When doing business, the majority or business owners choose to have a separate name for the business other than their own. The name, once chosen is registered with the county of operation. This is followed by opening up a business account in the new name and perhaps applying for a business credit card or line of credit to help the business stay in operation during its first few years.
The name chosen for the business, which will be presented to the public is considered the fictitious name for the sole proprietor. This is the business name that is used in advertising campaigns, on business cards and on business bank accounts. This name is registered with the county under the category of fictitious names.
DBA or doing business as…
When the fictitious name is registered with the county the business owner has now officially announced the intention to operate the business under the fictitious name. The business owner is now doing business as the chosen fictitious name. And for sole proprietorships (those who declare business earning through Schedule Con the personal tax returns) the DBA and fictitious name are technically the same thing.
What’s the Difference?
The biggest difference between the DBA and a fictitious name comes into play with corporations. A corporation name is actually registered with the states and files business tax returns separately from personal tax returns. There are situations where a business owner will choose to open several different companies under the umbrella of the main business name but want each company to have their own name. In this case the corporation owner will file fictitious names that sit under that main corporation. Therefore, instead of John Doe DBA Branches and Bushes Landscaping the corporation, All Inclusive Landscaping Inc, has a fictitious name for its company that landscapes for private residences; All Homes Landscaping, and a fictitious name for its company that landscapes for businesses; All Business Landscaping and a company that grows the plants; We Grow Plants. In this way the corporation can keep the finances separate for each separate business, yet report it under one business tax return.
Therefore, a business owner who plans on growing and adding to the initial company would be wise to choose an original yet generic name. The name should explain what the business does and be memorable to customers. At the same time the name should be vague enough to allow for separate businesses to form under it. The example above, All Inclusive Landscaping describes exactly what the business is. The DBAs under the main business made up of fictitious names, also clearly explain what they do; landscaping for homes and businesses as well as plant cultivation.