Do You Need a DBA If You Want to Sell Online?
Ecommerce, or online shopping, has been growing steadily for over a decade. Getting what you want has become as easy as unlocking your smartphone and going to an online retailer for, well, just about anything! You can shop online, pay online and have your purchase delivered to your doorstep in a matter of days — if not hours.
According to Statista, online retail sales totaled $505 billion in 2018 and are expected to jump to $735 billion by 2023. Companies such as Amazon, Apple, Home Depot, Macy’s, Walmart, Best Buy and Target net billions of dollars each year from online shoppers. Streaming service provider Spotify brought in over $8 billion worldwide, while Etsy, according to Digital Commerce 360, sold $4.97 billion in goods in 2019 — a 26.8 percent jump from the previous year.
So what does this all mean for you and your small business, and how can you benefit from the online shopping trend? First things first is to establish your presence in online markets. Second thing on your list should be determining if you need a DBA name (short for “doing business as”) to further establish a brand in the online market space while operating under the coverage of an incorporated business.
What Is a DBA For?
A DBA, or “doing business as” name, is also known as a fictitious name, assumed name or trade name. A DBA allows you to do business using another name other than the legal business name created when you establish your LLC. A DBA name can be more creative and help establish a brand for a specific product or service. You can even consider it your business’s nickname. (Hopefully, it’s a nickname that matches what you are selling.)
Let’s say you set up a brick-and-mortar business that sells wedding dresses. You create an LLC for your business called Michele Ann’s Bridal, but you want to sell party favors online as well. Since Michele Ann’s Bridal LLC may not attract buyers looking to buy favors for birthdays, graduations or other events, you opt to sell under the name of a DBA: Do Me a Favor. This alias, still under the umbrella of your legal business name, is selling favors on Etsy, Handmade at Amazon, iCraft and a dozen other handmade goods marketplaces, and establishing a new brand. Having a DBA works for Michele Ann’s Bridal, now let’s take a few steps back and see how it can work for you.
Do I Need a DBA for My Online Business or Website?
A DBA is not required to start an online business, but whether you are a sole proprietor or are forming an LLC, you may want one anyway. Here are a few reasons why you may want a DBA if you plan to sell online.
- To Separate Your Personal Name from Your Business Name. If your sole proprietor or LLC name is your legal name, a DBA will allow you to sell your goods or services under a name other than your legal name. It also creates a level of professionalism by separating your personal name from your business name. Determine if your online product or service will be more recognizable with a name that is not simply your first and last name.
- You Want to Keep Your LLC Name More General. If you’re establishing an LLC, you may want to keep it more general in order to create many sub-brands or websites beneath it. For example, maybe your LLC name is TM Enterprises LLC. If you want to sell shaving lotion online, a DBA name of Tony’s Shaving Care may be better suited to market your products.
- To Set Up a Business Bank Account. If you’re currently a sole proprietor, a DBA may be required to get a business bank account. Most banks will not let you set one up with your personal information. If you’re getting set up as an LLC, you can open a business account with this information, or you may elect to set up a separate account with your DBA name in order to receive payments and send invoices with this new DBA name.
- To Reduce Paperwork. Instead of creating a new LLC for each business venture you take on, creating a DBA for each business will reduce the paperwork needed to file for multiple LLCs. Depending on the state, fees to file a DBA may be less than the fee to file a new LLC.
How to Apply for DBA
The purpose of filing a DBA is to notify the city and state, as well as the customer, of the entity that is behind the DBA. For a DBA, you must submit your application with a county courthouse. Many states also allow you to file a DBA online. Each state has its own procedure for filing a DBA, but overall, the following steps apply:
- Visit your state government website (Secretary of State, Division of Corporations, etc.).
- Download and complete the relevant form, which may be called a DBA, fictitious, trade or assumed name form.
- Pay the fee, which can vary anywhere between $5 (Iowa) to as high as $204 (Illinois).
Some states, including California, Georgia and Illinois, add red tape to the DBA application process by including publishing requirements. Other states, including Alaska, Kansas and New Mexico, do not offer DBA filing requirements. (Check the chart to view all the states with their filing requirements.)
Setting Up a DBA with Incfile
Overall, adding a DBA to your business can give you the opportunity to connect with the right market and customer base and set your product/service lines apart from each other.
Incfile offers a complete DBA Filing service to take the hard work of filing for a fictitious name off your plate. Incfile’s business experts can deal with all the forms, filing, registration and fees on your behalf.
Whether it’s establishing your LLC or moving forward with a DBA, Incfile will guide you through the process and get your business off the ground and running.