FBN (fictitious business name) is often the choice of owners as they prefer a separate name for their business than their own. Once the fictitious name is chosen, it is then registered in the country of operation. In its registration, it is registered under the category of fictitious names.
This is then followed by opening a business bank account with the same name and applying for the credit line to get the business off and running in its initial years.
On the other hand, DBA (doing business as) is different from FBN in a way that while it is the operating name of a company, it is not the registered name of the company. A company could be registered under one name and operating under another. However, for sole proprietors, DBA and FBA is essentially a similar thing.
To get your FBN registered, many states would want you to visit the county office and fill the FBN/DBA registration form along with the EIN confirmation letter. The average registration fee starts from 10$ to 100$. While many states will require simple business documentation and form filling, some states may require additional details and bank account information.
At the end of the day, it is not a big ask to get your business name registered, and many registered agent services will do it for you.
Name of the Game
The purpose of registering the DBN and DBA is to notify the public that under what name your company is holding its practices.
The FBN and DBA laws are, in fact, consumer protection laws, and they are in place to ensure that the entire pyramid of business, from its registration to execution of business practices, is visible to consumers, and when there is a transaction between a business and a customer, the customer should know whom he is dealing with and if there are any consequences related to the particular transaction.
As far as the corporations are concerned, there are many reasons for them to use the FBN/DBA apart from them being a legal constraint. Here are some advantages that fictitious names provide you:
- Unless you register an FBN for your business, it will be registered in your name under an operating agreement. This is a big privacy concern, as owners of corporations will not want their names on the public record. So, for this privacy concern, an FBN/DBA offers a great way out.
- Every corporation looks out for a distinctive name that stands out from the rest and that offers companies a competitive advantage.
- FBN/DBA offers your business an opportunity to get it off and running with a name that sits well with the trade of your business. For example, if your name is Adam Smith and you have a gardening business, you would prefer a name like Adam’s flowers and petals instead of merely Adam Smith.
- Oftentimes, when you are registering a bank account for your business under the company agreement, the bank will require a registered FBN/DBA and won’t register your business bank account with your name.
- An obvious and big advantage of registering your FBN/DBA is that you will be protected from any litigation related to the name of your business, as well as once you have a name registered for your business, no other business can use it, as it is protected under the law. Free business name search platforms will inform others that this is an already registered name. This is a kind of business license for you.
It is critical to note that if you first register an FBN or/and DBA before forming a corporation, LLC, or any other legal entity type, the particular state of the USA you’re doing business in will recognize your business as a sole proprietorship.
Once you are recognized as a sole proprietor, you can run your business in that state under your FBN, but it will not provide you with Limited Liability Protection. This would make you personally liable for any debts and obligations related to the business.
So, the appropriate strategy is first to form the LLC and then get the FBN/DBA registered. It will ensure that your limited liability protection is valid, and you are not personally liable for any debts and obligations related to the business.