How to Transfer a DBA to a New Entity in Texas

A business' name is usually the first information the public hears about a company, so the name can impact the first impression received. While some businesses do well simply by using a generic legal name, others opt to be creative with a fictitious business name.

Under Texas law, a business can operate under an assumed name, also known as "doing business as" or DBA, for any legitimate business reason, as long as the name is properly registered with an official government entity. Transferring the DBA is a relatively simple matter.

DBA stands for "doing business as," and is one of the terms used to refer to the fictitious name a company uses to conduct its business. A DBA is effectively an alias, and standing alone, is simply a name. It must be associated with a real-world company to have a business structure. Other terms for a DBA are an assumed name and a trade name.

Any type of company across the range of industries can register a DBA name in Texas, including sole proprietorships, limited liability companies (LLC), corporations, franchises and nonprofits. In Texas, it is mandatory for some types of companies to have a DBA, but optional for others. An argument can be made that it is always a good idea to operate under a DBA.

Every incorporated business in Texas must register for a DBA if it operates under a name other than its legal name, that is, the name stated in its certificate of formation.

This includes for-profit corporations, nonprofit corporations, professional corporations, professional associations, limited liability companies (LLCs), limited partnerships, limited liability partnerships, and all foreign filing entities – all are required to register a DBA name.

A sole proprietor need not obtain a DBA under Texas law, but they are permitted to do so. Under a sole proprietorship, the business and the owner are the same. That means they will share a name, such as Jose Lopez Plumbing, unless the owner registers a DBA.

In some states, getting a DBA prevents other businesses from operating under the same assumed business name. In Texas, however, operating under a DBA doesn’t prevent others from registering that same name. It does, however, serve as notice that another company is using the name.

Using a DBA allows business owners the creative freedom to name their businesses as they like without going through the complex process of forming an LLC just to make a name change.

The state of Texas requires that all limited liability companies operating in the state file for a DBA. If an incorporated company buys a business without a DBA, it must get a different DBA for that business too. For example, if Jill’s Hair Supplies LLC buys a hair dye manufacturer, the LLC would file a DBA to create a separate fictional name for the new company.

A business entity may conduct business or offer professional services under many different assumed names, but a separate assumed name certificate must be filed for each assumed name. This allows government regulators to keep track of the different operations.

Why would a sole proprietorship want to form a DBA? An assumed name might be catchier than the legal name, which is the same name as the individual who owns the company. This can help with branding and marketing and also serves to publicize what services the business renders.

But operating under a DBA also protects the privacy of the business owner and allows that owner the freedom to use an assumed business name on advertising used in publicity rather than using their personal legal name.

That makes banking safer and easier since there will be a separate bank account for the new business rather than sharing the owner's personal business account. Most banks require new businesses to file a DBA before opening a bank account in the business name.

Texas Business & Commerce Code Section 71.103 requires that certain businesses operating in Texas must file an assumed name certificate with the Texas Secretary of State.

These include domestic and foreign corporations, limited liability companies limited partnerships, limited liability partnerships, and other foreign entities that regularly conduct business or render a professional service in Texas under a name other than their legal name.

The document to file is Form 503, Assumed Name Certificate, setting out the legal name of the company, the fictitious name, the type of entity, how long the name will be used (up to 10 years renewable for another 10-year period), and the counties in which it operates. This is a notice filing, intended to put other businesses and members of the public on notice of the use of the DBA by a particular entity.

The business must set out the expected duration of use on the certificate, but it may also abandon the assumed name certificate before that time by filing an abandonment of the certificate, found in Form 504.

This certificate filed with the secretary of state must be signed by an officer, general partner, member, manager, representative or attorney in fact for the incorporated business. If it is signed by an attorney in fact, it must include a statement that the attorney in fact has written authority from the principal to execute the certificate.

Anyone who intentionally signs an assumed name certificate that contains a materially false statement commits an offense under Texas Penal Code Section 37.10.

Several years ago, an incorporated business had to file the certificate in every county in which the DBA was to do business. This requirement was removed by the Texas legislature in 2019. Currently, only a sole proprietorship or general partnership need to do this.

The filing of an assumed name certificate doesn't mean that the business is actually and currently using the assumed name in order to determine who used it first.

Nor does the filing give the company any right to use the name if this turns out to be against the law or the statutory right of unfair competition, unfair trade practices, common law copyright or similar laws. The Texas Secretary of State does not review the certificate to determine if there is a similar name on file with this office.

The government body with which a fictitious name is registered depends on the type of business involved. A sole proprietorship or general partnership must submit their assumed name certificate to the county clerk in the county where the business is located.

A general partnership is a business without a formal structure formed by more than one persons. A sole proprietorship is a business that is owned by a single individual and doesn't have a formal business structure.

In both cases, the name of the business is the same as the name of the owners. Many principals of these businesses opt to go with a DBA in order to change the name of the business to a more marketable name.

Note that the DBA does not offer personal asset protection in case someone sues the business. That is only accomplished by incorporating, such as forming an LLC to separate business assets and debts from personal assets and debts.

First, pick a unique name and visit the website of the Texas Comptroller of Public Accounts to search for a new DBA name to make sure it isn’t already in use. Next, file an Assumed Name Certificate with the county clerk in every county where the business conducts their activities.

As described above, DBAs – business names that are different from the legal name – must be registered at the state or county level in Texas, depending on the type of entity involved.

The law requires sole proprietorships and general partnerships to file an assumed name certificate with the county clerk's office in each county where the business operates, while incorporated entities and foreign filing entities must file assumed name certificates with the Texas Secretary of State's office.

A DBA filing is good for the length of time set out in the certificate, with a 10-year maximum. Is a business required to use the DBA for the entire time? It is not. A business owner can sell the business or relinquish the DBA to another business during that time.

But there is no procedure to amend a certificate in Texas. Rather, in order to do a DBA/assumed name transfer correctly under Texas law, the authorized party must file a new assumed name certificate with the appropriate state and local offices within 60 days of the change.

A change in business ownership is treated as a material change that requires the filing of a new certificate. How does this work? When the new entity that will be using the DBA is either a sole proprietorship or a general partnership, it files a new assumed name certificate with the county clerk's office in each county where the business plans to operate.

If the prior business entity using the DBA already has a certificate on file with a county, this new certificate will replace it. Where the new entity is to operate in counties where the original business did not file a certificate, the new one will be the first entity to submit the certificate.

Every county in Texas maintains a website that provides information for the county clerk's office. On the county clerk's website, there will be a downloadable, fill-in-the-blanks assumed name certificate and instructions for filing. There is a fee for filing the certificate, which differs by county.

The procedure for transferring a DBA to a new incorporated company such as an LLC or a professional corporation is similar but not identical. The new entity to take the DBA must file a new assumed name certificate with the Texas Secretary of State's office.

Note that the submission to the Texas Secretary of State can be done by downloading Form 503 from the forms and fees section of the secretary's website and filing the certificate by mail. But it is also possible to file the certificate online using SOS Direct, the state's electronic filing system.