A DBA can provide businesses with an excellent means by which to operate under a chosen name that differs from their registered business name. There is, however, a risk that businesses can operate unethically due to the apparent anonymity afforded by a DBA. To prevent this, some states mandate that DBA registrations must be publicly announced and provide a clear link between DBA and entity. But what happens if you fail to publish your DBA?
The DBA registration process.
When registering a DBA, there are a few factors that need to be considered in order to protect you and your company and ensure that you fully comply with your state’s consumer protection legislation. As DBA’s are only permitted to operate in the jurisdiction in which they are registered, you are naturally required to contact your local county office or governing body to formally register your DBA. You need to ensure that your business name has not already been taken and that it complies with the basic naming requirements of a DBA (cannot include Inc. or Corp. within the company name.) In filing a DBA, you would automatically be informing the state of your intention to operate under a name that is different to yours. However, should your state require it, a DBA should make an announcement clearly stating the business entity’s full, legally registered name as well as their DBA, trade name or fictious name. As DBA’s in the US can only legally operate in the jurisdiction in which they are registered, this announcement is usually made through a local newspaper or some kind of local announcement forum and it should provide the public with a clear and unambiguous link between company and DBA.
Which states require you to announce your DBA?
Although specific regulations vary per state and county, there are seven states in the US that require your DBA registration to be published; Florida, California, Georgia, Pennsylvania, Nebraska, Illinois and Nebraska. Some of these states require multiple public announcements in separate publications and have highly specific and stringent regulations, while others only require a single announcement and do not require actual proof of publication. Generally speaking, regardless of which state you operate in, it is good practice to announce your DBA to protect yourself and your business.
What are the potential consequences of failure to publish your DBA?
As DBA’s do not provide you with any personal liability protection, any and all charges held against the DBA will also be held against you. This can lead to very severe personal consequences. In the aforementioned states, a failure to comply with specific announcement regulations can potentially result in the following;
Your DBA registration can be considered void or cancelled.
In most states that require a DBA publication, failure to comply with state regulations can result in your DBA registration being considered void or cancelled. Should your business be considered void, you will also not be allowed to legally enforce any contracts entered into and claim any outstanding payments from vendors or consumers. There are even cases of companies not being allowed to register any DBA’s for a specified amount of time following the recognised failure of compliance, so it is best to make sure you do your research.
You could be issued with a fine.
In some states such as Pennsylvania, your DBA registration announcement not meeting the stipulated state regulations can lead to a fine of up to $500. As a DBA offers you no personal legal separation protection, as a sole proprietor you are automatically considered liable to pay this fine in a personal capacity.
You could be charged in court.
In Illinois and Georgia, failure to meet state regulations can lead to a charge of a class C misdemeanour against you for each day that your DBA is non-compliant. This charge can also fall to you in a personal capacity and can have a serious impact on your ability to conduct business going forward.
As a rule of best practice, you should always announce your DBA to the public, however the implications of not following state protocol in any of the seven states that have strict regulations around DBAs can have a severe and long lasting impact on you in both a personal capacity and as a business.