At the beginning of your business, you would find yourself having to make a very tough decision. This decision involves choosing the right type of business entity for your dream idea. And one of the most popular ones that many choose are an LLC and the DBA. So, if you want to form an LLC or choose to register a DBA, it is important that you know the difference between the two and which one is better for you. This article would help you understand what to choose by explaining each of the types and their benefits for you in detail.

What is an LLC?

A Limited Liability Company, also known as an LLC, runs as a partnership, sole proprietorship, and a corporation all in one. Moreover, the LLC offers the members protection from their personal liabilities. This means that the members would not be held personally liable for any of the debts in the company under the LLC.

To explain better, when you form an LLC, you are creating a separate legal entity. And as soon as you form your LLC, you will be running your business under the legal name of your LLC, which is the name that you choose to register your LLC. When choosing your LLC name, check first to ensure that no other company is already using it. If another business has the same or a similar name, the government will not register your company.

Benefits of an LLC

Many choose an LLC due to its multiple benefits. Here are the benefits that an LLC offers:

• An LLC is a separate legal entity.
• The name of an LLC is the legal name that is used everywhere.
• The legal name of the LLC is what is used when conducting business.
• An LLC is offered with personal liability protection for its members.
• The LLC is normally considered for a business when employees would be hired or when there is a possibility of liabilities. In short, the members of an LLC gets a high amount of protection.
• An LLC makes expansion easier and seeking funding easier as well.
• Having an LLC means gaining a lot of credibility amongst the employees, partners, vendors, and even potential customers.
• It is very easy to sell off an LLC.

What is DBA?

A DBA, or “Doing Business As,” is a trade name or assumed business name. An individual registers it to operate under a name different from their legal name. It lets a person run a business using a fictitious name without creating a separate legal entity. In many U.S. states, you don’t need to register a DBA if you use your legal name for business. However, a DBA is usually required when a partnership or sole proprietorship wants to operate under a different name than their own.

For example, if your name is John Black and you do business as John Black, you don’t need to register a DBA. But if you choose a name like “John’s Professional Services,” most states require you to register that name as a DBA. DBAs are not limited to partnerships and sole proprietorships. If you form an LLC and want to use a name different from your LLC’s legal name (for example, ABC LLC), you must register the other name as a DBA. This allows your LLC to do business under that alternate name.

Benefits of DBA

Well, unlike the LLC, if you decide to register a DBA, you need to know that it has something different to offer when it comes to its benefits. To begin with, it will:

• Leave the liability with the individual who registers the DBA.
• Not become a separate legal business entity.
• A DBA is advantageous mostly if you are conducting business under an assumed name. Let us take an example: in case you have a website that provides freelance services. The DBA would allow you to legally conduct business under the domain name. In short, you are allowed to run a business under a fictitious name legally.
• One main benefit of a DBA is that once you conduct business under an assumed name, you can easily have your company incorporated under the DBA name, if you wish.

Difference between DBA & LLC

Now that you know all about the benefits you get if you form an LLC and if you register a DBA, let’s get into the differences between them in detail. To begin with, if you are about to register a DBA, the cost of it would be much less than that of forming an LLC.

Basically, the sole proprietorships that do not want to form an LLC and pay the multiple different fees can choose to register a DBA. Through this, they can still promote their business and brand. Moreover, choosing a DBA means that you would not have to encounter many legal procedures and registrations. And since LLC is a separate legal entity in the eyes of the law, it has to follow many rules and comply with various requirements.

#1 Registering a DBA vs. Forming an LLC

Forming an LLC

An LLC is a legal entity that you create according to the laws of your chosen state, which can differ from one state to another. To form an LLC, you simply file the Articles of Organization with the Secretary of State’s office in your selected state. Before filing, make sure your desired LLC name is unique by checking its availability on the Secretary of State’s website.

Once the LLC has been formed, in case there is any change in the address, service, or membership, it is important for the owner to report all the changes to the Secretary of State’s office. Other than that, the owner would have to file an annual report that holds all the crucial financial and business details of the company.
Furthermore, the name of the LLC would last forever unless and until the business is liquidated. And once the LLC is formed, the owner can easily file for a DBA to conduct business under another name other than the registered LLC business name.

Registering a DBA

The main purpose of registering a DBA is to keep the owner’s identity and business transactions transparent. The official business name does not change. Instead, the company can use a new name for its business activities. Registering a DBA requires fewer documents than forming an LLC. Typically, the owner files a Certificate of Assumed Name with the county’s register of deeds where the business operates.

However, some states may require additional documents or registration with the Secretary of State or the corporation’s office. If your company is already a foreign corporation or LLC, you might need to provide extra paperwork during state registration.

#2 Taxation

LLC members can choose how they want the LLC to be taxed, selecting from options such as partnership, corporation, or sole proprietorship. Although LLC members are required to pay Medicare and Social Security taxes, they can report and pay these taxes through their self-employment tax filings. Additionally, LLCs can take advantage of many tax deductions that DBAs cannot access. In contrast, a DBA has no special tax status; therefore, the owner must pay taxes through their personal tax return, without the benefit of separate business tax treatment.

#3 Protection

One key difference between an LLC and a DBA is liability protection. A DBA does not protect you from personal liability, but an LLC provides limited liability protection. This means that if your business faces a lawsuit, the LLC shields your personal assets from being at risk.

With a DBA, even though you are able to hire your name, you cannot hide your actual identity from anyone. This means that if you are sued and you are not an LLC, then your personal liabilities would be at risk. This is only if your company is a sole proprietorship or a partnership and you have decided to register a DBA for it.  

How can IncParadise help you?

Choosing whether to register a DBA or form an LLC is a major decision for any company. Forming an LLC can be costly, so many opt to register a DBA instead. However, a DBA does not provide limited liability protection. This protection is important when starting a business. Ultimately, the choice depends on how you plan to run your business and what suits you best.

With all clear about what an LLC is and what a DBA is, you can now make your choice. In case you want to open an LLC, then you would have to register it with the government. This means that you would need to incorporate your company in your state. Well, you need not worry about it. IncParadise can help you with it. Contact us to know more!

Last updated: July 2025