Legal Question in Business Law in Massachusetts

Re: dba's

The notation "dba" is an acronym for " doing business as". The legal significance of the 'dba' designation is that the entity so designated is treated as a sole proprietorship. Thus, "John Doe d/b/a Doe Auto Detailing" simply means that John Doe is 'doing business as' Doe Auto Detailing and each is the alter ego of the other. Some of the basic advantages of a sole proprietorship are; 1) simplicity of formation, 2) simplicity of administrative operation, 3) simplicity of dissolution, 4) little if any legal fees for formation, operation & dissolution, 5) flexibilty of conversion to another entity, 6) centralization & flexibilty of power & management & 7) single level of taxation. Conversely, some of the disadvantages of a sole proprietorship are; 1) unlimited personal liability for both contracts and torts, 2) finite existence (as opposed to the perpetual existence of a corporate entity), 3) additional taxation of 'self employment earnings'( as opposed to the exemption of the SE tax to shareholders of an S-Corporation and certain members of a Limited Liability Corporation), 4) non transferability of interests, 5) the possibility for higher tax rates depending upon the net earnings of the entity,based upon the fact it is a pass through conduit (and taxed at the individual rate of the owner), & 6) the inability to maximize various asset protection and estate planning strategies.;))

Re: dba's

A d/b/a allows you to use a trade name in your business but you are still personally liable for the debts and liabilities of your business. It provides no protections for you personally as would a corporation or limited liability company.

Re: dba's

Essentially, none -- there is no "setting up" but simply filing a registration with the city/town clerk. It has no tax implications, and does not affect your personal liabilities; you still are operating a sole proprietorship.

That said, don't let someone talk you into forming an LLC, LLP, or corporation without evaluating whether it actually would afford you any protection in your circumstances. For example, if you operate a courier service and drive a vehicle yourself, and are at fault in an accident, you would not escape personal liability even if your business were incorporated. Insist upon a real analysis before shelling out thousands of dollars -- insurance is usually far cheaper.

Best wishes,

LDWG