When you start to think about naming your new business I can guarantee you’ll begin to wonder how you may legally present it to the world. A great way to do that, and part of your overall asset protection plan, might include filing for an assumed name. Doing Business As (DBA) is a way for you to present yourself as Fred’s Hamburgers when your actual company name, filed with the state, is Fred’s Global Burger Domination.
Part of why people form LLCs is for the presumed personal asset protection you may gain. Another layer in that strategy, although a small one, can be had by filing for an assumed name. Even though assumed names are publicly listed, this small extra step is often enough to deter potential plaintiffs against you. They just won’t take the time to look up who they should be suing (Fred’s Global Burger Domination) and sue Fred’s Hamburgers instead. This would result in a dismissal at the justice court level.
A lot of people might give up now at the prospect of finding out who actually owns the business that they want to sue. This isn’t fool proof (or legal advice) but it helps. It is important to note that you don’t have carte blanche using your assumed name. If you call your business, or create your bank accounts under a name you haven’t registered – you are now on shifting sands. My guess is that a judge might not appreciate you not doing your due diligence and let the suit stand.
You can get as many assumed names as you can handle. I believe in Harris county (Houston) the fee is $15 and lasts for 10 years. Chapter 71 of the Texas Business and Commerce Code outlines what an assumed name is and who needs to file. The filing is different for every entity type. Because we are forming an LLC here, this line is of particular importance:
(H) for a limited liability company, a name other than the name stated in its certificate of formation or a comparable document, including the name of any series of the limited liability company established by its company agreement.
Now, the one thing I’m not clear on, nor can find anyone that is, is whether you need to file a DBA so that you don’t have to include “LLC” in your logo, headings, website, etc. I don’t think you do, but, I think it’s worth the few bucks to cover yourself. Again, this is a step in your asset protection armor, and it’s one of the cheap ones.
State and County Filings
You have to register your assumed name with the state of Texas and with the counties within which you will operate. To be honest, I think “operate” is defined as having a physical address. Online businesses shouldn’t have to file in all counties (but I bet the goober-ment wishes we did). File with the state using Form 503 (doesn’t have to be unique, the state doesn’t check). File with your county clerk’s office to complete the second half. The state filing is just a public notice. The county clerk checks that your name isn’t deceptively similar to another business’s.
Now, you may file for a DBA in a county that you don’t live in (Texas only??). There is no current database that cross-checks all the names filed in all 254 Texas counties. Think about the implications that has for you..
You most likely won’t go to prison for failing to file a DBA. Chapter 71 discusses the penalties, which are mainly civil sanctions (fix it and pay for lawyer fees) and worst case criminal – doing business under an assumed name. Now, I couldn’t find records of any cases of this in Texas. The prosecutor must prove criminal intent. I can only imagine this happening if you lost money to some Rebook shoe scammer on Craigslist. Good luck finding that guy to sue him, though. What will get you in big trouble is forging or fraudulently filing for an assumed name. You then showed your criminal intent and willingness to be a bad guy. Shame on you.
File for a DBA at the state and county level. The small bit of protection you get is well worth it. Be smart in how you file – I’m not using my personal name, although there is a time and place for that (craftsmen, celebrities, etc.). Lastly, I don’t know if not having an assumed name allows you to exclude your LLC labeling requirements. Better to just file for it.
Information in this article is proved for general educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. Consult your tax advisor as well.