I was recently speaking on the chapter I wrote in Business Success With Ease and one of the mistakes I discuss is business owners not filing for their business licenses to be in compliance with the city (or cities) in which they operate. I have had someone call me when they receive a notice with penalty and interest for a tax they said they were not aware they owed. They did not have a bookkeeper at the time and apparently did not know they were supposed to have a business license (many were home based and didn’t realize they had to have a license if they operated out of their home). One of the entrepreneurs at the meeting said, “I’ve filed my DBA so why do I need to have a business license?”
Business Licenses and DBAs (doing business as) are two separate things altogether. Business licenses are issued from the city you are in providing services to clients. Many times you must register in multiple cities if providing services to clients in cities other than the one in which you are based. Business licenses are usually paid annually (although I have a client in a city that requires it semi-annually) and the fees can be based on gross sales, gross payroll, or number of employees. You may also need a special permit if operating out of your home. When I first began working with clients, I had a home office and I had to pay the regular city license plus a home operating permit.
A DBA is filed with the county and allows you to “Do Business As” the name you pick for your business even though the business is not an entity (it a sole proprietorship or partnership). You must file the name you intend to use, and publish the information publicly. When I had a DBA, I had to file every 5 years, and when I changed addresses, I had to file again. Each time I filed with the county, I had to publish in a local newspaper the information for four weeks. By getting a DBA, you may open bank accounts in the business name rather than your own which appears more professional.
So to answer the question do you need both a business license and a DBA as a sole proprietor, the answer is yes!
If you would like to purchase the book Business Success With Ease in which my chapter discusses common mistakes business owners make and how to avoid them, visit https://affordablebookkeepingandpayroll.com/bswe/. If you’re local, feel free to stop by my office as well!
I’m trying to get my Dba so I can register it for a small business
Be sure to reach out to your county to see if the name you want is available and the things that are required to publish your company information.
Thank you for the information. It was very helpful.
I’m glad it was helpful to you!
Hi,
I have a home based consulting L.L.C. and added a DBA for home cottage food operation.
Do I need to pay for two licenses?
Thank you
Hi, I’m sorry for the delayed response. Your message was with many other spam messages and overlooked. I don’t have enough information to give you a specific answer. But assuming your city requires business licenses, you at least need one. If your DBA is under the LLC, you may only need 1. You would need to verify with the city if they require one for every business name or if it’s by the tax ID. However, if you have an LLC and the DBA is under a different entity, you would need a license for both.
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Should I have a DBA before applying for a business license?
Hi George,
You don’t have to as you can file the business license under your legal name. But if you want to include the DBA on the business license, then you should file the DBA first.
To reiterate, do you need BOTH the DBA and business license? My local newspaper messed up, and I have to reregister my DBA. It will cost $175 to run the four-week DBA ad when I reregister. I thought maybe I should just put that money into getting a business license instead, which will be $150. Are you saying you need BOTH the DBA and business license if your business is different from your legal name? In other words, I’ll need to pay the DBA ad cost and the business license fee to start?
Heidi,
In most cases, yes. If your city requires a business license, you must register with them and pay the fee. A DBA is generally a registration with the state or county that verifies your name is not being used and allows you to do so. They are not the same. A DBA is a “fictitious business name” which allows you to use a name that is not your legal given name if you are not operating as an entity. Very few cities don’t require you to have a license but contact them to find out their requirements. But the business license allows you to operate a business in that location.