All You Need to Know About Changing a DBA to an LLC

Operating Under a DBA

Legally, a DBA is a fictitious name. The legal name of a sole proprietorship or general partnership is the name or names of the people who own the business. It is those names the owners must put on any government forms or applications. In most instances, however, that can be a clumsy way to market your business. Instead, the owners assume a DBA to put on signs and marketing material.

In most states, any business that wishes to operate under a DBA must register the fictitious name with the state or county. The Small Business Administration on its website maintains a list by state of filing requirements for DBAs.

An LLC is a business structure that offers the liability protection of corporations, but it is more flexible regarding how it's taxed, and it faces simpler legal requirements. Even though the Internal Revenue Service doesn't recognize an LLC for income tax purposes and, by default, taxes an LLC as a sole proprietorship or partnership, in all other aspects it is a separate legal business entity requiring its own business name. Business owners register an LLC with the state, usually through the secretary of state's office, by filing articles of organization. The articles must include the business name, which can essentially be the former DBA. If the owners originally filed the DBA at the county level, however, the owners must check to be certain their business name does not conflict with an existing business already registered with the state.

The LLC's legal name, however, must include the words "legal liability company," or the initials "LLC" at the end. Some states may also allow the word "limited" to be used in the name.

Under federal regulations, an existing partnership that converts to an LLC does not need a new federal Employee Identification Number (EIN). It can use the former partnership's existing EIN for reporting income, even though the legal name for the business has changed to its former DBA . A single-member LLC with no employees and not subject to federal excise tax can continue to use the member's Social Security number. Some states, however, may require an LLC to obtain a new EIN, and it may be necessary to obtain a new number for banking purposes.

While a former company's DBA can be used for the legal name of an LLC, it is also legal for the LLC to operate under a fictitious trade name separate from its legal name. The procedure in most states for an LLC to file a DBA is similar to that used by sole proprietorships and partnerships.