Is a DBA Enough for Your Small Business? Avoiding the Risks of Informal Startups

Filing a DBA is the simplest way to start a business, and can be a useful tool for sole proprietors and individual professionals trying to keep their overhead low during business startup. But is a DBA enough? Before you register a trade name and hang out your shingle, make sure you know what a DBA does, and doesn’t do for you.

What is a Connecticut DBA?

A DBA, which stands for “Doing Business As” is what Connecticut law calls a fictitious name or trade name. A Connecticut DBA allows you to engage in business and contracts under an alternative name, rather than your legal name. Both individuals and corporate entities can file a DBA in Connecticut. Individuals often believe a DBA is enough to get their business started, but they have other uses as well. Corporations and limited liability companies (LLC) use DBAs to form divisions, simplify complex business names, or operate under different brand identities.

Registering a Trade Name for a CT Small Business

To use a Connecticut DBA, you must register that name in the municipality (city or town hall) where you will do business. This is legally required before you start doing business, but the registration never expires, so you only have to file it once. Failing to register your DBA can result in fines or even jail time. That’s why you should work with a business lawyer to properly register your DBA before opening your doors.

1. Choose an Appropriate Business Name

Choosing a name for your small business startup’s DBA is possibly the most important step. One of the hazards of informal business startup is putting extensive effort or resources into a business identity only to find out it is not allowed or already in use.

Before starting your business, you need to perform a records search to make sure the name is unique in your city or town. You should also avoid business names that can be confused with competitors or existing businesses online. Avoid misleading words or identifiers such as “LLC” or “Inc.” that suggest the DBA is a formal business entity. Also, under Connecticut law, you cannot use the name of any municipality that suggests your business is located somewhere it isn’t, unless you also include a full street address in every piece of advertising. For example, if you register your DBA and open your business in Glastonbury, you should avoid using the word “Hartford” in the name. Work with a knowledgeable business lawyer to select a name that complies with state and local laws, and that will be attractive to future customers.

2. Work with an Attorney to Complete a Trade Name Application

Another hazard of CT small business startups is filing the wrong form in the wrong municipality. The specific form you need to register a trade name or DBA depends on the municipality where it is being filed. You will need to identify the correct form and then complete it and file in your local clerk’s office. Some of these forms are deceptively similar, so it is easy to get turned away and told to start again.

While the forms differ from city to city, they generally include:

• The individual or business entity’s formal name
• Principal address where the company is located
• Mailing address
• Personal addresses of each owner of a sole proprietorship or partnership
• Names and addresses of owners of business entities (in some municipalities)
• Notarized signatures by each authorized signatory for the business

Your attorney can help you ensure you are using the right form, and can facilitate gathering the notarized signatures required.

3. File Your DBA Registration Form With the Town Clerk’s Office

Once your name is chosen and your application is complete, it must be filed with the town clerk’s office and the filing fee paid. One hazard of informal business startup is opening for business before the registration process is complete. You can file your application by mail, but this can cause delays. You or your business lawyer generally can file the application and pay the fee in person, which will remove any question of when your DBA is formally registered. In many municipalities, you can also get an authorized copy of your application for an additional cost, giving you written confirmation of your DBA for banks and business partners.

How a DBA Compares to Other State of Connecticut Small Business Options

Before you decide to register a DBA, you should know the hazards of informal business startup compared to using more formal structures such as a corporation or limited liability company. If you are an individual doing business using a trade name, you are still entering into contracts, paying taxes, and fulfilling regulatory requirements yourself. There is no separate business entity between you and your company’s liability. If something goes wrong and your company is sued, it will be your name on the lawsuit. If you want to protect yourself from being personally responsible for your business debts or being sued for your company’s failings, you will want to take the extra steps (and pay the extra expense) to form a formal business entity, most often an LLC.

Get Help Registering Your DBA or Trade Name

At Lawrence & Jurkiewicz, we focus our practice on helping people. We know how to help entrepreneurs and business owners choose the right business formation structure, and complete the Connecticut DBA process to get them off on the right foot. We will meet with you to review your business plans and financial circumstances and help you choose the right business structure for your new venture, and will make sure your DBA application is completed and filed properly. We want to help you make the right decision for you and your business. Please call (860) 264-1551 or contact us for a consultation.