The name of a company is extremely important; it’s the first impression potential customers will get when they seek you out. The initial name you picked may work for your main business, but as you expand your offerings, maybe you’ve found that it’s not well-suited anymore.
One way to get around this is to use a DBA, or “doing business as.” Not only can you use a punchier name, but you can also narrow things down in a niche.
What about if you want multiple DBAs? Can you do this, and how many DBAs can an LLC have?
In this article, we’ll explore each question (and more) so you know what your options are.
Can My LLC Have a DBA?
First of all, yes, your LLC can have a DBA, otherwise known as a trade name or fictitious name. This allows you to operate outside of its legal name.
Can You Have Multiple DBAs Under One LLC?
Yes, you can have multiple DBAs under one LLC. This allows you to operate several business ventures or brands under one legal entity.
The result is simplified management and reduced administrative costs. It’s much better than forming separate LLCs for each business.
If you haven’t already formed an LLC yet, then use our free business formation service. We’ll give you the first year of registered agent service free!
On that note, are you wondering, “Can an LLC cover multiple businesses?” The short answer is yes, but read our article on the topic to learn more.
How Many DBAs Can an LLC Have?
Now, to answer the main question, you can technically have as many DBAs as you want under one LLC. Whether you have one or one hundred, it’s your prerogative.
However, you should know that managing multiple DBAs requires proper organization and tracking of each business’s activities for legal and tax purposes. It goes without saying that the more DBAs you have, the more complicated and time-consuming it’ll be to manage them.
For one, each DBA has to be registered separately. To do this, you have to do the following:
- Check that the name’s available and not already in use
- File a form with the state or county (usually called a Fictitious Business Name Statement or DBA Registration)
- Pay a filing fee (typically varies by state or jurisdiction)
- Publish the DBA in a local newspaper (if applicable)
Also, since every DBA is filed under one LLC, you’re more at risk regarding legal action. If someone brings a lawsuit to one DBA, it’s basically a lawsuit against the LLC itself since DBAs aren’t separate entities. This means that the entire LLC’s assets (including those related to other DBAs) are at risk.
When Should You Get Multiple DBA Under One LLC?
With that said, there may be scenarios where having multiple DBAs under one LLC may be a good idea. Below are the points to consider.
Saving Money
It’s more cost-effective to set up numerous DBAs than LLCs. You’ll save on:
- Formation fees
- Annual reports
- State compliance costs
- Separate accounting and tax filings
Enhancing Customer Clarity
Your LLC name may be too general or broad to describe certain services or products you provide. As a result, customers may find it confusing.
But DBAs will clarify things for them. For instance, if you have a parent company named “Global Ventures LLC,” you can use a DBA of “Budget Trips” for affordable adventures and a DBA of “Luxury Getaways” for more upscale packages.
Differentiating Brands
Does your LLC operate several distinct brands or product lines? Then having separate DBAs for each can allow you to market them independently while keeping them under the same legal entity.
For example, you can have a business focused on fitness while another is centered around therapy, all under one LLC.
Expanding Into New Markets or Industries
If you don’t already operate several brands or product lines, but you plan to in the future, then having DBAs can still be beneficial. Registering a DBA for each market segment can help create specialized identities.
Operating in Different Areas
Local marketing is essential since it builds trust and loyalty with customers. So if your business serves several locations and you want to appeal to local audiences, you can use location-specific DBAs to make your brand more relatable.
When Shouldn’t You Use Multiple DBAs?
There are definitely scenarios where you shouldn’t use DBAs.
One example is when you have a high-risk business; if the activities of one DBA can expose the others to liabilities, then it’s a bad idea. And if managing distinct financial systems becomes overly complex, multiple DBAs aren’t ideal either.
Those using different partners or ownership structures across DBAs should also avoid this scenario.
How to Mitigate Your Risks
Just because there are disadvantages to DBAs doesn’t necessarily mean you shouldn’t use them. There are ways to mitigate risks so you can get what you want without experiencing unnecessary downsides.
The first strategy is to use separate LLCs for high-risk ventures. If one DBA has higher liabilities and the others don’t, then consider forming a separate LLC for it to shield the others.
You should also maintain separate records for each DBA. When you have clear financial and operational records, you can avoid confusion and demonstrate professionalism if issues arise.
In addition, whether you have one business or multiple, you should always obtain adequate business insurance. In the case of DBAs, purchase comprehensive liability insurance that’s tailored to the activities of each DBA. This includes the following types of liability insurance:
- General
- Professional
- Product
As time goes on, monitor compliance and make sure that each DBA complies with relevant laws and regulations. You should also keep up with current permits to minimize the risk of lawsuits.
Lastly, limit cross-brand association. The branding, operations, and marketing shouldn’t be closely associated, as this might damage your overall reputation if just one DBA faces legal trouble.
Use DBAs Accordingly
So how many DBAs can an LLC have? Theoretically, you can have as many as you want. However, it’s not always a good idea to go wild with it.
Instead, you have to assess your situation and determine why you need DBAs. Make sure you evaluate the legal, tax, and operational implications, and consult with a business attorney or CPA if needed. From there, you can file accordingly and optimize your strategy.
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