How to Register a DBA in New Mexico (Step-by-Step Guide)
Starting a business can be a difficult task. One of the biggest decisions for new businesses is thinking of a name. If you are a sole proprietor or general partnership, you must operate under your legal name. One way to bypass this is to register a DBA, which allows you to use a more marketable name of your choice. This article will examine what a DBA means, its advantages and disadvantages, and how they work in the state.
New Mexico does not allow DBAs to be registered, so we will look at different available options.
What is a DBA?
The DBA acronym, meaning “doing business as,” refers to a company or individual conducting business operations under a fictitious name. It can be viable if a business wants to use a more marketable trade name than its official title. A DBA allows a business to use a different name while still being legally accountable for the business under its legal name.
For instance, if John Smith operates a sole proprietorship that sells handmade candles, he can register a DBA name, such as “The Candle Co. by John,” to promote his products and services instead of using his name.
Sole proprietors, partnerships, and corporations often choose to register for a DBA if they want to use a different name that better represents their products or if they want to use a more creative and catchy name.
The process for registering a DBA varies by state. Generally, the process involves
- Selecting a unique business name
- Verifying its availability
- Filing the appropriate forms with the relevant government agency, like the Secretary of State or county clerk’s office
- Paying a DBA filing fee associated with the registration process.
New Mexico DBA name registration
New Mexico is one of the states prohibiting businesses from registering DBAs. This can be problematic for several reasons;
- You may need help to open a business bank account.
- Your business name or intellectual property may not be protected.
- Marketing your company as a sole proprietor or general partnership may be hard.
We will offer solutions to the need for DBA registration in New Mexico.
The absence of DBAs in New Mexico has both pros and cons. In other states, having a registered DBA does not guarantee sole ownership of the assumed name. This means another business can start using the same DBA name without legal consequences.
However, some states offer exclusivity for DBA names, making it an easy and cost-effective option to register an additional name for your business.
Unfortunately, New Mexico is not one of these.
Solution 1: Form a formal business
One way to use a different name when conducting business is to open a new LLC or corporation.
Forming a business in New Mexico involves the following steps:
- Choose an entity type
- Think of a business name (make sure it is unique using a New Mexico business search)
- Choose a registered agent
- Register your business
- Filing fees range from $50 to $100 depending on the type of business.
- Obtain tax ID numbers (Employer Identification Number and State Tax ID number)
- Obtain permits and certifications
- Maintain your business.
When you form your business, you can choose a new name that is not yours or your partner’s.
The advantages of registering a corporation or LLC can offer limited liability protection, protecting the company’s assets from yours. It also provides exclusivity on using your business name in the state.
LLCs offer several tax advantages to their owners, such as the option for pass-through taxation and the ability to receive both profit distributions and a reasonable salary. These benefits can help reduce the tax burden on LLC owners.
The disadvantages of registering a corporation or LLC are that they are far more costly than DBAs in most states and require much more upkeep.
Solution 2: Register a trademark with the New Mexico Secretary of State
You can apply for an LLC, corporation, or partnership trademark if you have already formed a business. This trademark can protect your name from being used by other businesses.
Before registering your trademark, check that your proposed name is not in use with a New Mexico trademark search.
Once you have confirmed your name is available, register it with the trademark application form and submit it with a filing fee of $50.
Starting a sole proprietorship in New Mexico is a simple process with no formal requirements or fees. You only need to start conducting business to operate as a sole proprietor in New Mexico.
In contrast to most other states, using a business name different from your legal name in New Mexico does not allow you to register a DBA with the state.
It is recommended that you verify with your local city or county government to ensure there are no local business name registration requirements.
For example, say Sarah Johnson runs a catering business out of her home under the name “Savor the Flavor Catering.” As Sarah’s business name differs from her legal name, she should double-check with her local government to see if there are any requirements for registering her business name.
Advantages and disadvantages of a DBA
There are many advantages to registering a DBA:
- Versatility: A trade name can be changed or updated more quickly than a legal business name, allowing business owners to adjust to market conditions or changes in their products or services.
- Separation of personal and business finances: A separate business bank account is possible by applying for a DBA, allowing you to conduct bank transactions under your startup’s name instead of your account. This enables you to receive and issue checks or credit card payments using your business name, making it easier to separate personal assets and business finances.
- Enhanced marketing opportunities: A well-chosen name can be more descriptive and memorable than a legal name. This alternative name can improve brand recognition and increase marketing and advertising opportunities.
- Cost-effective solution: Compared to other business entities, such as Limited Liability Companies (LLCs), registering an assumed name usually is less expensive and more straightforward, making it an affordable and timely option for small business owners and entrepreneurs.
There are some drawbacks to consider:
- Limited legal protection: They do not provide personal liability protection, meaning that the business owner is personally responsible for all debts, obligations, and lawsuits related to the business. This lack of legal protection can be a significant risk to some companies, depending on their industry or services.
- Additional legal and administrative obligations: Registering a new name requires complying with all legal requirements and registering the name with the relevant government agency, which can be time-consuming and add to the business owner’s administrative burden. This additional work can be particularly challenging for small businesses that lack dedicated legal or administrative staff.
Who needs a DBA?
- Sole Proprietors: A DBA can help them use a different name for marketing their products or services and provide them with more flexibility to adapt to market changes.
- Partnerships: Filing a DBA allows partners to enhance brand recognition.
- Corporations: Business entities that want to use a name different from their legal name or conduct business activities under multiple names. For instance, a corporation with a subsidiary that sells software named “Tech Solutions LLC” but wants to sell hardware can file a DBA for “Tech Hardware” to distinguish the two business activities.
- Limited Liability Companies (LLCs): These flexible business structures allow owners to limit personal liability and protect their assets. LLCs can also register a DBA to conduct business under a different name or brand.
Why or why wouldn’t you need a DBA?
A DBA is required when:
- You want to operate under a name different from your personal or your company’s legal name.
- You want to use a more memorable, descriptive, or marketable name for your products or services.
- Your business is either a sole proprietorship, general partnership, corporation, or LLC that plans to conduct business under multiple names.
- You want to test new products or markets without altering your legal name.
When might a DBA not be needed? A DBA may not be necessary if:
- You operate your business under your personal or your company’s legal name.
- You are a single-owner LLC that does not need to do business under a name different from your name or the legal name of your LLC.
What are the consequences if I run my business under a different name?
Operating under a different name from your company name may have legal consequences.
I have read that I can reserve a name. Is this an option for me?
If you reserve a name, you can open a business bank account and complete other admin tasks, as the name is reserved for 120 days. This may also bring about more problems if you eventually use a different name for your business. This short-term solution is only available for LLCs and corporations, not to general partnerships or sole proprietors.
Aren’t DBAs and trademarks the same thing?
They are two different things. In most states, a DBA allows business owners to use a fictitious name different from their full legal name. In contrast, a trademark is a kind of intellectual property registration that will protect your business’s brand and name.
What do you recommend?
In many states, DBAs do not give a business naming exclusivity. Formally incorporated businesses can have name exclusivity, so if you are considering registering a DBA for name exclusivity reasons, we recommend incorporating your business.
If you are a sole proprietor, contact your local city and ask about the naming rules for sole proprietors.
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