by Sheren Javdan
September 2, 2014
A fictitious business name, also known as a “Doing Business As” (DBA) name or trade name, is a secondary name given to a business by the business owners that is different than the owners’ name or the name of an existing corporation or LLC.
Choosing the proper business name is one of the most important brand marketing and advertising¬†tools for a new business owner. The name of a business creates a reputation and persona for the business, something business owners spend thousands of dollars a year trying to sell.¬†
The default name given to a business will be the legal name of the owner(s) of the business. This name will appear on all legal and professional documents and poses an issue for owners who wish to maintain a sense of privacy or autonomy from their business. In order to help provide privacy for the business owner, business owners can¬†either form an LLC, corporation, or in the case of a sole proprietorship, a fictitious business name.¬†
Is a Fictitious Business Name Required?
The simple answer is no. There are only two scenarios under which business owners are required to file a fictitious business name. That is, an individual operating his or her business as a sole proprietorship¬†or partnership, and when an existing corporation or LLC wants to do business under a different name than that stated in the articles of incorporation or articles of organization.
Scenario 1: Fictitious Business Name For Individuals and Partnerships
By default, sole proprietorships and partnerships take the name of the business owner(s). As a result, there is not much room to grow a brand image. A restaurant operating under the name “Jane Doe” will not gain recognition as a restaurant, rather consumers will be left confused as to what it is Jane Doe really does.¬†However “Jane’s Fine Cuisine” or “Jane’s Cafe” creates a more recognizable brand name.¬†
Scenario 2: Fictitious Business Name For Corporations and LLCs
Corporations or LLCs wanting to use an alternate name can file a fictitious business name. If a corporation or LLC uses an alternate name without properly registering it, it can expose the business owners to personal liability.
An example includes a corporation named “Fiona Floral, Inc.” filing for “Fiona’s Flowers” as a fictitious business name. Any contracts entered into by the corporation would executed as “Fiona Floral, Inc. Doing Business As Fiona’s Flowers.”
It is important to note however, for liability issues, a corporation or LLC can not register a fictitious business name for the purpose of creating a separate business. Fictitious business names should only be used for the purpose of creating an alternate name for the same business. If a corporation or LLC attempts to file a fictitious business name for a separate business, they can be personally held liable in case of a lawsuit.
How Do I Register a Fictitious Business Name?
A fictitious business name must typically be registered in the county where the business is located, with the office of the county clerk. Newspaper publication is also typically required. Fictitious business name registration fees vary from county to county and also depend on how many names are being registered. For example, fees increase per additional fictitious business name registered.
Name availability should also be checked prior to filing for a fictitious business name. However, it is extremely important to recognize that registering a fictitious business name will not typically prevent others from using the same name in your state or in other states. To protect a name, you should register a trademark. Also, to ensure you are not violating an already existing trademark, it’s important to conduct a trademark search beforehand.
How Do I Maintain a Fictitious Business Name?
Most counties require that you renew your fictitious business name after a certain period of time. For example, in Los Angeles, California, fictitious name statements usually expire five years after registration. You are also required to notify the County Clerk whenever there are any amendments to the name or there is a change of address. Accordingly, be sure to stay on top of filing deadlines and immediately notify the County Clerk when there are any changes associated with the fictitious business name.
After your fictitious business name has been registered, also be sure to keep an eye out for misleading solicitations. Fictitious business name permit holders are often targets of scams.