business law firm, Baron Law LLC, Cleveland, Ohio, answers questions on what a DBA (aka “Doing Business As” ) is and should you set your business up in this manner. For more comprehensive information contact Baron Law Cleveland to schedule an appointment to discuss the different ways you could set up your business and what would be most beneficial to you .Cleveland, Ohio,
I recently sat down with an immigrant from Africa who said one of the amazing things about America is that anyone can run a business doing anything. We likely take it for granted that the industrious and entrepreneurial here can chase their dreams while in other places such freedom to pursue economic endeavors is lacking. This freedom to create and operate your own business, however, is not the wild west. With freedom comes the opportunity for malicious or incompetent business practices, just ask anyone unfortunate enough to employ a shady auto mechanic, landscaper, or financial planner. That’s why to protect the public, lay down some semblance of order, and make ways to address misconduct and grievances, Ohio law has rules on how businesses can be run. These rules are partially why starting up a business is such a complex process with a lot of moving pieces and paperwork. Thus, retaining an experienced Ohio business attorney will ensure the proper foundation is set so your business can succeed and grow.
DBAs, i.e. doing business as, sometimes referred to as Fictitious Business Names or Assumed Business Names, are a product of consumer protection laws. Naturally, with the ability of anyone to make a business and also operate under a business name, often people don’t know who they are actually working with or who they hired. The potential for confusion and pseudo-anonymity with small businesses leads to risks for consumers. Namely, the inability to pursue legal remedies for misconduct simply because they don’t know the identity of who to complain about or who is ultimately liable. This is why Ohio law incentivizes the use of DBAs and business registration for small business and punishes those who don’t
Trade name v. Fictious Name
In the legal world minor details often have big outcomes regarding procedure, responsibility, and liability. Whether you’re operating under a trade name or fictitious name can make a big difference. Under Ohio law a trade name means a name used in business or trade to designate the business of the use and to which the use asserts a right to exclusive use. You file with the Ohio Secretary of State to reserve your trade name so no other business can use it or claim it as their own.
Fictitious names, on the other hand, means a name used in business or trade that is fictitious and that the user has not registered or is not entitled to register as a trade name. These are not required to be distinguishable from the records of any other previously registered name and provide no protection or ownership of the name. Facially, the differences between trade and fictitious names appear simple, but the consequences for not having either can be dire for business owners. Talk with a local Cleveland area business attorney to find out the how and why about the different methods of business registration.
Operating without a trade or fictitious name
In Ohio no person doing business under a trade name or fictitious name shall commence or maintain an action in the trade name or fictitious name in any court in this state or on account of any contracts made or transactions had in the trade name or fictitious name until it has first complied with Ohio law. See O.R.C. § 1329.10 (B). What this means for those operating without filing a DBA or a trade name is that these business owners are prevented from suing or counter-suing in the name of their business until the filing requirements are satisfied.
In the real world this means those operating without registered names can’t sue on delinquent debts, can’t sue over contracts entered into on behalf of the business, and can’t raise counterclaims in defense if the business is ever a defendant in a legal proceeding. This is the carrot and stick of Ohio law. If you prefer to operate without a registered business name, leading to potential customer confusion and greater chance for misconduct, than you aren’t allowed to fully exercise the legal rights of your business. Granted, though registration compliance allows retroactive enforcement of business rights, the time wasted recognizing, fixing, then filing upon newly reinstated rights can be crippling within a litigation context. Time wasted properly filing a DBA or trade name can mean the passing of a statute of limitations, missing a discovery cut-off, and/or the relinquishment of affirmative defenses. This is why finding and working with an Ohio business attorney when you’re starting a business or facing significant business growth is so important. I hear it time and time again from small business owners, “I wish someone would have told me that.”
How to file a trade, fictitious name, or DBA
The filings are relatively straightforward. You can use the forms provided on the Ohio Secretary of State’s website and file a trade name registration or report the use of a fictitious name. DBA’s, however, are not filings recognized by the Ohio Secretary of State. The use of trade names or reporting of fictitious names are similar to how DBA’s operate and largely accomplish the same purpose.
The devil is always in the details. Small business owners know the struggles of being pulled in a thousand directions at once and operating with a full schedule every work day. The last thing you need on your plate is dealing with complex legal issues that could have been, and should have been, addressed when your business was being created. A few filings and minor filing fees afford your business a lot more legal protection than most people realize. Hopefully, your business runs without a hitch and you never have to lean on these protections. For those business owners not so lucky, however, the legal protections which come from filing properly and being compliant with Ohio law can mean the difference between business longevity and filing for bankruptcy.
About the author: Mike E. Benjamin, Esq.
Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at firstname.lastname@example.org.
The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.