Choosing an Entity: What’s the Difference Between a DBA and an LLC?

When choosing your business entity, your choices aren’t limited only to S-Corp and C-Corp, nor do they stop with LLC. There is another option available to you, DBA. This is known as “Doing Business As” and may be a fourth option available to you.

A DBA, unlike an LLC, is not a legal name for your business. A DBA is simply a name that you can use to provide products or services. Another name for a DBA is a “fictitious name” or a “trade name.” Laws regarding DBAs vary, and some states require a DBA be registered before it can be used by a business owner. A major difference between a DBA and an LLC is that an LLC is not required by state law.

An important note regarding the difference between an LLC and a DBA comes to liability. As the name suggests, an LLC limits your personal liability when it comes to your business. However, a DBA is unable to offer the same protections. Any business decisions made under a DBA are solely attributed to the business owner instead of only to the business.

Registering a DBA or an LLC both require start-up fees, but a DBA is substantially less expensive than an LLC. DBA formation is also usually a one-time fee, in Colorado this fee is usually $25.00. Call ATS today at 303-232-8300 and schedule your free consultation with our business advisors to discuss what business entity is best for you!

Accounting & Tax Solutions

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