What is a DBA? What is an ABN? Do I need them?
Blog by Attorney Nicole Hetz
Are you confused about the difference between an ABN, DBA, FBN, and LLC? Do you want to know what kind of protection they give you? Hopefully after reading these next few paragraphs, you will have a better understanding of what we are talking about when it comes to the registration of a business name with the Oregon Secretary of State.
What is an ABN or DBA?
The terminology differs slightly but these are similar things:
Assumed Business Name (ABN) is the term used in Oregon by the Oregon Secretary of State.
Fictitious Business Name (FBN) is the term commonly used in California, but some counties use the other acronyms. To find out filing requirements, visit the website of your county in California.
In Washington state, the Department of Revenue refers to them as trade names or “doing business as” name, per RCW 19.80.10. (This is not a trademark.)
Another name commonly used across the United States is Doing Business As (DBA).
Let’s start with the most basic level of registration.
An Assumed Business Name (ABN) or a Doing Business As (DBA) is used interchangeably in Oregon. This is the first layer of protection that you can give your business name or your business if you are a sole proprietor who is just starting out with a great business idea. Maybe you consider that your business name is clever and original but you are afraid that someone in Oregon may want to copy it. You are registering the name. An ABN is not a business entity.
How does it differ from an LLC?
A LLC, or Limited Liability Company is a legal entity or business structure. The LLC differs from an ABN or DBA because members of an LLC have asset protection. This means that your LLC protects you from personal liability. A DBA does not offer you this protection because it is not a legal entity different from yourself. With a DBA your personal assets would be at risk because you are doing business as yourself but registered under a commercial name.
When is an ABN required?
The Secretary of State explains that an assumed business name registration is required any time you are conducting business under a name other than the true and legal name of each person conducting the business. If you are doing business under your "real and true" name, then you don't have to use or register an ABN.
Registering as an ABN will give you a few advantages:
It will confirm if the name you want to register is available which means that no other business with exactly the same name has an active (up to date) registration in the Corporation Division database from the Oregon Secretary of State
It will let the public know that you intend to do business under that name
Doing business without registering a business name may result in a lack of standing in court to pursue or defend legal actions, difficulty in opening bank accounts or accessing capital and entering into contracts.
Does registering an ABN protect the name for my business?
In short, no, but there are additional steps you can take. Registering the name with the Secretary of State as an ABN does not provide exclusive rights to use the name. This is where it gets tricky. Registering your name does not imply you can legally use it.
For example, you might be able to register “Stumptown” with the Secretary of State, but the real Stumptown could still sue you. Another business can register a business name that’s like yours, but not exactly the same.
If you wish to protect an assumed name, you may be able to file for protection under trademark law. Filing for a trademark would give you federal protection and entitle you to send a Cease & Desist letter to whoever is using that same name, among other legal resources. Here is a link to another blog about protecting the brand name of your business.
What am I legally liable for with an ABN?
Under a DBA or ABN, there is no distinction between the business owner and the business itself. Your assets are at risk if you have an ABN and no actual business structure. Does this keep you up at night? Would you like some separation between your assets and your business? This separation is achieved by registering for a Limited Liability Company or better known as LLC. A sole proprietorship is a legal structure (like LLC or Corporation), and a DBA is not. A DBA is a legal requirement to operate your business with a trade name or a pseudonym different from your registered legal name.
What name can I use?
When choosing to register your ABN in Oregon, your fictitious name should not include: the business entity suffix, such as LLC, Incorporated, Corp., etc unless the business is actually an LLC, corporation, or etc; any word that implies banking or related financial activity, or; any special characters.
In practice, entrepreneurs start their business ventures by checking the availability of the business name they want to pursue on your state’s website. If that name is available, you should register as a DBA/ABN while you decide on other things like legal structure, marketing, employees, etc. If you decide to become an LLC with that same name, the Oregon Secretary of State asks you to cancel the ABN registration in order to register the same name as an LLC. This is why we recommend you ask your attorney for help! There are a lot of technicalities that require legal assessment. Here is a link to another blog about protecting the brand name of your business.
How does a business name change as the business grows?
Let’s bring this all to life with an example:
Molly started her company, “Mila’s Flowers” in May of 2018. She checked on the Oregon Secretary of State website to see if that name was available. Molly noticed that the name had not been previously registered or showed up as active. She contacted her attorney to help her register for an ABN/DBA for the business name “Mila’s Flowers.” With the help of her attorney, Molly’s business “Mila’s Flowers” was registered as an ABN/DBA in July 2018 with the Oregon Secretary of State.
A year later, Molly’s business, Mila’s Flowers, had grown to the point where she wanted to open new locations and hire employees. Molly decided to work with her attorney again and formalize her business as an LLC. By July 2019, Molly’s attorney assisted with this transition by canceling ABN/DBA with the Oregon Secretary of State and registering “Mila’s Flowers, LLC.” Molly’s attorney also drafted an operating agreement for this new LLC. She was able to open a new business bank account with this operating agreement.
Next Steps
Are you ready to register a DBA/ABN/FBN? We can help!
Are you ready to upgrade from an ABN to an LLC? We can help!
Please contact us to schedule your free 30-minute consultation to get started. We look forward to helping you through each stage of the process.