LLC vs. DBA – Do you know the difference?

The July call for the members is on this very subject. A question was asked recently by several coaches all of whom were independently operating on the assumption that a dba was good enough for their business and that they may eventually develop several different dbas for various products and/or services. A dba which is short for “doing business as” also known as a trade name does not give you any protection whatsoever. It is simply a fictional name by which you are known or may do business. It can be your brand, and you can get some intellectual property protection for it (more on that in another post if there is interest) but it does not protect you from personal liability the way a limited liability company does. The tax reasons for establishing an LLC are to avoid the double tax associated with corporations. The practical effect for a solo business owner is huge; you get to simply fill out a schedule C and be taxed as if there were no entity at all; yet, you get all protections of a corporation so that your liability is limited to your invested capital in the LLC.

Running several dbas from the same LLC is allowed in some states, not in others, but as a general rule, you will want to avoid doing this as it really does not help you – and may even hurt as it may allow a creditor to “pierce the corporate veil.”

This should concern you just enough to want to call your counsel or get one if you don’t have one. It should not be done or solved by self help!