DBA vs Business License: Is a DBA a Business License?

It takes more than a good idea and lots of drive to start a small business. It is a requirement of all small business owners to comply with city, state, and federal laws. This usually includes obtaining a business license and registration. Most of the time, this entails registering and obtaining a license. But what is the difference between DBA and business license?

It is important to understand that these are two separate requirements, each of which requires different steps to complete.

Here, we’ll cover what you need to do to get a DBA vs. business license so that you know you won’t break any laws when starting a business.

In order to understand the difference between DBA and business license, let’s first look at DBAs.

What is a DBA?

When you register a name as your “doing business as” name with the state or local government, that is what a DBA is. They are most commonly used by sole proprietors. In other words, it’s the legal name of your business. There are many people who mistake it for a business structure.

You may have never heard of a DBA if you are new to the business. DBAs may appear complicated at first glance, but they are actually very simple concepts. DBAs prevent businesses from hiding or changing their business names in order to avoid lawsuits from consumers.

To learn more about DBAs, read our “What does DBA mean” Guide.

When Do You Need it?

A DBA is very important for a sole proprietorship because if they do not have a DBA, any business they do will be under their business name. Hence, in the case of any legal problems, the government is able to go after personal finances or properties (especially if you lose in court). A DBA serves as legal protection.

If you want to change the legal name of your business or if you want to start a business separate from your main one, you may also need to file a DBA. It may also be necessary if you have a sole proprietorship and want to open a business bank account.

There are some states that require you to file a DBA even if you are a partnership or a corporation, so make sure you are aware of the requirements in the state where you are doing business.

How to Get a DBA License?

If you have to file with a Secretary of State (the state one, not the federal one), you should do so. The process usually involves providing some information about your company and paying a fee.

Do you Have to Renew a DBA?

In some states, your DBA will not expire until you file a new business name. Depending on the state, you may be required to renew your DBA every few years. It all depends on where you live, so be sure to visit your Secretary of State’s website to find out the law specific to where you live.

Not it’s time to understand business licenses

What is a Business License?

Due to the wide range of licenses required for different types of businesses, licensing can get quite complicated. Some states have broad and mandatory license requirements.

In addition to business licenses, some industries require very specific licenses, such as aircraft, food, and liquor. There are even licenses for selling motor vehicles. If you fail to obtain all the licenses and permits your state requires, your business may be fined by the state or closed down.

What Does a General Business License do?

Although some licenses and permits are for specific purposes, any business is going to have to obtain a general business license before doing business in their state.

A business license covers much more than a DBA. Typically, a business license allows the government to track your business, collect sales tax and other fees, keep track of your employees, and ensure that your business is transparent to consumers.

Do I Need a Business License for My Company?

The answer is yes. State laws vary, but almost every businesses generally require licenses or permits for the following reasons:

A brick-and-mortar business may require permits to allow commercial activity and build or remodel the building. You may also need permits for fire safety and signage in your municipality.

Many states require you to get a seller’s permit if you sell goods. With this permit, you are able to collect sales tax from your customers.

You may need a license if you provide services that require licensing, such as day care, beauty salons, electricians, lawyers, medical care providers, and accountants; or provide services that are governed by state or federal laws.

What Types of Business Licenses Do I Need?

When you asked yourself “What is a business license?”, you might have discovered there are different types of business licenses.

Each state requires different types of licensing, but there are some that are universal regardless of the type of business:

• General Business License
• Occupational Licenses
• Health Permits
• Tax Licensing
• Fire Department Permits
• Zoning Permits

The list does not end here: there are many other licenses that you may need depending on your type of business structure.

How to Get a Business License?

After you have determined what licenses you need for your business, gather the documents each license requires and apply with the state, city, and county governments.

Difference Between DBA and Business License

Do you still have questions about the difference between a DBA and a business license? Here’s a quick overview:

A DBA (sometimes also called a DBA business license or fictitious name license) is issued by counties. Although some states may require it if you intend to conduct your business under a name different from the registered one, you do not necessarily need it to operate a business.

Business licenses are issued and required by the city, the state, or the federal government. You must have one to operate a small business.