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Corporation Wants Four DBAs Under One Account
Answer by Mary Beth Guard and Ken Golliher, BOL Gurus
Guru Bios
Question: We have a corporation that has four DBA's under the same corporation name, and they have a business checking account that they would like to use all four DBA's on the same account. They do not want to open four separate accounts. Is this legal?
Answer by Mary Beth Guard: Actually, it may not be a problem. The acronym "dba" simply stands for "doing business as." If a corporation, or other legal entity, wishes to do business under another name, most states would require the entity to file a fictitious name certificate or trade name certificate with the appropriate state authority. That gives the business the legal authority to do business under the additional name.
One example would be a corporation that owns four stores. For whatever reason, it has not made each store a separate legal entity. All stores are merely part of the same corporation, but each of the four bears a different name and customers will be making checks payable to each of those names. Obviously, if you have a corporate customer, Funky Fashion, Inc., you're not going to accept for deposit into its account checks payable to other names, such as Darling Dresses, UNLESS the corporation has registered Darling Dresses as a trade name.
Since trade names are essentially marketing devices, and don't represent separate independent businesses (or separate TINs or tax returns), there's really no reason a company couldn't use several different trade names on a single account. As a practical matter, however, you may face obstacles in styling the account with multiple DBAs and accommodating it on your system.
Answer by Ken Golliher: As Mary Beth explained, there are no legal prohibitions, but there are operational issues that may come back to haunt you. It's also an exception that may confuse standard teller training; i.e. checks should be deposited into accounts that bear the same name. There is also the issue of how the bank will become aware of and document "additional" DBAs as the customer expands into future enterprises.
Because of the training issue and the simple fact that the customer can tell the drawer of the check who they want the payee to be without the bank having to make the adjustment, I would not allow it. If the choice was not mine to make, I would require that the customer endorsement applied to each check reference 1) the DBA name, 2) the corporation and 3) the account number.
First published on BankersOnline.com 8/21/06
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