Questions of the Week: February 24, 2013By
“What is a DBA?” Asked Mary from California.
To answer your question Mary, a DBA is an abbreviation of “doing business as.” It allows corporations and sole proprietors to operate a business under a different name than what is registered with the state. DBAs are important because they indicate which legal entity/person is responsible for the business operating under a particular name. Sole proprietors can start a business and get a bank account with a DBA but are not afforded the protections that come with a corporation. DBAs not have any impact on the trademark status of the operating name. DBAs offer the lowest level of legal protection that can come from the state, they merely registered the fact that a person or entity is doing business under a particular name. This is also known as a “ficitious name,” an “assumed name,” or :”trading as.”
“When do I need a lawyer?” is the Question from Brian of Illinois.
Contrary to popular belief, protecting your business does not always require expensive services by a lawyer . Especially in the initial stages of your business start-up, it is important to allocate your cash carefully, and not waste it on unnecessary fees.
One way to avoid paying lawyers is by doing your own research. Many services offered by lawyers can be done by people without law degrees. For instance, if you lease a property to a tenant find a boilerplate lease agreement and do your best to fill it out yourself. After you fill it out you should take it to an attorney for his/her stamp of approval. Many lawyers who provide lease agreements will charge you as if they wrote the agreement from scratch but in reality many of them are using the same templates you would be using. It is better to use lawyers to check your work whenever possible rather than having them do the work.
“In what state should I incorporate?” Asked Anny from Romania.
As a general rule of thumb, if you are doing an active business, incorporate where that business is located. If you are using a corporation to hold a passive asset like a safe deposit box, you may want to consider a state like Delaware, noted for its protection of anonymity. Also see our interview with the Asst. Secretary of State of Delaware for more details.