Perhaps you are ready to establish yourself as an entrepreneur and need to make your new business official. If you are acting as an individual, you have the opportunity to declare your business a Sole Proprietorship. This means that your business is unincorporated, you are the sole owner and the business is tied to your social security number rather than its own tax identification number (TIN).
According to U.S. Small Business Administration, “the legal name of a business is the name of the person or entity that owns a business.” Therefore, if you are the sole owner, then your full name is the legal name of the business. While that may be the technicality, it’s not very… catchy. Part of the fun of running your own business is getting to name it!
If you choose to give yourself a business name, this is called an assumed name, fictitious name or DBA name. DBA stands for “doing business as.” To give an example, John Doe is DBA John’s Mowing. An assumed name should be unique to you, to the best of your knowledge. It is not permissible to use the name of a known entity. For example, DBA John’s Mowing is allowed but not DBA John Deere. This is an important rule to follow when working as an independent sales representative for a company such as Avon or Mary Kay. You cannot be a DBA because you do not have ownership in Mary Kay.
To claim your chosen DBA name, you may need to register it with your state’s government agency. Some states, like Kansas, do not require any formal registration of an assumed business name. For guidance, you may reference this chart for each state’s required documentation. After completing the proper certification for your state, you may move forward with opening a business account and working under the new name!
In addition to a sole proprietorship, there are many other options for how a business can be established. Check out the website for the U.S. Small Business Administration to learn about Limited Liability Companies, Partnerships and Corporations and the legalities of each ownership option.
Tags: DBA, sole proprietorship, TIN, assumed name