Certificate with the secretary of state in Texas is $25, and your Texas DBA will then need to be renewed every ten years.
For more information or for help with obtaining a DBA for your Texas business enterprise, Call us today to consult with an experienced Texas business attorney.