18 Sep DBA’s & Why You Should Register
A “Doing Business As” (DBA) name is a fictitious name used for marketing or branding purposes in lieu of a person’s name or the name of a business entity, such as a corporation or limited liability company. A DBA is also known as a trade name or assumed name. The essential purpose of a DBA is to tell customers who they are doing business with, but DBA’s can also be used by companies or sole proprietorships to create separate business entities that can independently open bank accounts, advertise, and enter into contracts, among other business activities, without having to form a new legal entity. While the benefits of registering a DBA are abundant, there are also severe penalties for failing to register a DBA including the inability to enforce contracts as well as liability for fines, injunctions, and even criminal penalties.
For the most part, it is safe to assume you should register your DBA.
If a business is operating as a corporation or LLC, that entity is free to use its registered name when conducting business. However, if that entity intends to use a name different than the name of the corporation or LLC, then a DBA is required. If a business is a sole proprietorship registered in the owner’s name, the business owner will usually need a DBA unless the business name the owner intends to use is a combination of his or her name and a description of the offered product or service.
In order to register a DBA, a business owner will need to complete and file the required forms and pay a fee. While most states require submission of a DBA filing to a local office, some states require a filing with a state agency instead of, or in addition to, the county in which the business intends to operate. When the filing is complete, a company may begin using the DBA name, including engaging in advertising activities. Additionally, some states and counties require notice of the new DBA be published in a newspaper for a particular period of time. If required, the publication must comply with applicable rules including deadlines with respect to the date of first publication following submission of the application, rates of publication, and minimum length of time the notice must run.
The registration requirements for DBA’s vary by business structure as well as by state and county or municipality, and it is important to comply with the registration requirements applicable to all of the states and counties in which you plan to do business. Contact an attorney to determine your business’s registration requirements.
As applicable to cannabis business, if a corporation, LLC, sole proprietorship, or other legal entity registered in Washington State has both a producer license and also a processor license, and wants to operate both businesses independently of each other, the business can file a DBA for one – or both – of the businesses without having to form a separate entity. Once registered, the corporation can conduct business independently under both names, including entering into contracts, opening bank accounts, and advertising to consumers. If the business fails to register a DBA and conducts business under an unregistered name, the business will be unable to enforce the contracts or other legal obligations it enters into under that name – meaning it will not be able to recover damages from any person who or other business that breach their agreements ranging from landlords, to fertilizer providers, to its attorney.
Another good reason to register a DBA is to avoid penalties including fines, injunctions, and even criminal penalties for improperly operating a business under a fictitious name. Some states do not allow an unregistered DBA to conduct any business – including preparing to conduct business, such as engaging in advertising or public relations activities – and the prosecutor’s office can issue charges for misdemeanor failure to register. In other states, such as Colorado, the state will assess monetary penalties against companies operating under unregistered DBA’s. Many states, including Colorado, will also bring an action in the courts for an injunction to prevent the business from conducting any activity within the state until it is properly registered.
While DBA’s do offer businesses a myriad of advantages, registering a DBA does not provide intellectual property rights for that trade name (the way trademark or copyright protection might). Just because a DBA is successfully registered with appropriate bodies does not mean the underlying company or owner is protected from – nor afforded enforcement power with respect to – trademark infringement lawsuits. The requirements for filing a trademark are significantly more arduous than filing a DBA; successful trademark registration affords businesses intellectual property protections such as the ability to stop someone else from using their name or logo, collect damages for improper use, and protect oneself from suit for alleged misuse of a name or logo. (In fact, failure to register and use your DBA prior to filing your trademark application can make the trademark registration process both longer and more costly.)
Additionally, trademark registration requires that a company’s name or mark have a high “distinctive capacity,” whereas in Washington State, DBA’s only require that a business name is different from any other already-registered business name. It does not matter if two or more names are substantially similar, nor is it relevant whether businesses with similar names operate in the same industry, nor will registration depend on whether the DBA contains a generic or general-use term – all of which constitute important considerations in the trademark arena.