What is a fictitious name?
What Is A Fictitious Name?
When a business uses another name that is not an entity's proper or legal name, it is called a "fictitious name."
To use a fictitious name requires permission from a state or country to conduct business.
Some refer to a fictitious business name as a trade name, assumed name, and "Doing Business As" (DBA.) No matter the title, a new business needs to go through the fictitious name registration process.
Thus, registering a DBA must occur when a business entity uses a name not the same as the one on record with the Secretary of State's Office.
Which Business Entities Need to Register a DBA?
All main business entities need to register a DBA if choosing to use a name that differs from the company's legal name.
Four main business entities:
Corporation
Limited Liability Company (LLC)
General partnership
Sole proprietorship
Why Use a Fictitious Business Name?
States require business owners to file fictitious business names for many reasons, including:
To inform the public of who owns the company. Fling for an assumed name puts a company's name and the business owner's identity on public record.
When a sole proprietorship or general partnership uses a trade name, they can use more creative and compelling names to market.
It allows LLCs or corporations to operate many businesses without creating separate legal entities for each one.
If a business owner wants to use a different name, one that is not their own name
Owners, who use their personal legal names as their business name, may later want to use another name that better represents the business. The owner will need to file the fictitious name or DBA.
If their first and last name are not a part of the assumed business name, the company cannot legally operate under that name. Owners must first get the approval of a fictitious name from their state or county.
Owners that use their full personal names for their business entity do not need a DBA. Yet, if planning to create many e-commerce sites and cafés, consider forming a corporation with a generic name. Once the entity is running, owners can file a DBA for each one.
Benefits of a Fictitious Business Name
The main benefit of filing a DBA is it keeps owners in compliance with the law. Owners will experience a penalty for neglecting to file a fictitious business name. The business owner may be subject to fines and the right to enforce contracts. It can even result in the shutdown of the business.
Advantages of filing for a fictitious name include:
Avoid the complexity and expense of formally creating a business entity to use another business name.
Establish a company brand using a catchy name that resonates with customers. Owners do not have to create an LLC or incorporate the business
Owners can open a business bank account to receive and make payments through their company. Most banks will request a copy of the filed DBA.
Help control costs and decrease the paperwork and compliance tasks with expanding a business entity.
What to Consider Before Fictitious Name Registration
Owners considering registering an assumed business name must seriously examine the fictitious name they are thinking about choosing. Business owners need to decide whether it will best represent the brand.
Here are a few questions owners should ask themselves before filing a DBA.
Will the fictitious name:
Project the right impression?
Be relevant to what the business sells?
Attract the company's target customers?
Be unique, simple, and easy to remember?
Gain traction and be more effective than using the company's legal name?
Be helpful to Search Engine Optimization (SEO) and easy to find in online searches?
What to steer clear of when choosing a DBA:
Words that are hard to pronounce
Cultural taboos
Controversial references
Edgy humor
Curse words and offensive language
Before settling on a fictitious business name, ask friends, family, members, and the company's target audience for feedback. The more time and effort owners put into selecting the right DBA, the more it will help later.
Companies can avoid insulting, angering, and driving away customers by carefully considering the outcomes of a DBA.
Once an owner decides on the assumed name, they need to research to make sure it is still available to use in their jurisdiction. If another business is already using a similar or the same name, owners will receive a denial of the DBA registration request.
Another significant consideration owners must review include how a fictitious name does not offer protection like forming an LLC or incorporating. Yet, business owners can opt to file for trademark protection to prevent competitors from using their fictions name.
How to File For a Fictitious Name
Business owners should file their DBA when opening the business bank accounts. In some states and countries, owners may get a certain period of time to file after first using the business name. Yet, it is best to file the fictitious name long before the deadline.
Filing for a fictitious business name:
Complete a fictitious name registration form
Pay the applicable filing fee, which varies from state to state.
Find out when filing for a DBA expires in the state or county of the business.
Depending on the state, applying for DBAs need to happen through a state agency. In other states, filing a fictitious business name must be through the county of the business location.
May need to publish a notice in the local newspaper and provide the state or county that this step is complete.
Check when a DBA needs renewal. In some locations, a DBA may last for 10-years, while in others, it may need renewing in 5-years. Yet, in some states, like New York, a fictitious name is valid as long as the business is open.
Renew a DBA on time. Failure to meet the deadline results in losing the fictitious name claim.
Conclusion
Take securing a fictitious business name seriously. Owners, who do not follow the DBA filing process, will experience significant compliance issues. Avoid breaking the law, and cover all the bases, by applying for a fictitious business name on time.
