Fictitious Names and DBAs: How to file in Pennsylvania
Picking a good brand name to represent your business is a vital first step to success. The identification in your customers’ minds with your name and logo have a huge impact on how they perceive your products or services. How can you legally use an alternate name under Pennsylvania law? In this article, we’ll discuss how to file a “Doing Business As” or DBA name. Under Pennsylvania law, these are formally known as “Fictitious Names.”
Fictitious Names are filed with the Department of State
A business which intends to trade under a Fictitious Name is required to file a registration with the department of state before use, although in practice, many businesses are already using a name when they decide to register it.
The filing of the Fictitious Name has several benefits, including formally putting other businesses within the Commonwealth of Pennsylvania on notice that the name is being used. The filing of a DBA name also allows you to obtain an EIN for the business and simplifies legal proceedings if they are necessary.
Generally, you can use your own name in a business descriptor without filing a Fictitious Name. For example, Smith Bakery is an acceptable name to use if the business is a bakery and the owner’s last name is Smith. Others can be a closer call, however. Bob’s Great Cakes is probably not considered acceptable, because in addition to the name and the descriptor, you now have an adjective that changes the simple descriptor.
What happens if I Don’t Set Up a Fictitious Name?
If you simply begin using a Fictitious Name for your business, there are relatively few consequences. One of which is that if you are sued, or need to sue someone, you have to pay a $500 cost to the Department of State before proceeding with a lawsuit or formally defending a lawsuit in court. Another problem, however, is that someone else may file to begin using your name. This can open up a protracted legal struggle to determine who can use the name and where.
You must advertise the Fictitious Name to the public after filing
If any individual (rather than an LLC or Corporation) is a party to the Fictitious Name filing, then you must take one more step. After filing with the Department of State, you are also required to advertise the new name in the local newspaper and the law journal in the county in which you intend to do business. This raises several important questions, including whether you need to publish in additional counties when your business grows. The cost of publishing can be nearly a thousand dollars by the time you’ve complied with all the requirements, and this makes setting up a Fictitious Name expensive.
Why not an LLC or Corporation?
Since the cost is so high, for most individuals, the best way to proceed is to file either an LLC or Corporation. For reasons we’ve discussed in other articles, LLCs are generally better than Corporations, as they are simpler, less expensive, and easier to keep track of. There are pros and cons to setting up an entity, however, so be sure to consult with your attorney about whether to take those steps.
If you’re starting a business in Pennsylvania, it’s important to have corporate counsel you can trust. At Cornerstone Law Firm, our attorneys have experience guiding business clients through everything from basic setup questions to complex litigation. Call us today for a consultation on your business needs, and let us help you take the next steps with your company.