The Differences Between LLC and DBA

When starting a side business or small business, it is imperative that you choose between a DBA, or Doing Business As or an LLC, a Limited Liability Company.

Why?

A DBA can be tied to your social security number, unless you associate it with an LLC, and it is imperative that you choose the right method of business registration for your personal and business needs.

Let me explain.

Registration of a DBA versus an LLC

When you register a DBA and use your real name as the owner of the DBA assignment, the cost is less expensive and the longevity of the purchase is for a number of years instead of something that you have to file and register annually, but your real name (and most likely your social security number) is linked to the DBA, which when you file taxes the amount has to be claimed on your return each year. This may result in a higher tax bracket, which you may owe taxes over what you’ve already paid within your regular salary.

With an LLC, you pay a yearly fee to register your business, you are required to file taxes quarterly (State, Local, City) and Federal taxes annually. The LLC costs quite a bit more, but you are able to claim additional write-offs on your tax return compared to a DBA since you have a separate EIN (Employer Identification Number) or TIN (Tax Identification Number) for your business from the IRS instead of all funds being tied to your social security number.

Protection and Insurance

One of the reasons why I file my Business as an LLC, with other sub-businesses of my primary business under it as a DBA is so that in case there is an issue with a product or service, the LLC protects my personal assets from being included in any sort of lawsuit. You do not get this protection with a DBA associated directly to your name, even if you have insurance for your DBA registered business.

As a Limited Liability Company (LLC) people can file a lawsuit against you for your business assets, which I also have insurance for my business in case a situation should come forward, which is very inexpensive, but they cannot touch my personal assets – even my DBA registered businesses under the LLC.

Additional Information

Each DBA and LLC registration is based on your State, and I would recommend doing research and / talking to a professional, preferably a business attorney if you have any other questions based on this topic. The information that I include here is based on my own experience and should be validated and cross-referenced based on your personal expectations and requirements for your own business ventures.

I believe in you. You can do it!