How many DBA names can I add to my entity?
And also, do I need to get a new EIN for each DBA that operates under my umbrella entity?
In this audio snippet, you'll hear about:
- First part is a state question. Second part is a federal question.
- In LA, can file as many DBA's as you want for your corporation.
- The only limitation is the cost of forming those DBAs.
- To find out who you need to call, start at the secretary of state web site.
- Would not recommend that anyone use their social security number on a document – so it's advisable to get an EIN for each DBA
- For "number of employees" question, if you answer more than 1, don't be surprised if you start getting letters from the IRS
Audio Transcript
Travis:
My next question is: "How many DBA names can I add
to my entity? Also, do I need to get a new EIN for each DBA that
operates under my umbrella entity?'
Yosef:
Well, your first question is actually a state related question, and
your second question is first of all a federally related question.
Travis:
Oh, thank you.
Yosef:
My understanding is that, again, this is dependent not only on the
state that you're operating in, but perhaps even on the county that
you're operating in. I know that in Los Angeles county, where my
practice exists right now, that I can file as many DBAs as I want for
my corporation.
Travis:
An unlimited number?
Yosef:
It's virtually unlimited. Of course, it's dependent on the cost. I
mean, there's a filing fee, there's a publication fee, and generally
there's some attorney that's doing this for you.
Travis:
Right.
Yosef:
It's just not cost effective to inundate the government's office there...
Travis:
OK.
Yosef:
With DBAs.
Travis:
Do you think that somebody could probably find out, most every county
has their own web–site as well, correct? They could probably find out
by making a phone call down to the courthouse?
Yosef:
It wouldn't necessarily. Well, again in some states it would be the
courthouse. In other states, it would be the county's office and other
states actually do this at the state level.
Travis:
OK.
Yosef:
So the best place for anyone to start would actually be at the Secretary of State's website, as we discussed before.
Travis:
That makes sense.
Yosef:
We're on your question as to whether a separate EIN number is necessary for a DBA.
Travis:
Yes.
Yosef:
The answer to that question is really going to depend on what you're
going to use in the alternative. If you're a sole proprietor, if you're
not a corporation, if the alternative is, 'OK, I'll use my social
security number,' I would not recommend that anyone use their social
security number on any documents.
Travis:
[laughter]
Yosef:
I would recommend highly that no, "Go out to the IRS's website and
apply for an EIN, for an employer identification number."
Travis:
Right, they're so simple to get.
Yosef:
They're relatively simple to get and they're relatively simple to apply
for. If someone's never done it before, they should probably read the
instructions carefully.
Travis:
[agrees]
Yosef:
But it's a pretty simple process. One thing that I do caution people
often, is that, on the online application, the IRS asks you how many
employees you foresee that you're going to have. If you answer that
you're going to have employees, don't be surprised when the IRS starts
sending you letters with forms to fill out.
Travis:
[laughter]
Yosef:
Often my clients get these letters, and they're terrified. They don't know what they've done.
Travis:
Right.
Yosef:
There's mounds of paperwork.
Travis:
I think I may have called you up with that question once or twice.
Yosef:
Yeah, I'm sure you have.
Travis:
[laughter]
Yosef:
And the IRS is just trying to be nice. They're just trying to help you
out. This way, you don't accidentally, as we discussed earlier, fail to
file an employer's quarterly tax return. But for an employer, some of
this paperwork can be just daunting. In my experience, employers have
better things to do than deal with these things.
Travis:
Right.
Yosef:
Every time you apply for an EIN, you may start getting some interesting mail from the IRS.
Travis:
OK.
Yosef:
I would recommend that every business have at least one EIN for their core operation.
Travis:
OK.
Yosef:
Does having more than one EIN provide any direct benefit? It's not always clear to me that it does.
Travis:
[agrees]
Yosef:
Again, if an employer foresees that they have got multiple divisions,
et cetera, then sometimes having an extra EIN can come in handy to help
them segregate their own reporting requirements with the IRS.
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