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  1. #1
    Join Date
    Apr 2008
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    3

    Default D/B/A Conflict

    I was an employee (sales and art) of a company that had an existing dba name. The company fell apart (but didn't properly dissolve). The owner abandoned it and the financial officer quit. I saw an opportunity to run this company correctly and I started a new corporation in 2002 using the same dba name (continuity for some of the same customers that were mine as a a salesman). I am currently in good standing and doing very well, but found out that there is a 941 tax debt on the old corporation from the year 2000 and that the corporate taxes weren't filed. Can I be linked to that 941 penalty and held responsible by the IRS, or is that strictly the responsibility of the owner and the financial officer of the old corporation I worked for?

  2. #2
    Join Date
    Jan 2008
    Posts
    1,948

    Exclamation Re: Dba Conflict?

    What state?
    In CA (for example) you can not just use a dba. You file a statement that tells the government who the owner's are of said business. You also need to publish the information in a newspaper for a specified period of time. In order to have a bank account under a dba, you need to have a FEIN - also to let the government know who you are. There is also the re-sale certificate. If you are collecting sales tax you are sometimes asked to have a security deposit on hold to cover your first quarter if you have never collected taxes before...
    The list goes on and on.

    Using someone else's dba can get you in serious trouble. I suggest you get a lawyer pronto or your business will fall apart too.

  3. #3
    Join Date
    Apr 2008
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    3

    Default Re: Dba Conflict?

    Maryland

    I have my own FEIN number which, of course, is different than the previous company. I am incorporated and in good standing, using the same dba as the prior failed business.

  4. #4
    Join Date
    Mar 2008
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    1,995

    Default Re: D/B/A Conflict

    I bought a well established business of over 50 years. As it turned out, the business had a $1 million dollar lawsuit against it the day I took over, and was sued for other things after I took over.

    During the purchase of the business, I was told to establish a corporate shell, such as XYZ, LLC, under which I would establish a DBA. For instance, XYX, LLC, DBA ABC Tire company. Say the business I took over was the ABC Tire company.

    My attorney advised me to make the name slightly different, so I did a "DBA called the ABC Tire & Auto" company. Turned out the attorney gave me good advice. Prior owners apparently did this also, so it was called the ABC Tire & Rubber Company, ABC Tire RIP (owners initials), and ABC Tire Inc.

    There were summons to the ABC Tire company which I simply ignored, as my attorney advised me I have no obligation to answer the summons of others. On the other hand, if my DBA was exactly the same as the previous owner, then I have to go to court to explain that I am this ABC Tire company with this EIN number, not that other ABC Tire company with that EIN number. The summons were issued to the DBA, not the corporate shell, and not based on an EIN#.

    This served us well as customers continue to refer to us as the ABC Tire Company, we answered the phones that way. Many commercial customers continue issuing checks to us as the ABC Tire company, and we deposited to our account, ABC Tire & Auto, even though we advised many to update the name. No Bank teller ever complained about this in all the years we did this.

    We even took advantage of this. We received "income executions" to garnishee employee wages but it was issued to the ABC Tire Company, and we wrote back saying the ABC Tire Company is out of business, we are not the "ABC Tire Company" and we never heard back from them again.

    So, make the name similar enough, so as not to confuse customers, but not exactly the same to keep yourself out of trouble. If you make the first part of the name the same, you can answer the phones just like the previous business, but ignore summons because you are NOT that company..

  5. #5
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: D/B/A Conflict

    If we say the business"was the ABC Tire company" and we say that you were sued in the actual name of your company, then your attorney was a blithering idiot. d/b/a's don't change the underlying name of the business - they're an alternate name, not a replacement name. If, on the other hand, you're following all state laws in relation to your use of the d/b/a, and you are sued by a law firm that can't be bothered to check the corporate records and sue the correct entity, then those lawyers are blithering idiots.

  6. #6
    Join Date
    Mar 2008
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    1,995

    Default Re: D/B/A Conflict

    Quote Quoting aaron
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    If we say the business"was the ABC Tire company" and we say that you were sued in the actual name of your company, then your attorney was a blithering idiot. d/b/a's don't change the underlying name of the business - they're an alternate name, not a replacement name. If, on the other hand, you're following all state laws in relation to your use of the d/b/a, and you are sued by a law firm that can't be bothered to check the corporate records and sue the correct entity, then those lawyers are blithering idiots.
    In our line of business, we're required NY state law to post the corporate name, dba name, on a sign with the required lettering in a certan size, outside the building.

    Even so, I've more often get summons under the dba name, "ABC Tire & Auto", rarely under XYZ, LLC. Why, I don't know.

    Then, other summons come under the prior owners dba, and we don't answer those.

    What my lawyer said was "don't make my DBA "ABC Tire", which I was going to, but make it slightly different. So I added "& Auto" to it.

    That's all I'm saying.

    And we got "income executions", at least two of them, we got them coming in under the prior owners dba name, which is the name in the phone book, and I'm guessing that's where some attorney's get their information from.

    Blithering idiots?? Maybe.

    It seems the original poster mentioned he made his DBA the same as the prior management, and my attorney specifically told me never never do it that way.

  7. #7
    Join Date
    Apr 2008
    Posts
    3

    Default Re: D/B/A Conflict

    SChinFChin is correct, I used the exact same D/B/A as the former company I worked for. I, unfortunately, didn't have the foresight or proper advice to not use the same D/B/A (although it seems obvious now). I am incorporated under a different name and FEID# though. The potential debt is a 941 withholding tax debt from the IRS. I'm not sure if I will be responsible for that debt even though I wasn't an officer, owner, nor had any financial responsibilities.

  8. #8
    Join Date
    Mar 2008
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    1,995

    Default Re: D/B/A Conflict

    Quote Quoting JW128
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    SChinFChin is correct, I used the exact same D/B/A as the former company I worked for. I, unfortunately, didn't have the foresight or proper advice to not use the same D/B/A (although it seems obvious now). I am incorporated under a different name and FEID# though. The potential debt is a 941 withholding tax debt from the IRS. I'm not sure if I will be responsible for that debt even though I wasn't an officer, owner, nor had any financial responsibilities.
    I wouldn't worry about the 941 debt as the IRS would be sending notices to the company in it's "corporate name", identified by it's unique EIN#, rather than the DBA. We deal with Federal, State, and local entities via our "corporate name".

    The problem with DBA confusion is mainly with retail businesses. and retail customers, partcularly if you operate from the exact same location, using the exact same name, and the store signs stay the same. If a customer bought merchandise in January, had a problem, come back in March, the exact same store is there, it's hard to convince them that the new owner has absolutely nothing to do with it.

    This later problem is what my attorney was mainly concerned about.

    Further complicating this is that some businesses like mine requires a state license, where a new owner temporarily uses a few months during a changover, so it's important that the new owner issues it's own invoices and receipts from the start under his own slightly different DBA, so at least, indication that something has changed.

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