What does this mean?
“D/B/A” stands for “doing business as.” It’s also commonly called a fictitious business name. It means that if your company -- whether it be a sole proprietor, LLC, corporation, or other entity -- goes by a different name when selling to the public, you need to file for registration with your state.
So if your entity name is “William Bone, LLC” or you’re a sole proprietor and you call your company “Salesly,” you’d have to file for a d/b/a for Salesly.
Does this apply to me?
If you’re a sole proprietor and have a business name that’s different from your own name, or if you’re an entity and you advertise your company with a different name other than the entity name, then it applies to you.
For example, if your name was William Bone and you had a company called Bone Roofing, you’d still need one. But if you were a graphic designer and didn’t have an entity or a company name, and you just signed all your contracts with your own name, you wouldn’t need one.
Also, if you want to open a business banking account, you’ll need one.
Why is this mistake going to harm my business?
Penalties could range from a small fine to not being able to enforce a contract to actual criminal charges.
While a small fine isn’t the end of the world, not being able to enforce a contract would be a nightmare. Imagine that you sign a contract using your fictitious business name and later the other contracting party doesn’t perform. If you didn’t have a d/b/a, there’s nothing indicating who the contracting party was--you “legally” just made up a name out of thin air. So, that could be a huge problem.
The criminal charge would also be terrible. Although I find it difficult to imagine a prosecutor pursuing this, the law makes sense--it ensures consumers aren’t just defrauded by fake business names.
You could avoid all this by:
Filing the d/b/a (or fictitious name registration, as some states call it) with your state. It’s commonly done through the secretary of state’s office. It’s dirt cheap -- less than $10 in many states. And you can do it on your own easily.
Will set up his LLC as William Bone, LLC. His company went by “Salesly” however. Will signed all his contracts under Salesly’s name and advertised to the public that their business name was called “Salesly.” Will got into a conflict with a contractor who did a terrible job building Will’s website, so Will didn’t pay the contractor the full amount. The contractor hired an attorney to sue Will for failing to pay the full contract.
The contractor’s attorney looked at the contract and checked the state records and saw that Will had never filed a d/b/a for Salesly. As a result, Will was unable to enforce the contract and now had to worry about potential criminal implications. Will could’ve avoided all this by filing a $7 d/b/a with his state.