How Should You Register Your Business
After you have chosen the name of your business, it is time to register it and make it official. Legally forming a business by filing an assumed name or registering a trademark can help your business name protection. Therefore, once you find that perfect name, you have to register it. There are many ways you can register your business depending on the exact needs of said business.
You can register your business as a corporation or limited liability company (LLC), as a business under an assumed name (DBA) or you can register as a federal trademark.
Pros of an LLC
An LLC is more formally called a Limited Liability Company. LLC’s combines sole proprietorship and partnerships into one business entity which offers liability protection, a flexible management structure, and even tax advantages. Those starting a business should consider an LLC if they are concerned with personal legal liability and taxation. LLC’s offer easier taxation as they are taxed at the owner's personal tax rates, they offer the simplicity to form and operate, they are flexible when it comes to ownership and they give your business credibility.
Cons of an LLC
As with a lot of things in life, the cost is almost always a con. LLC’s are generally more costly to form and manage than other ways of registering. There are filing fees to be paid, as well as operating agreements, although the latter isn’t required, it is recommended. The LLC will also need to pay annual fees and taxes to be paid to the state. Also, having an LLC will make it difficult for you to find investors, especially if you want those high-end venture capitalists, as they usually only seek to invest in corporations.
Pros of a DBA
A DBA, Doing Business As, is any business that operates under a name that isn’t their legal name. DBA’s themselves can also be named in different ways, it also can be called a fictitious name, assumed name, or even a trade name. Having a DBA can help expand branding opportunities, increase your privacy and even give you access to small banking possibilities. DBA’s can be seen as more professional and trustworthy. They can be extremely useful when a company wants to add a new business to its umbrella but doesn’t want to open up a whole new legal entity.
Cons of a DBA
Unlike an LLC, DBA’s does not protect your business with legal protections by removing personal assets from business liabilities. Instead, a DBA means you are just operating under a fake name, without any additional protection. In addition, depending on where you live, a DBA may not protect your company’s name.
Pros of a Federal Trademark
Having a Federal Trademark creates a legal authority that you own the registered item and it is enforceable if someone tries to steal it. A Federal Trademark gives you the benefit of ownership, the notice of ownership allowing others to see that it is yours and yours alone, provides you with national protection so that it doesn’t limit the range of where the protection is applicable. It also helps in international situations. It also protects against trademarks similar to yours and entitles you to certain statutory claims in cases of counterfeiting, making it easier for you to receive the damages and profit you are due.
Cons of a Federal Trademark
Because Federal Trademarks are high up on the list as far as protection goes, it is only fitting that it costs more. While this isn’t necessarily a negative, it is a point to be made. The registration process itself will cost more than other forms of registration, but also your marketing and advertising costs will more than likely increase. There are also legal requirements that each state requires to trademark your name if you decide to take that route. If you are looking to register nationwide, you’d go through the United States Patent and Trademark Office, which as mentioned, can be complex and costly.
After thorough research and consulting, you should be able to determine which registration is right for your business. In some ways, it’s almost like a ladder working your way up. Many smaller businesses will be perfectly fine using an LLC whereas bigger corporations will choose a DBA or Federal Trademark.