As you embark on your journey to start to your own small business, there is no doubt that there is tons on your plate. There are decisions to be made, contracts to create, there could be vendor and supplier relationships to build, consumer research to be done, and possibly staff to be hired. With so many big decisions and moves to be made, it’s natural that the “smaller” ones can slip through the cracks or go by unnoticed. Here’s the thing, sometimes what appears to be a small decision should, in fact, be given the same attention as the bigger ones.

If your plan had been to go about as a DBA, which means “Doing Business As”, and not worry about forming an LLC, it may be worth a little research first. This is a decision you don’t actually want to rush through.

Never Even Heard of a DBA – What Exactly Is It?

For those who are completely new to the business world, and as a potential start-up, there is a good chance you don’t have much experience. It’s only natural to wonder about what the official DBA meaning is. In most cases, this is used by sole proprietor style businesses who don’t want to operate under their own name and prefer to use a fictitious name instead. So, let’s say your name is Joanne Bell – you would instead choose a fictitious name, known as a DBA. So, you could operate your business as John Smith if you choose.

It may seem strange that you can operate under a fictitious name, but in most states, this is allowed. If you are still not sure on the DBA meaning, here’s a guide.

So, What’s the Problem with a DBA?

So, if states are allowing it, and it’s relatively easy to do, what is the problem with a DBA? Well, there is a very big glaring problem and that’s the fact that it doesn’t offer the same kind of limited liability protections that an LLC would offer, or your standard corporate structure. There is no “corporate shield” as they say, which means your personal assets will not have protection from the business liabilities you accumulate.

Not only that, but you won’t have the same tax benefits, which can be huge right there. Your business will be open to all kinds of risks that are frankly not usually worth taking.

Let’s Not Forget the Naming Rights

There is another negative to opting for a DBA, as it also limits your naming rights. You won’t have any official rights to the name you choose for your company, and while that may not seem like a big deal at first, the moment someone else starts using your DBA name as a legal business entity, it can cause a real issue. How do you create awareness and buzz for your company if you have to end up changing the name?

It Isn’t Such a Small Decision

So, while it may seem like the name of your business isn’t such a big deal, opting for a registered LLC is certainly the safer way to go.

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