Do I Need A DBA?

by CaptainJuice 7 replies
Hello Warriors!

I live in the U.S. and already have an LLC. This LLC is going to be used for web design, ecom, and app development. Basically multiple businesses.

I'm getting ready to open up my first eCom store. Should I create a DBA under my LLC to cover myself?

For example if my store is unsuccessful I'll just shut down the DBA and not the LLC.

Thanks in advance
#ecommerce sites, wholesaling & drop shipping #dba
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  • Profile picture of the author ecomhustla
    I would say DBAs are most useful as a branding tool to speak to your target audience.

    I suppose a DBA can be used to "cover" your LLC, but I figure that if the business fails to gain traction, no one will remember the name anyway.

    In my opinion it is best to use a DBA as a "brand name" that piques interest, makes you memorable, gives your target audience something to identify with, and/or readily conveys the purpose/value of your business.

    For example, for the web design and app dev side of things, you might go for a more techy/creative or business-oriented name, perhaps one that suggests sleekness and artistic skill, or professionalism and reliability that can take people's businesses to the next level. Maybe it won't even be a real word, but the letters/syllables you choose might still have certain connotations. The possibilities are endless, but the idea is to convey the values you think your web/app businesses will bring customers.

    But if your retail division sells things unrelated to your tech stuff (let's say home decor or kids toys), then in my opinion you wouldn't want to use the technical or business-like DBA for this area. Instead, go for something fun that conveys the value in these markets that these shoppers will be attracted to (e.g., a certain style, persona, way of life).

    This is the main usefulness of DBAs -- you can brand differently in different markets under a single business structure.

    With different divisions like your business will have, different DBAs can be good for speaking most directly to your customers, preventing confusion if customers look you up for a certain purpose (e.g., if someone needs a website, you want them to find your web design stuff right away without wading through all your retail listings).

    But if everything is related enough, and if your LLC name sounds appropriate enough without being too generic, then you probably wouldn't need a DBA at all.
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  • Profile picture of the author CaptainJuice
    Thanks ecomhustla.

    Well my LLC was actually for a app I wanted to develop, so the name is kind of weird. Therefore I made it my main business that all my other interest will run through, so it's kind of like an umbrella. That way if I have 2-3 business going it will all have one entity.

    The name for my ecom store is totally different that's why I was curious to do a DBA. It's only $40 in my state so it's not too expensive, but every penny counts when starting out.

    Thanks for the reply!
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  • Profile picture of the author dave_hermansen
    Chances are, you are required by law to set up a DBA in your state if you are going to be selling under another name. You can use the same resale tax certificate for all of your websites, however.
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  • Profile picture of the author jamez1515
    You could make a DBA if you want.

    But it might be an unnecessary expense in the beginning or unnecessary work.

    Why not just wait until you start making some money then do it?
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  • Profile picture of the author CaptainJuice
    @dave_hermansen
    You're probably right. They always find a way to get more money out of everyone. All of my taxes will run through my LLC.

    I think in my state in order to have a DBA you must have a business entity.

    @jamez1515

    That sounds like the logical thing to do, but every expense needs to be recorded to write it off. Most likely I'll set up a DBA and write of the $40. I'll call my tax guy this week and find out.

    I was just curious if anyone else has done this.
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    • Profile picture of the author dave_hermansen
      Originally Posted by CaptainJuice View Post

      @dave_hermansen
      You're probably right. They always find a way to get more money out of everyone. All of my taxes will run through my LLC.

      I think in my state in order to have a DBA you must have a business entity.

      @jamez1515

      That sounds like the logical thing to do, but every expense needs to be recorded to write it off. Most likely I'll set up a DBA and write of the $40. I'll call my tax guy this week and find out.

      I was just curious if anyone else has done this.
      I sincerely doubt that you need a "business entity" to set up a DBA. The DBA IS the business entity. I know when I was brand new and a sole proprietor, I set up a resale tax certificate under my own name with a generic company name as the DBA (e.g. David Hermansen Doing Business as XYZ Online Stores). Then, each website that was added got its own DBA (e.g. Dave Hermansen Doing Business As BirdCagesUSA.com).
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      • Profile picture of the author CaptainJuice
        Hi Dave,
        I believe you are right that you do not need a business entity when starting to do business and you can just register with the state “doing business as”.

        In my scenario I already have an LLC and to keep all of my taxes under one roof I would register the DBA under my current LLC I have originally set up.

        It's basically what you are saying in your scenario since you created XYZ Online Stores you can use that as your main business venture and file the other DBA’s under that name.

        It just keeps everything under one roof for tax time.
        Thanks for the reply.
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