With entrepreneurialism on the rise, there are plenty of videos and written resources that suggest "all you need is a DBA". But is that truly all you need to limit your personal liability and protect your personal assets while conducting business? Let's get into it...
First and foremost, DBA stands for Doing Business As. It is also referred to as an "Assumed Name" in many states such as Texas. Filing for a DBA is essentially letting your state or county (depending on where you file) know that you'll be doing business under this specific nickname. Yes, you read that right -- a nickname that will be used interchangeably with your own name.
A DBA Name does NOT create a business entity.
Because a true business entity is not created, it will not be afforded the benefits of a business entity. This means that the business will not be distinguished from the individual who filed for the DBA. You and the business are legally seen as one. So you will be personally responsible for all debts, liabilities, contractual obligations, etc. that the business is responsible for.
In order to conduct the business in a way that limits your personal liability, you'll want to create a true business entity. There are many types of business entities: Limited Liability Company (LLC), Corporation, Limited Partnership (LP), etc. Each of these entity types have their own unique structures, rules, and benefits. Before forming one, please do your research and determine which entity would best work for your business type and the goals you have for your business both short term and long term. For more information of the entity structures and how they differ, check out our other blog posts. If you'd like guidance with choosing the right structure, feel free to schedule a consultation with our office. We're always happy to assist.
If you are an entrepreneur in need of guidance developing, maintaining, or protecting your business and brand, allow my office to help you do so. You can book a confidential consultation through the online scheduling tool. We would love to earn your business.
This is general information and is not intended to be legal advice. For legal advice, please contact a lawyer.
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