DBA and LLC are two words related to business. When a person thinks of starting a business, these two words confuse them.
These two words may be confounding but are very different in meaning. They refer to two different aspects of a business. One can also put in quite the opposite characteristic of the other.
DBA is known as ‘Doing Business As.’ It is a process by which the name of the business is approved. The name of the business is very different from its legal name.
To achieve this change in name from legal to market name DBA is filed. The permission to use different names is only granted after this process.
LLC is a feature that states that a company is separate from its owner’s legal entity. LLC is known as a Limited Liability Company. The business has its own legal and distinct entity.
This feature separates the owner while DBA connects the owner with the business.
Key Takeaways
- A DBA (Doing Business As) is an alias or trade name under which a business operates. At the same time, an LLC (Limited Liability Company) is a legal business structure that protects owners from personal liability.
- LLCs provide more legal protection and tax flexibility than a DBA, as they separate business assets and liabilities from those of the owners.
- DBAs are simpler and less expensive to establish but offer a different level of liability protection or tax benefits than LLCs.
DBA vs LLC
DBA means “Doing Business As,”. It is a type of business structure that allows a person or company do business under another name other than their legal name. LLC or “Limited Liability Company,” is a type of business structure that provides limited liability protection for company owners.
DBA shows no distinction between the liability of the owner’s personal property and the property of a business. The DBA makes the market name of a business valid.
It connects it to the official name of the business. The official name may be of the owner’s name, while the market name may be different.
LLC is a type of business where the business is taken as a different object from the owner’s personal properties. The feature of LLC in a business keeps it limited in its liability.
This also keeps personal property protected. They allow owners the privilege to keep their property safe.
Comparison Table
| Parameters of Comparison | DBA | LLC |
|---|---|---|
| Name | Owners apply to this process to change the name of the business from its legal name | People apply for the status of LLC in business to gain not just the facility of changing a name but many other facilities. |
| Entity | The liability of the belong to the same entity as of the business | The entity of owner’s liabilities and business’s liability is different |
| Owner’s Liability | Belongs to the business as well | Both are different from one another |
| Business’s Liability | Belongs to the same entity as of owner’s liability | This is taken as a different entity from the owner’s liabilities |
| Taxing | It pays in a single sheet along with all other DBAs (if any). | LLC pays all the taxes together of itself and the DBAs it has (if any). |
| Registration | Under state registration, the DBA is filled and a certificate is issued | This is registered along with many other formalities included through certain processes |
What is DBA?
DBA is the short form of ‘Doing Business As’, which signifies the name by which the public will recognize your business. To receive this facility, one has to fill out the form and pay the fee.
The filing fee depends on the state to which the person belongs. Some states even give the privilege of not requiring this registration.
The business which has their name as their name legally can use this feature. They help the owner to give the business name of their choosing. This feature is also known as ‘fictitious business name or trade name.’
People with small businesses or who don’t want to become corporations also use these facilities.
This helps owners in many conditions. For example, when the person owns more than one business or website. They help the person to distinguish the business with different names.
They also help if a business account is needed to open in a bank separately. This helps when a business expands to new environments.
After registering for DBA, the business changes the name for the public. The business is not required to use its legal name in any advertisement or publication.
For example, a business card of DBA will disclose the public name only.
What is LLC?
LLC is a business legal entity that allows the owners with many features. This enables very few regulations when compared to traditional corporations.
We see that LLC provides a great deal of protection to the members. They protect the liabilities of the owners.
This is one of the most growing types of business in different parts of the world. We also find a great range of flexibility in taxation.
The option of sole proprietor or partnership or S corporation or C corporation is found. The protection of the members as well gives a great attraction to this type of business.
The owner is known as a member of LLC. Members are partially and or completely protected by LLC. This gives great relief for when the company goes under debt or crashes depending on the state shield law.
There is also less amount of work legally or practically when we compare with others.
We can find different types of LLCs. Professional LLC provides any kind of professional services. Series LLC, L3C, An Anonymous LLC, etc., are some other forms of LLC.
There might be some judicial or financial problems in raising an LLC. But it is very productive.
Main Differences Between DBA and LLC
- DBA is a process of changing name and, LLC is a process of opening a new legal entity of a business.
- DBA is much less complicated than LLC.
- DBA have different kinds of rules and regulation. LLC has different rules and regulations.
- DBA can also be present under LLC. But an LLC cannot be under DBA.
- DBA is a way of changing the legal name. LLC is a way of stating which legal entity the business will follow.
- DBA permits the public name to be different from the legal name of a business. But LLC gives a set of features to a business.
- https://onlinelibrary.wiley.com/doi/abs/10.1002/jcp.1041560306
- https://iovs.arvojournals.org/article.aspx?articleid=2715826
- https://physoc.onlinelibrary.wiley.com/doi/abs/10.1113/EP089228
Last Updated : 15 July, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
