Business Types

There are many different ways to set up a company. While it may seem confussing, we'll explain the differences and why people choose the business structure for their situation.

There are Sole Properitors (you as the only owner), Partnerships (you and another person jointly own the business, and Corporations (a legal self living entity that is recognized by the government). Since the Business Swami was created to explain the topics easily to the average person, we are going to skip the academic definitions and dive into the below three structures which are most commonly used.

DBA (Doing Business As)

Sole Properitor
Partnership

LLC (Limited Liability Company)

Single member
Multi-Member

Inc (Incorporated)

Multi-Member

Whats a DBA?

DBA is an abbreviation for "Doing Business As".

People create a DBA so that they can legally do business as under a company name without out spending much money. Think of a DBA as an assumed name, or a fictitious name for a single person to operate a business under. An example would be if Mr. Smith, a machine operator, wanted to paint houses during evenings and weekends, he could hypothethically create a DBA called Smith Paiting and begin painting and receiving checks written too Smith Painting.

This form of business is just a legal second name for you to conduct business under. Think of a DBA as a way to market yourself without saying the company name is your name. One legal reason people create DBA's is that it doesn't cost much and it allows them to market themselves as a company. It adds a sense of professionalism to their company. Some Companies set up multiple DBAs. This happens often for companies that own and maintain many websites. An individual can create a Limited Liability Company and then file paper for a sperate DBA for each website. This allows each website to open a seperate business checking account and obtain seperate business listings in the phone directory. An example is our operation. We have "The Swami Group LLC" as a company which operates multiple websites: FinancialSwam.com and BusinessSwami.com. We are capable of operating seperate businesses under DBAs while minimizing our cost of only having to file and maintain one company. This becomes even more convenient when a company sells products or services through websites. The seperate DBAs allow the seperate banking.

An issue to bring up is that it is fairly simple to create a DBA. In most states DBAs are created by simply: you search a database to see if the name you want to operate under is available, submit a simple form and pay a small fee (usually between $20 to $75). In most states this is all done at the county clerks office; but some states require you to go the their Secretary of State office. You should contact your county clerk's office to verfy where you will need to go and the actual legal process for your area.

There is one major point to point out regarding operating a business under a DBA; there is minimum personal protection. Any liability from the DBA passes directly to the individual (or LLC). Unlike a Corporation or Limited Liability Company (LLC), any debt or legal ramifications do not stay with the company, they or passed onto the entity that created the DBA.