Choosing between a DBA and an LLC in California comes down to one trade-off: a DBA is a cheap name registration that leaves your personal assets exposed, while an LLC is a separate legal entity that shields you from business debts but costs at least $870 to start and $800 every year after. If liability worries you, the LLC is the answer. If you just need to operate under a name other than your own and want to spend as little as possible, the DBA does that and nothing more.
What Each One Actually Is
A DBA, short for “doing business as,” is a registered alias. It lets you operate under a name other than your legal name, but the law still treats you and the business as the same person. A DBA is a name tag. It changes nothing about your legal exposure.
An LLC is recognized under California law as “an entity distinct from its members.”1California Legislative Information. California Corporations Code 17701.04 Business debts and lawsuits belong to the company, not to you. Creditors of the LLC can reach only the assets the company itself owns.2California Secretary of State. Starting a Business – Entity Types
Liability: Where the Two Really Separate
If someone sues your DBA or the business can’t pay what it owes, creditors can go after your personal bank accounts, your car, and your home. There is no legal wall between you and the business, because under a DBA there is no second entity to begin with.
With an LLC, that wall exists, but it holds only as long as you treat the LLC as genuinely separate from yourself. California courts can strip away liability protection if you blur the line. The most common way owners lose it is by mixing personal and business money in the same accounts. Using company funds to pay personal expenses, or covering business debts out of your personal checking, hands creditors an argument that the LLC is just a shell. Separate bank accounts, your own financial records, and timely state filings are the baseline. Skipping them is where owners get into trouble.
Professionals Who Cannot Form an LLC
Before you weigh costs, check whether an LLC is even available for your work. California prohibits LLCs from providing professional services that require a state license.1California Legislative Information. California Corporations Code 17701.04 That affects attorneys, doctors, dentists, architects, accountants, psychologists, nurses, pharmacists, veterinarians, physical therapists, and several other licensed fields. If your work requires a license under the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act, your corporate option is typically a Professional Corporation under the Moscone-Knox Act.3California Legislative Information. California Corporations Code Part 4 – Professional Corporations A nonprofessional occupational license, such as a contractor’s or cosmetology license, doesn’t block you from forming an LLC.
What a DBA Costs
A DBA is dramatically cheaper to set up. County filing fees for a Fictitious Business Name Statement run roughly $26 to $50, depending on the county. California also requires you to publish the statement in a newspaper of general circulation, once a week for four consecutive weeks.4California Legislative Information. California Business and Professions Code 17917 Publication in a community paper adds anywhere from $30 to $150, though major metropolitan papers can charge several hundred dollars.
The DBA stays valid for five years.5Solano County. Fictitious Business Name There’s no annual tax, no biennial filing, and no state agency checking in on you between renewals. One real consequence of letting it lapse: without a valid Fictitious Business Name Statement on record, you cannot sue in any California court on a contract or transaction conducted under that business name.6California Legislative Information. California Business and Professions Code 17918
What an LLC Costs
Forming an LLC costs $70 for the Articles of Organization filed with the Secretary of State.7California Secretary of State. Limited Liability Companies – California On top of that, you owe the $800 annual franchise tax for your first tax year. A first-year exemption existed for LLCs formed between 2021 and 2023, but that window has closed. LLCs formed in 2026 pay from day one.8California Franchise Tax Board. Limited Liability Company Minimum startup cost: $870 before you spend a dollar on operations.
The $800 franchise tax is due by the 15th day of the fourth month of each tax year, regardless of whether the business earned anything.9California Legislative Information. California Revenue and Taxation Code 17941 It keeps accruing every year until you formally cancel the LLC with the Secretary of State. Stopping business activity doesn’t end the obligation. Owners who walk away from an LLC without canceling it sometimes discover years of unpaid tax bills and penalties waiting for them.
If your California-source income reaches $250,000, you owe an additional fee on top of the $800:10California Legislative Information. California Revenue and Taxation Code 17942
- $250,000 to $499,999: $900
- $500,000 to $999,999: $2,500
- $1,000,000 to $4,999,999: $6,000
- $5,000,000 or more: $11,790
Every two years, you also file a Statement of Information with the Secretary of State to update your managers, members, and business address.11California Secretary of State. Instructions for Completing the Statement of Information Form LLC-12 Missing that deadline triggers a $250 penalty collected by the Franchise Tax Board and can lead to suspension of your LLC’s right to do business in California.12California Franchise Tax Board. Common Penalties and Fees
Taxes
By default, a single-member California LLC is taxed as a sole proprietorship, and a multi-member LLC is taxed as a partnership. Profits pass through to the members’ personal returns. A DBA operated by a sole proprietor works the same way federally; the IRS doesn’t distinguish between a sole proprietorship with a DBA and one without.
Where an LLC offers flexibility a DBA cannot is in electing a different tax treatment. An LLC can file IRS Form 2553 to elect S corporation status. That election can reduce self-employment taxes for owners who pay themselves a reasonable salary, because only the salary portion is subject to payroll taxes while distributions above that salary are not. Making the election in California requires filing Form 100S with the Franchise Tax Board.13California Franchise Tax Board. LLC Treated as a Corporation A DBA has no entity structure to support such an election. You’re limited to sole proprietorship taxation.
Name Rights
A DBA does not give you exclusive rights to the business name. Multiple businesses across different counties can register the same fictitious name, and the registration doesn’t function as a trademark. If protecting the brand name matters, a DBA alone won’t do it.
An LLC name must be distinguishable from every other LLC, corporation, and limited partnership already registered with the Secretary of State.14California Legislative Information. California Corporations Code 17701.08 That statewide screening blocks another LLC from registering an identical or confusingly similar name. It isn’t a trademark; someone could still use a similar name as a DBA or in another state. But it’s a meaningful layer of exclusivity a DBA doesn’t give you.
Which One Fits Your Situation
A DBA tends to be the right call when you’re a sole proprietor doing low-risk work, want to operate under a trade name, and can’t justify $800 a year for liability protection you don’t realistically need. Freelancers testing an idea, side businesses, and simple service work often sit here.
An LLC tends to earn its cost when your work carries real liability exposure, when you have personal assets worth protecting, when you want the option to elect S corp taxation later, or when you want some claim to your business name across the state. The $870 to start and $800 a year is the price of putting a legal entity between your business and your personal finances. Whether that price is worth paying depends on what you’d lose if the business got sued tomorrow.