If you’re a sole proprietor in Michigan, “Doing Business As” (DBA) under a “trade name” or “fictitious name” can help you diversify your offerings while keeping all your accounts under the same umbrella entity. But what if you want to expand and have multiple DBAs?
A sole proprietor can file for multiple DBAs, but they must first go through some legal steps. Read on to learn more about what you need to know about DBAs for sole proprietors.
How Many DBAs Can You Have?
The number of DBAs a sole proprietor can have depends upon the individual situation and the state where you’re doing business. However, there is typically no limit on how many DBAs one may file.
The main stipulation is that each trade name must be unique and not in use by another company in your state.
To ensure the DBA you want to use is available, start by accessing your state’s business entity search to see if the entity name is already in use. For example, Michigan residents would need to visit the Michigan Department of Licensing and Regulatory Affairs website for a Business Entity Search.
After confirming that no one else is already using the name, you can set up your DBA with the state. Michigan sole proprietors can file with the Michigan Corporations Online Filing tool or file the Certificate of Assumed Name form by mail or in person. Note that there’s a $10 fee to file a DBA for sole proprietors.
What Is the Legal Requirement?
Any entity conducting business under a DBA must file the assumed name with their state. By filing a DBA, you are legally allowed to conduct business using an assumed or fictitious name.
Having said this, if you do not wish to file for a DBA, you may conduct business using your business’ true and legal name without having to file any additional paperwork with the state.
No businesses are required to set up at DBA. However, those who want to operate under a name other than their business’ legally filed name must file a DBA. In the state of Michigan, that governing body would be LARA. If the government discovers that you’ve been acting under a name the state has no record of, it could create issues later.
How Can a DBA Help Your Business?
Setting up a legal DBA provides numerous advantages for your business and may even be necessary depending on your circumstances. These benefits include:
It’s the Easiest Way to Register a Business Name
By filing a DBA, you can create and register your business name in the state without establishing a separate corporate entity or LLC. It’s also the most affordable way to use a business name.
You Can Operate Many Businesses in One
Having a DBA allows you to operate multiple businesses in the same state without having to create a separate business entity for each one. You can register and use several different business names for one sole proprietorship.
For example, a contractor may offer various services, from repairs and new construction to tree maintenance and sod delivery. He could create unique DBAs for “The Sod Father,” “Green Thumb Tree Maintenance,” “Ready Repairs,” and “New Construction Contracting” for each business but operate them all under the same LLC.
DBAs Maintain Compliance
Filing for a DBA ensures that you comply with state laws and regulations. Without registering a DBA, you may be subject to penalties or fines for operating under an assumed or fictitious name without being properly registered.
DBAs Protect Your Name
Using a DBA also keeps your name separate from the business. Legal separation is beneficial if potential liabilities are associated with the business as it ensures that they don’t affect you personally.
DBAs Can Be Your Key to a Business Bank Account
Having a DBA also makes it easier to open a business bank account, as banks often require you to have an official trade name before they set up a new account.
Need Advice About Your DBAs in Michigan? Contact Us!
Whether you are just starting as a sole proprietor in Michigan or already have an established presence within the state, understanding what role DBAs play in helping grow and protect your business is essential. While having multiple DBAs may be beneficial depending on your circumstances, each must be unique to avoid confusion among customers or legal issues.
Need advice about setting up your DBA? Contact us at MI Tax CPA! We’ll help ensure all your bases are covered so you can focus on growing and scaling up your company without worrying about compliance issues caused by incorrect filings or paperwork errors.