Multiple Reasons for Using a DBA for your Business in Massachusetts
Branding
Often, the cart comes before the horse when starting a new business. Many times a new Massachusetts business owner operating as a sole proprietor will begin doing business in one name, develop branding in that name and then realize that setting up a bank account in the brand name is not possible because the name is not registered with a doing-business-as (DBA) certificate (you are limited in this case to receiving funds in your name only). Branding is extremely important for any new business, and it is typically in these initial stages of starting a new business that the details are overlooked. State, County, and city regulations govern whether or not your new Massachusetts business requires a DBA certificate.
DBA and Low Risk Businesses
If you operate a business where the potential for a lawsuit is very low, you may be reasonably protected operating that business as a sole proprietorship or general partnership. However, and this fact cannot be understated, even if the risk of a lawsuit is low in your type of business, if your business operating as a sole proprietorship or a general partnership does become the subject of a lawsuit, your personal assets are likely at risk. That said, operating your Massachusetts business as a DBA may make sense if your company is low risk. Still, you may be required to file a DBA certificate with your local municipality, county, or with Massachusetts. Our firm can assist you in determining your risk of liability based on your type of business and in obtaining a DBA certificate if needed for your business.
The Hidden DBA Risk
Some business owners mistakenly think that just because they have filed a DBA certificate with Massachusetts, their city or county, that they are protected from liability. Unfortunately, as mentioned above, if your Massachusetts business is operating as a sole proprietorship or a general partnership your personal assets could be at risk. There are other corporate structure options to sole proprietorship and general partnerships that need not be expensive or out of reach for your business. Our firm will assess your business liability risk and offer an array of solutions for business structure to minimize liability as much as possible. With respect to business liability, an ounce of prevention is truly worth a pound of cure.
“Doing Business As” and Corporations and LLC’s
It is possible to choose a DBA for branding purposes for your corporation or your LLC. If your Massachusetts business is already incorporated or formed as a LLC, your DBA certificate must be filed. The purpose of the DBA in this context is to give the general public and anyone else interested in contacting your business through legal channels, e.g., service of process, a way to know how to contact your business. In Boston, for example, as of 2018 any business not registered with the Office of the City Clerk could be fined $300.00 per month for failure to file a Business Registration with the City Clerk. Imagine the aggregate effect of many months of noncompliance with the law which requires businesses in Massachusetts to file (M.G.L. Chapter 110, Section 5) which could have been avoided by a very nominal filing fee.
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