What’s the Difference Between a DBA and a Legal Entity?

As a business owner, you may be familiar with the term “DBA” if you operate under a different name than the legal title of your entity. Learn more about the difference between a DBA and a legal entity and how each is used.

What is a DBA and How is it Different Than a Legal Entity?

As a business owner, you may be familiar with the term “DBA” if you operate under a different name than the legal title of your entity.

DBA is short for “doing business as” meaning just that. It’s the name you “do business as” and the name by which your customers or clients know you, rather than your organization’s full legal name.

It’s common for corporations and limited liability companies (LLCs) to register DBAs for specific lines of business or storefronts under the same legal entity. For example, Richard Smith Food Service Inc. might register the DBA “Uncle Rick’s Cafe.”

How Does Having a DBA Affect My Insurance Policy?

Since DBAs are not separate legal entities from their parent organization, they do not require separate insurance coverage. They’re protected under the full coverage of the parent organization.

It is possible to hold and use multiple DBA registrations under a single corporate entity, but all of the DBA names will refer to the parent company with respect to any lawsuits or other matters related to legal or financial liability. DBAs do not provide any sort of asset or liability protection to a business.

When Can I Use a DBA?

What is the Difference Between a DBA and a Legal Entity?

Deciding whether to operate your business under a DBA or not depends on a combination of things including your preference as the owner.

Sole proprietorships and partnerships are required to operate under the legal, personal name of their owner or owners. However, if you prefer to operate under a different title than the full legal name of your organization, you have the option to apply for a DBA. The same goes for franchises as well, where the name of your chain will differ from the title of the legal entity under which they will operate and be owned by.

Since a DBA is merely the operating name and not a business structure, it does not provide the same legal protection you would receive from a business structure (e.g., corporation, LLC, etc.)

If you’re considering using a DBA or already are and have additional questions, we recommend discussing further details with a legal professional who can offer expert advice on your specific situation.

Commercial Coverage with Morris & Garritano

At Morris & Garritano, our team of experts has been trusted for over 135 years providing dedicated service to our clients. We pride ourselves on building meaningful relationships and exceeding expectations as trusted advisors.

For more information regarding insurance coverage for DBAs, you can contact your Account Manager or call our office to get started if you aren’t yet a client.

Footer Note: 

As of 3/1/2022, Morris & Garritano will no longer routinely include DBAs as part of the Named Insured on commercial policies. Since DBAs are not true legal entities on their own, any coverage in effect for the official legal entity (e.g., LLC or corporation) automatically extends to the DBA.  Please note that if you operate under a DBA, this procedure change does not affect your policy(s) or coverage. We do ask that you continue to inform your Account Manager if additional DBAs or Named Insureds are created so that we can make notes and act accordingly. If you have questions or concerns regarding this process, please contact your Account Manager directly. 

Please note this article is intended to provide a basic understanding of the topic and should not be construed as legal advice. You should not act on the information in this article without consulting legal counsel or other knowledgeable advisors.