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Many prospective entrepreneurs and new business owners are often unaware of the concept of establishing a fictitious name for their company, also called a "doing business as" (DBA), but doing so can have a variety of benefits.
While the specific reasons for obtaining on a DBA vary from business to business, here are three common reasons.
Your company has a diverse set of offerings - Filing a DBA might be ideal for your company if you are looking to market two unrelated products or services. This allows you to conduct business under one name for one offering, and than use another fictitious name for the other.
This strategy can be much more effective for certain types of business however. One example of a DBA being used to help a business diversify, would be a tech company offering IT systems to businesses and high end home theaters to private consumers. The company could use one name for its business clientele and another name for its consumer-based operations.
Your company has multiple branding strategies - If your company markets the same product to two distinct types of consumers and has separate marketing strategies for each, establishing a DBA can be ideal for reaching both demographics effectively. It allows you to conduct business with each type of client under a name that would appeal directly to them.
For example, your company is actively selling a product to both retailers and directly to consumers. You might want to establish two separate marketing initiatives, one that appeals to each of these markets. Establishing a DBA would allow you to sell to both of these types of consumers under two distinct names.
To establish financial accounts - Some banks or other financial institutions make it a requirement that sole proprietors or general partnerships must have a DBA established before they will be allowed to set up an account. Even if you wish to continue conducting business under your personal name(s), you will still need to have a DBA before some institutions will open an account for your business.