How Assumed Names Disguise Your Ownership (And Help Make You Lawsuit-Proof)

Your business may operate under an Assumed Name (also called a fictitious name, trade name, or doing business as (DBA). An Assumed Name is simply any name other than your or your business's legal name.

Value of a DBA/Assumed Name

An "Assumed Name" can help you avoid potential legal pitfalls by giving you a "Doing Business As" name that is different from your company’s official name or personal legal name. It also allows you to have a business bank account even if you're a sole proprietor.

In Texas, we refer to DBA registration as filing an Assumed Name Certificate. Any type of entity structure can file an Assumed Name, whether you are operating as a sole proprietor, a partnership, a corporation, or an LLC.

Assumed Names & D.B.A.: How Business Owners Disguise Company OwnershipPublic Interest in Disclosure

Public interest in disclosure is the legal principle that a court should have access to relevant information, and that an opposing party (a litigant) should have access to all relevant information to make their case.

Legally speaking, your DBA is the public disclosure associated with the identity of the true party in interest (you) and the location where the party may be served with process (if suit is filed). Public interest in disclosure was created from the belief that is in the public interest to be able to ascertain whom to sue and where exactly the service of process can be performed.

What This Means If You Are Sued

What if your real estate business is taken to court? The potential plaintiffs will be able to benefit from your DBA filing requirements. Each and every day suits are filed against Assumed-Name defendants.

An attorney is probably going to be able to dismiss a suit that is filed against the Assumed Name (usually associated with a corporation or LLC that has a liability barrier). To have a better chance of winning the suit, the plaintiff should refile the case against the true party behind the DBA.

Note: It is not mandatory for a legal entity to have its business headquarters where you conduct business. In fact, requesting an out-of-county service of process gives your legal opponents additional delay and expense. However, this is when many plaintiffs will certainly give up.

What Laws Apply To Assumed Names?

An individual or company may possess as many DBAs as they desire, at the state or county level. A period of ten years can be covered with a single filing. A filing of a particular form may be used to terminate or abandon a DBA.

You should verity the county clerk's website within the county where you have your main headquarters or where you perform your services. Texans can visit the Secretary of State website and fill Form 503 for a state-level filing.

You are required to mention the counties where an Assumed Name will be used in this form. You need to check the box for “All” in case the entity will potentially use its Assumed Name in all counties in Texas.

A notarized DBA filing for people, companies and others is required by the Texas Business and Commerce Code chapter 71. You are required to state the psychical address (location) of your business. In case the county where the company has its main headquarter is different from the proposed county of business, you must file a DBA in both counties.

Let's imagine that you have a California LLC and wish to conduct business under an Assumed Name in Miami. Should you file an Assumed Name certificate in both counties? The answer is YES. Both the domestic and foreign entities within the scope of your business are included in the statute.

State vs. County Filing of DBAs

After you have formed an LLC, you need to get a DBA. However, where should the filing be performed, at the county clerk's office or with the Secretary of State?

The DBA needs to be filed as at both levels, according to the Business and Commerce Code:

"The corporation, limited partnership, limited liability partnership, limited liability Company, or foreign filing entity shall file the certificate in the office of the Secretary of State and in the office or offices of each county clerk as specified by Subsection (b) or (c)."

Even though filing with the Secretary of State is usually neglected by smaller entities who often file just in their local county, you need to consider that the statute says “and” when referring to state and county filings.

The county clerk needs to discover if a proposed DBA is available at the county level. The main thing to consider is that your proposed name should be different from another entity's filed Assumed Name that operates in that county. It is not mandatory to ascertain if a particular name is available, considering the fact that the DBA filing is essentially a notice filing. Simply file Form 503.

There are 254 counties in Texas. Is it important to file in the county where you live when you are obtaining a county-level Assumed Name for daily usage and banking purposes? The answer is no.

You can file for a DBA from El Paso County and the bank will still accept it, regardless if your are operating in Houston.

You should also consider the fact that there is no central data base connecting the Assumed Name records of Texas's 254 counties. You might want to get your company's DBA far from its true base of operations and in a county whose DBA database hasn't entered the online world yet, if asset protection/anonymity is your goal.

What About A Series LLC Doing Business through One of Its Series

Series are viewed as sub-companies, so an individual series has the power to sue and be sued; to contract; and to hold title to real and personal property, according to Business Organizations Code section 101.605.

However, the series has to function or hold title under its own name to fulfill these functions at the series level. This in turn demands that the series obtain an Assumed Name Certificate.

Are there any causes for this situation? Yes there are! First of all, technically speaking, the series is not an independent legal entity. And since it is running under an Assumed Name, is should possess a DBA on file. Additionally, the DBA filing should be conducted both at the state and county levels.

The name of the entity conducting business as an individual series will contain the basic Assumed Name for a Series LLC. As an example: “ABC LLC conducting business as ABD LLC-Series A.” Section 71.103 requires an Assumed Name filing both at the office of the Secretary of State and the county where Series A does business.