Difference Between DBA and LLC
DBA vs LLC
There are many people nowadays who aspire to be an entrepreneur. Unlike before, starting up your own business is as easy as eating pie, and can even be started right out of your own home. However, before anyone is able to obtain the necessary licenses and start their small business, they must know the technical terms involved, so that they won’t be caught dead in the water. Two of the most common defining terms in business, are DBA and LLC. It is for your best interest to understand the similarities, differences and implications of each, and will surely help you to make the right decisions for your endeavor.
What is DBA?
DBA is actually an acronym for ‘doing business as’. It is a term used to refer to a fictitious name under which a business is allowed to operate. For instance, your legal business name is ‘Jason Clark’, but you wish to address your business as ‘Jason’s Computer Shop’, for the sake of giving it an attractive name to attract customers. Therefore, one must file a DBA.
What is LLC?
LLC is actually an acronym for ‘limited liability company’. LLC entails that, similar to a corporation, any credit or claims against a LLC may only be held in contrary to its assets, and not the individual owners. Individual owners cannot be held accountable in an LLC.
Liability Protection: LLC vs. DBA
Since DBA is merely a pseudo-name for an existing business entity, it doesn’t make the business itself a separate entity, thus, it is not able to protect its owner from personal liability. With a LLC however, the owner is never held personally accountable, since the business itself is a separate unit.
In the case of LLC, business proprietors have the exclusive rights to their brand name in their state. No other business may have the same name. With DBA however, numerous businesses can operate with the same pseudo-name, in the same state.
LLC, although unconnected in liability, the owner however, is not considered as a separate taxable part. Similar to a DBA, owners must claim business incomes on their individual tax returns.
DBA and LLC are two basic terminologies that must be clearly understood to be able to put up the right business; both have their advantages and disadvantages.
1. LLC means ‘Limited liability company’, while DBA means ‘doing business as’.
2. LLC owners aren’t held liable for any credits or liabilities his/her company incurs, since it’s a separate entity, while DBA owners take the full responsibility, and are accountable for all his/her company’s assets and liabilities.
3. LLC has brand name or trademark exclusivity in their respective states, while DBA does not have exclusivity.
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