business-registrationI got a call from my DBA State registration service saying my Partnership Information was incorrect for my EIN. Can you please point me towards some corrective actions?
Background: A friend of mine is in the process of starting a business. We are going into a 50/50 Partnership (not LLC) and are going to running the business under a fictitious name, let’s call “Sweet Business”.
I placed the following key pieces of info for my EIN Application:
Partnership Information
Legal Name: Sweet Business
Responsible Party
Name: My Name
Questions:
What should my Legal Name be for our partnership?
Do I send a letter to the IRS to ask for this correct?
Can I continue to do business while this error exists?
A “DBA” is a fictional name - another name for a real entity.
An EIN is an “Employer Identification Number” that you obtain from the IRS (https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers-eins). An EIN can be your SSN or you can apply to have one for yourself as a “sole proprietor” or for a corporation/partnership.
As such, the EIN must have a “responsible party” (https://www.irs.gov/businesses/small-businesses-self-employed/responsible-parties-and-nominees) - a natural person or corporation (that must by some means be owned/controlled by a natural person) that can respond to inquiries and make sure taxes are paid.
You need to notify the IRS (by applying) to get an EIN since they issue them. You do not need this for a DBA in most (if not all) states. A DBA generally can be established with your personal information. If you intend for your responsible party for the DBA to be a partnership, then you should probably apply for an EIN and list the partners as responsible parties - then send that information to the state for your DBA.
Some states will allow you to operate while errors like this exist. Most really don’t care as long are you are “acting in good faith” and you are not operating under an already registered DBA, trademark, etc. Primarily the point is to make sure you are not violating someone’s right to use the name prior to your use of it. Secondary concerns have to do with fraud, consumer rights, etc. (in the event you are operating a scam, it’s likely you won’t register and in doing so, you violate the law - which makes prosecution much easier).
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