What is the Difference between a DBA and and LLC?

When starting your business, one of the first things you will have to do is figure out the kind of entity you want to be. There are multiple options available, but today we’re going to talk about DBA vs. LLC. No matter which one you choose, you can get your documentation and paperwork sorted out at govdocfiling.com.

What is a DBA?

Technically speaking, this is not a business entity. DBA stands for “doing business as” and it allows enterprises to use fictitious names for themselves. For example, your business name may be Computer Biz, but your DBA could be “The Computer Whiz.” The DBA is what you use to sell yourself to your customers.

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Advantages of a DBA

There are two reasons that someone may use a DBA. First, it’s cheap to maintain. You just have to pay a registration fee, and then renew the name every so often, which is usually around five years. If you’re looking to save costs, this can be a great option.

Second, it offers flexibility. If you’re a sole proprietor and you want to do business under a different name, a DBA will allow you to do that without having to form a separate entity and all that that implies.

What is an LLC?

A limited liability company (LLC) is a unique business entity that’s different from yourself. This means that you are separating your company’s assets and holdings so that they don’t affect your personal credit. You can be the sole owner, or you can go into business with other people using an LLC.

Advantages of LLC

The main benefit of filing an LLC tax form is that you don’t assume liability for the company. For example, if the business goes bankrupt, it doesn’t reflect on your personal credit.

That being said, you do have to pay taxes for the company, which can be costly. Also, if there are multiple owners and one of them leaves, you have to reform your entity as a result.

Which is Better?

Overall, the best option is the one that fits your particular needs. If you are a freelancer, a DBA is going to be an ideal choice. However, if you’re hoping to run a storefront or hire employees, an LLC is much better.

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