Naming your company can be tricky. You’ve spent hours brainstorming unique ideas that embody what your company will stand for.
But there’s one problem. What if the name is the same as another company?
In this guide, we’ll explain whether you can have the same DBA name as another company and the benefits of having multiple DBAs.
Can Two Businesses have the Same DBA Name?
When starting a company, you want to pick a name that helps your business stand out from the competition while also describing what your business does.
However, you’ll need to consider whether another company may have the same or closely similar name.
Generally, in most states, two businesses aren’t allowed to have the same DBA name. However, there isn’t a definitive answer since it depends on various factors like the geographical area, the type of business, and whether the DBA name has been trademarked. We recommend consulting with an attorney to determine the potential risks of using a name already registered by another company.
When selecting a DBA name, it’s important to understand the potential legal ramifications that may arise. Avoid names that are too similar to other companies since it can lead to legal issues. Ultimately, this is up to each company to determine if the name conflict is a problem.
You wouldn’t want to choose the same name as another business since it’ll only confuse your customers with the other business. Searching to see if someone else has already used your desired business name is best. Typically, the Patent and Trademark Office (PTO) has a searchable database of federal trademark laws that lets you see whether a name has been trademarked.
You can use your DBA in more than one state as long as you own an LLC in those states. However, you can’t use the same DBA name for multiple businesses, and you’ll be forced to change your name.
What Happens If Two Businesses Have the Same DBA Name?
When two businesses have the same DBA name, several things could happen. If the companies are within the same industry and competing for similar customers, one business will likely change its name. This prevents confusion among customers who may purchase from the wrong business.
However, if the businesses aren’t within the same industry and aren’t competing for the same customers, then they can typically keep their name. Always check with your legal team to ensure that there aren’t any trademark issues.
For example, if the name of your DBA appears identical or similar to that of an incorporated firm, they can file a trademark infringement lawsuit against you. Typically, they might send a cease-and-desist letter to your business to warn you and demonstrate they’re aware of the various trademark laws.
If no action is taken, the conflict will be handled by filing a lawsuit or resolving it through administrative proceedings with the US Patent and Trademark office.
If you choose a DBA that’s closely similar to another company’s name, you can face legal consequences from that business. You may face monetary penalties from the court and be forced to change the DBA name legally.
Is It Better To Have Multiple DBAs?
Yes, multiple DBAs have many benefits, such as allowing specific branches or departments to operate under their name. It also helps your company segment markets increasing market research and brand control.
Ultimately, multiple DBA filings can be structured differently depending on the business’s needs. It allows each member involved in the LLC to operate their legal entity but access multiple sets of tax returns and financial records. The LLC with multiple DBA names can be taxed as a corporation or partnership. Also, this lets you use various DBA names rather than creating separate LLCs.
Benefits of Having Multiple DBAs
There are many benefits to having multiple DBAs, which include the following:
DBAs can protect you from legal trouble. You never know when an angry customer or botched transaction could lead to a lawsuit that attempts to incriminate you for fraud.
Multiple DBAs allow you to separate LLC businesses from the parent LLC entity with different branding.
While filing requirements and fees are associated with setting up a DBA, there’s no risk involved. The process involves contacting a local recorder’s or clerk’s office for a DBA certificate.
Or, if you decide to expand your business, a DBA will help facilitate that expansion, whether it involves opening a new line of business or expanding geographically. Suppose your business expands to a location where someone else has already registered your desired business name. In that case, a DBA allows you to register a different name in that region and operate under an alias.
If you want to enter an entirely new market, multiple DBAs are necessary. Countless companies own various brands with a DBA while their parent company oversees them.
Capture a Different Market
Every company you start will respond to different markets. This lets you branch out and promote your products or services to these target audiences. Filing multiple DBAs enables you to serve different subsets of markets for your products. As a result, you can create separate websites specifically attracting customers with additional needs.
Stakes a Claim on Your Business Name
When filing a DBA, you’re telling the world and putting the name you’ve chosen for each company on a public record. Some states don’t allow another business to register the same name, meaning another person won’t be able to use your desired business name.
Limit Personal Liability
Multiple DBAs can mitigate legal risk by reducing the personal liability of the LLC members since the assets are separated under each DBA.
Take Advantage of Tax Treatments
Every tax and industry has different tax laws. For example, some states have a state income tax, while others don’t. Creating a separate DBA for each state means you receive tax benefits from each location you’re doing business in.
DBAs Can Be Complex – Taxes Don’t Have To Be!
You never want to name your business the same as another. Having the same DBA name could result in trademark infringement lawsuits.
And if you end up finding another DBA or trademark like yours, send them a cease and desist letter to warn them.
Fortunately, when you have multiple DBAs, you get to state the location in which you’re doing business. As a result, you’re privy to certain tax advantages. Of course, this also lets you set up multiple business bank accounts.
While this can be complicated to manage multiple tax filings, it doesn’t have to be. MI Tax CPA can help you sort out all of your finances so that you can minimize your tax burdens. Consult with an expert from our team, and let us help you save by finding every deduction for your business.