Registering your new business as an LLC or DBA

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topgun1
Posts: 1
Joined: 24 Oct 10
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29 Nov 10 10:14:22 pm
I am going to start dropshipping, with the eventual goal of being a direct wholesaler. I am weighing the pros and cons of creating a business entity as an LLC or a DBA (sole-proprietor). I know that an LLC offers liability protection but wanted to get some thoughts and input especially for someone who will just be starting to sell on Ebay,Ubid,etc… Thanks!

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irene_salehoo
Posts: 2578
Joined: 21 Mar 10
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30 Nov 10 12:27:50 am
Hi Topgun1,

Welcome to SaleHoo! :)

A DBA should be filed if one chooses to transact under a business name OTHER THAN the business owner’s personal name(s), for general partnerships or sole proprietorships or other than the legal name appearing on LLC’s state-approved incorporation documents. Banks will also usually require DBA in opening a business bank account (for sole proprietorships and general partnerships). This DBA should be filed before anyone can begin transacting under such business name.

And for the corporation or LLC, this DBA must be filed with the appropriate state and/or county agency in the state in which the company is formed or foreign qualified.

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I am not so familiar with the differences and implications, but I’d like to share this info that I came across –

I copy paste
• In the case of a DBA, multiple businesses can operate under the same fictitious name in the same state. Under an LLC, owners have exclusive rights to their name in their state.
Taxes
• Though separate in liability, an LLC is not considered a separate taxable entity, and, like a DBA, its owners claim all income from the business on their personal tax returns.
Considerations
• A sole proprietor or partnership with a DBA can also file for an LLC, and vice-versa.

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Hope this helps. :)


Irene

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