There are times that a fictitious name is shorter and easier to work with than the legal entity name – thus, the reason that many charities resort to a “Doing Business As,” commonly known as a DBA.
It’s important for charities to understand the rules and regulations around DBAs. Unfortunately, the 50 states do not have uniform laws in place regarding DBAs. Here are a few key things to remember about DBAs:
- Most states require an assumed name to be registered at the local county/city level and some states require assumed names to be registered at the state level.
- 42 states have initial application fees, approximately half of them have renewal fees, and all of them have different timelines.
It is important to consider the following: does the charity’s assumed name need to be registered nationally? Or, conversely, just in states where you operate/fundraise? Due to the multiple filings within a given state, and the unique filing requirements, many non-profits use outside services to track and manage these filings.
It is also important to fully understand the jargon associated with DBAs.
- Most commonly you will see an alternate name appear as one of the following: Doing Business As name (also called a DBA), trade name, alternate name, and fictitious name. All of these names are used for the same purpose.
- Fictitious names can be used on contracts, checks, regulatory filings/policies, promotion materials, and project materials.
- Legal technicalities vary between both states and local laws. Ensure that your organization is following the law by talking to an attorney.
Once you have made the decision to use a fictitious name for any purpose, it is important that any Registered Agents used have the updated information. Without that information, the Registered Agent cannot process legal documents on your behalf should they receive something addressed to a fictitious name. In the case of legal or regulatory proceedings, this can result in delays and missed response deadlines. It is not unheard of for a judgement to be placed against a non-profit using an assumed name, and due to an uninformed Registered Agent, the non-profit is not even aware of it.
An expert such as an attorney can help your charity make the correct decision about using a fictitious name, and once decided, Capstone Charity Resources can help you with all the necessary filings and updates to Registered Agents.