Understanding DBA and LLC: Which Is Better For Your Small Business

Starting a business is a huge step, and one of the worst things you can do is choose the wrong business type for your needs. Generally, choosing between DBA and LLC means either opting for a less costly option that still offers you a good business standing or a more expensive one that gives you protection and superior benefits. Platinum Paralegals team advises you to speak with your lawyer or contact us for advice on choosing between DBA and LLC before making your final decision. It is a complicated matter, and you want to be sure you are doing the right thing.

To help you understand this better, we are shedding some light on DB and LLC:

Benefits of an LLC

The benefits an LLC offers are multifold:

  • An LLC is provided personal liability protection
  • An LLC is a separate legal entity
  • An LLC is often preferred when employees will be hired, or liability is a possibility
  • The name of an LLC is the legal name and used when conducting business
  • An LLC provides much higher protection
  • An LLC makes expansion and selling a business much more comfortable as it does seeking funding

We advise you to find a company that offers both an LLC template and LLC Operating Agreement to start your business.

Benefits of DBA

Unlike LLC, DBA doesn’t provide similar benefits. A DBA will:

  • Leave liability with the person that registered the DBA
  • Not be a separate legal entity
  • Not see bylaws, agreements, and other formalities that a corporation may face

DBA is a pretty good option for businesses that are operating under an assumed name. If you are, say, offering freelance services while being a website owner, a DBA allows you to do business under your domain name legally.

Significant Distinctions between DBA vs. LLC

The primary difference between doing business as a DBA vs. LLC is financial. DBA is much more favorable if you want to save some money as it has only two fees: a) a registration fee, b) a renewal fee. Depending on the state, these two fees are generally charged every five years. An LLC, however, requires the payment of state taxes in most cases. It is why LLC is much more costly. Usually, these taxes are a flat fee.

Business owners who don’t want to incorporate usually choose a DBA. That way they can brand and promote themselves without having to deal with the requirements of an LLC.

The best way to choose between a DBA and an LLC is to take all your business’s aspect into consideration and act accordingly. What’s good for one company isn’t for the other, so make sure you consult with the right set of experts on the best options. Our team at Platinum Paralegals will be happy to hear you out, and guide you to find the best choice for your specific business and its operations.