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DBA vs LLC: WHICH STRUCTURE IS RIGHT FOR YOUR BUSINESS?

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When you’re starting your business, its important to consider which business structure would be best suited for your needs. DBA (doing business as) is the most basic and cost effective option, but offers little to no protection, while an LLC (limited liability company) costs and require more to operate, but offers you protection from liability, and legally separates you from your business. But which one is right for your particular type of business? 

DBA

A DBA is a sole proprietorship and is often beneficial when you are doing business under an assumed name. For instance, if you are a blogger that offers freelance services, a DBA will allow you to legally do business under your domain name. This allows you to have the right to use this fictitious name to conduct business legally. It is not a separate legal entity, as you and the business are one and the same, and you are not protected from liability, should there be any. There are only two fees to get a DBA, a registration fee and a renewal fee, and when filing taxes, you file as an individual. Also, if you wish to later incorporate your DBA, you may do so at any time. If you conduct business as any of the below, a DBA may be right for you:

  • Blogger
  • Photographer
  • Freelance Hair Stylist/Makeup Artist
  • Consultant

LLC

An LLC is a limited liability company and offers many benefits that a DBA simply does not. An LLC is often preferred when liability is a possibility or employees will be hired. The protection given is much higher than a DBA, as you are separate from your business and protected from any and all liability. Expansion and selling a business is also easier with an LLC as well as seeking funding. If you start out with a DBA, you can later incorporate as an LLC once your business and profits grow. If you conduct business as any of the below, an LLC is better suited for you:

  • Salon Owner
  • Tattoo Artist
  • Cosmetics Company

Be sure to consult with an accountant or an attorney if you are not sure which structure is more appropriate for you and your business. I have personally conducted business under both DBA and LLC, as they both have their benefits. There are many business resources on the web, such as Legal Zoom and SBA.gov, that offers helpful articles and access to accountants and attorney’s for small business owners.

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