LLC Name Change vs. DBA: Which Is Right For Your Business
Circumstances can arise that lead an entrepreneur to look into how to file for an LLC business name change. However, before jumping straight into that option, other alternatives exist such as applying for a DBA or “Doing Business As.” This provides a similar result but operates under a different set of legal rules. What makes these two different, and why would a business choose a DBA over going through the process of filing for an LLC business name change?
The Name Change Option
An LLC name change is a more comprehensive and final change with bigger legal effects. An LLC’s name is also that company’s legal name and what appears on all financial or legal documentation. It’s usually also the name the company is known by in marketing and advertising. So, in many ways, the LLC name is the “true name” of a company.
It’s not difficult to change the name of an LLC, but it does bring some consequences. If a business has already acquired a reputation and brand association, that “brand equity” is lost. For example, if McDonald’s changed its name to “Burgers & Fries,” the existing brand’s global recognition would be gone.
However, in some circumstances, this may be what a business owner wants. This is especially true if the current LLC name has a less than stellar reputation or is associated with a controversy.
The DBA Option
Choosing the “Doing Business As” option is informing the state that a business owner will operate under a legally recognized “nickname.” This means that while on paper and in the legal system the LLC continues to operate under its current name, it has permission to conduct business activities under a different name as well.
This is an easier route for some, especially if they experiment in new directions. For example, a small business may be primarily known for selling family-friendly homeopathic products, but they wish to branch out into CBD/THC products legal in their state. Rather than starting an entirely new business entity, the new product and business can be performed as a DBA while the existing business continues.
As expected, however, the name of a DBA business may not have the same protection as a legal LLC name change. This also means there’s no change in tax structure or requirements since everything still operates under the same company. As always, the needs and goals of an entrepreneur determine whether a DBA is the right choice or if they should begin looking at how to file for an LLC business name change.