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First step to starting a business

Asked by: jessie - 13 April, 2011 Whats the first step to starting a business: do I get an llc first or a dba or do I register first?
Answered by: Lloyd Johnson - 17 April, 2011 Dear Jessie,

The first step to starting a business is to decide whether you will want to take advantage of the limited liability, offered by entities like LLCs and S-Corporations, or whether you want to do business on your own, as a sole proprietor.

Let me explain the difference between a DBA and an LLC.

An LLC is a type of entity with limited liability. It is similar to a corporation or an S-Corporation. LLCs are officially registered with the state in which they get formed under a separate name. Meaning that you, Jessie, can register an LLC called Jessie's Ventures LLC. Once registered, an LLC can just do business under its own name, without bothering to get a DBA.

You will only need a DBA in one of two cases. First, if you decide to do business through your LLC, Jessie's Ventures LLC, but under a different name, such as Jessie's Donuts. Then you need to register Jessie's Donuts as a DBA for Jessie's Ventures LLC.

Second, if you decide not to form an LLC at all, but instead continue to do business by yourself, as a sole proprietor, without taking advantage of the limited liability protection. Then if you want to call yourself in business by any name other than your own, such as Jessie's Donuts, for example, you will need to register that new business name as a DBA for yourself.

Our advice is, start an LLC. It is easy to form and relatively easy to maintain, but the advantages it provides are quite good: liability protection, credibility with clients, better administrative separation between you and your business, possible tax advantages, among others.


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