LLC or Business Trust w/DBA?


I have been working starting a small single person (me) business and I wanted to know what would be the best entity it should be organized as ...

  • File a DBA with the registrant is a business trust? This seems a little unusual to me, though a friend is big on this.
  • Form an LLC? This seems more conventional ...

LLC Sole Proprietorship

asked Aug 2 '11 at 09:19
Frank Gf
1 point
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  • I've never heard of this "Business Trust with DBA" thing. Is that even a real thing? Anyway... can you add more information about what kind of business you plan to be doing... that probably makes a big difference. – Joel Spolsky 13 years ago

1 Answer


Foming a business trust is something I've never heard of with any of my contacts -- however if you're thinking of a partnership, then yes I understand where you are coming from. In general, a choice of entity is highly subjective and varies on too many factors to be answered in a forum, however below is a key consideration to keep in mind with a Trust vs. an LLC

A Business Trust -- if you mean a Partnership is where you and your friend would essentially own a business however each of you are 100% liable for any problems the business encounters regardless of who is at fault.

For example, a Partnership means each partner has full authorization to sign on loans/debts, and also do virtually any managerial decision. So say you put $100k in the trust and your friend is just providing an office. If your friend takes the corporate debit card to splurge on a brand new car -- you won't have any recourse to get that money back because in a Partnership each member is responsible for the faults of any other member.

An LLC is the route most people go today mainly because like a Partnership you have flexibility in management structure, however you also have liability protections from clients, and also other board members/partners provided you're not doing anything illegal.

An example, with an LLC, you can say that if you put 100k into the company, you handle all financials/loans while your friend can get a percentage of profits and voting rights, however they wont be free to go carte blanche with a corporate account.

LLC's are essentially a free for all structure, so you literally can structure the company to fit any scenario you want. It's important however to speak to an attorney and have them draft an agreement because LLC laws vary greatly by state, and also due to the flexibility it's a must to have an attorney handle the draft because they are familiar with all the loose ends and such.

answered Aug 2 '11 at 11:41
397 points

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