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People often ask whether they need a DBA or an LLC. They do different jobs. A DBA registers a name. An LLC creates a business that the law treats as separate from its owners.
The short version
| DBA | LLC | |
|---|---|---|
| What it is | Registration of a trade name | A legal entity formed with the state |
| Liability protection | None by itself | Yes, if the LLC is run as a separate business |
| Who files | Owner, at state or county level | Members, with the Secretary of State or equivalent |
| Tax status | Same as the owner | Set by IRS rules, see below |
| Needs a legal name behind it | Yes, an owner or entity | It is the entity |
What a DBA does
The SBA says on its business name page that a DBA lets you conduct business under a different identity from your own personal name or your formal business entity name. It adds that registering a DBA does not provide legal protection by itself, and that multiple businesses can go by the same DBA in one state.
South Dakota's Secretary of State states it directly: a DBA does not create an LLC or corporation. Texas says in its name filing FAQ that more than one person can have the same assumed name on file and that a certificate does not prevent anyone else from filing the same name. For steps, see how to file a DBA.
What an LLC does
An LLC is formed by a state filing. Costs differ: California lists $70 for Articles of Organization and an $800 annual LLC tax, per its Secretary of State. Texas lists $300 for a Certificate of Formation. See what is an LLC and your state guide.
Taxes
The IRS covers sole proprietors on its sole proprietorships page. A sole proprietor owns an unincorporated business alone and files Schedule C with Form 1040. A DBA does not change that.
For LLCs, the IRS says on its LLC page that a one-member LLC is treated as an entity disregarded as separate from its owner for income tax, and a domestic LLC with at least two members is classified as a partnership, unless it files Form 8832 to elect corporate treatment. The IRS adds that for employment tax a one-member LLC is still a separate entity. More in LLC taxes.
Using both together
An LLC that trades under another name can file an assumed name for it. The LLC stays the owner, and the DBA is the label on the door. Where it is filed depends on the state. In Texas an LLC files with the Secretary of State. In California a county handles it. The Texas DBA and California DBA guides cover the two.
Which one fits?
- You are one person testing an idea under a trade name. A DBA may be enough, but you carry the business risk personally.
- You have clients, staff, contracts or assets to protect. Look at an LLC. Compare it in LLC vs sole proprietorship.
- You already have an LLC and want a brand name. File a DBA for that name.
Rules differ by state and by business. This is general information, not legal or tax advice. A lawyer or accountant can confirm which fits you.
Ready for a real company behind the name? Start your LLC.