Forming an LLC (Limited Liability Company) in Pennsylvania is easy and affordable. The following are few procedural steps on how to start an LLC in Pennsylvania. LLCs can be formed in two ways, domestic and/or foreign. If you are planning to set up an LLC in states other than Pennsylvania, visit How to Start an LLC.
On this page, you’ll learn about the following:
- How to Start a Pennsylvania LLC
- After Starting your Pennsylvania LLC
- Why an LLC in Pennsylvania
- Top 3 Businesses in Pennsylvania
- Pennsylvania LLC Formation Review
How to Start a Pennsylvania LLC
Suppose you’re planning to invest in some profitable business or maybe about to set up your business in Pennsylvania. In that case, forming an LLC in Pennsylvania is the simplest form of business for you. For any owner, LLCs are better as it reduces the personal liability for company or business debt.
An LLC or a Limited Liability Company a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. This section gives you a step-by-step guide on How to Start an LLC in Pennsylvania.
Step 1: Decide a Name for Your LLC
If you are to start an LLC in Pennsylvania, the first thing you do is decide on a business or company name, and how to name your LLC may be tricky. Thus, you have the option to choose a name that complies with the Pennsylvania business naming requirements. It must also be easily searchable for potential clients. Here is a step-by-step guide to follow when naming your Pennsylvania LLC.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
What are the requirements when deciding a name for your LLC?
A name search is vital to make sure your business’ name is unique. Check the availability of your name with Business Entity Search on the Pennsylvania Secretary of State’s website. Reserve the name by completing the Name Reservation Request Form for Domestic Entities.
- Don’t include words that could confuse people about your company. Words like ‘treasury, state department.’
- You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
- As for a business website and your URL name, check if your name is still available for domain use with NameCheap.
Reserve a business domain
Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.
If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.
Step 2: Assign a Registered Agent in Pennsylvania
A registered agent, or business entity, is a person that will act or work on your behalf. This person or business will receive significant tax forms, legal forms, formation documents, any internal document, a notice of lawsuits, and other official government correspondence in Pennsylvania. Choosing a Pennsylvania-registered agent for service of process for your LLC is required.
Make sure your registered agents are residents of Pennsylvania. It could also be a business with an office address. Here are the recommended agent service provider list and employees for you:
Our Rating & Pricing
#1 TOP PICK
$49 + State Fees
$299 + State Fees
$399 + State Fees
These five LLC formation services are recommended agents’ registered services as they are authorized to conduct business in Pennsylvania. Compare them to check the best yet cheapest option for you. Besides, these professional service providers can guarantee you professional service to their potential customers because they have been in the business for years.
Step 3: File Certificate of Organization in Pennsylvania
A Certificate of Name Reservation is needed to file a Certificate of Organization, as other states call it. You need to make reports of this certificate with the Pennsylvania Secretary of State, which costs $125. You may file them online or by mail.
This Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Pennsylvania, like if it is a member-managed or managers-managed. LLCs with employees need to check the Pennsylvania government portal for the guidelines to hire employees.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Pennsylvania LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county.
How to File by Mail
If you prefer filing real-life forms for your Pennsylvania LLC registration, then you can download the Pennsylvania Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature.
Step 4: Create Your Pennsylvania LLC Operating Agreement
A limited liability company operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
Starting an LLC in Pennsylvania does not require you to have a limited liability operating agreement, but it is ideal to have one that contains all your details of business operation. Hence, it is recommended to have one liability company agreement.
Step 5: Filing a Pennsylvania LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes. It is like a Social Security number dedicated to a business.
It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for tax filing and to determine tax classification options.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
After Starting your Pennsylvania LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business account
- File Pennsylvania business permits & licenses
- Get liability for business insurance with coverage for employees
- File a Pennsylvania LLC annual report or biennial report
- Already existing LLCs that wish to operate in Pennsylvania must register as a foreign Pennsylvania LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember the upcoming filing deadline and filing fee, annual costs, or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Why an LLC in Pennsylvania
Pennsylvania State, also known as the country’s Quaker state, is considered one of the most innovative states of the country. This innovation is also shown through the great landmark structures made in the state, which is also great for starting a business. The state is home to plenty of skilled labor force and business opportunities. Apart from that, various business funding options and reductions in tax liabilities are beneficial to start an LLC in Pennsylvania.
Loan and grant programs
The first benefit of starting an LLC in Pennsylvania is the loan grant programs available in the state. Various programs started by the government in the state are very beneficial for new startups that lack investment. All an entrepreneur needs to have is an innovative idea or forefront technology usage with the help of which they can easily enroll in the loan program.
The below-mentioned loan programs fulfill all the basic assistance that the Pennsylvania LLC requires.
- The first one is the Alternative and Clean Energy program. A grant is provided to companies working to better the energy sources and improve the environment.
- After that, there is a Business opportunity Fund provided to a range of businesses only after examining their business idea and the possible outcomes.
- A High-performance Building program for an LLC grants to LLC for their construction purpose and sets up a high technology building that can cater to better business opportunities and jobs.
- One more important grant program is the Neighborhood Stabilization Program which helps the non-local residents to stabilize their business and personal housing space in the state.
Job Creation Tax Credit
When an LLC starts developing jobs and helps in the state’s economic development, then a tax credit is provided to them. It helps them to expand more and create more such jobs in the region. To gain eligibility for this tax credit, an entrepreneur has to create more than 25 jobs within three years of their LLC startup. If one gets the enrollment, they will get a maximum tax credit of $1000 per employee hired.
The Opportunity Zone of Pennsylvania
There are more than 300 areas in the state which the government has started considering as opportunity zones. When entrepreneurs start an LLC in Pennsylvania, especially in that area, they will get some tax credits or maybe deferment gains on the fund that one is investing in for more than 5 years. The government’s main motive is the economic development of backward areas by creating jobs and a business environment.
Top 3 Businesses in Pennsylvania
If you want to start an LLC in Pennsylvania, it would be best to get a complete knowledge of established industries. You must know all the top industries based in the state to understand the business environment than before better.
Anthracites coal which is known for its highest carbon percentage, is found only in Pennsylvania. Some of the state’s mining regions are Northumberland, Columbia, Schuylkill, etc., producing this coal. Other than coal, there are deposits of limestone also that are found in the state. The limestone is supporting a vast cement industry of the state.
With the help of all the large-scale mining and small mining products like petrol, gravel, and natural gas, the contribution of mining businesses is around $36.86 billion to state GDP.
The manufacturing businesses have helped the state by contributing around $93.75 billion, equivalent to 11.89%. Various businesses of metal and machinery production are employing more than 569,000 people of the state.
Along with that, there is remarkable support of manufacturing business to the exports sector. They have managed to export around $35.85 billion worth of goods around the world. Some food production industries for which the state of Pennsylvania is famous are:-
- Bakery products like cakes, cookies, bread, and beer.
- There is a massive production of canned mushrooms, potato chips, and ice cream in the state.
Since the year 1682, when the state was formed, agriculture’s role is crucial in the state’s economy. There are around 59,309 farms in the state, with the average size of the farm is 130 acres. Some of the crops that are grown in the state are:-
- 63.8% of mushrooms in the USA.
- The fifth-largest producer of grapes
- Livestock product like milk, eggs, and beef
Some small businesses that are well established in Pennsylvania are:-
- Property management
- Virtual Assistant
Pennsylvania LLC Formation Review
Time needed: 30 minutes.
Just to recap, here are the easy steps again when forming an LLC in Pennsylvania. Click on the steps in this list to read the full detail.
- Name your Pennsylvania LLC
The first thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
- Choose a registered agent
In Pennsylvania, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing LLC that extended business to another state.
For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign LLCs, you must have a Certificate of Good Standing.
The cost to form an LLC varies per state.
Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here.
This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.”
>Do not include words that could create confusion between your LLC and any government business.
>Words like ‘bank, attorney, university’ are restricted as well.
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.
Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the fees for business names may also vary per state.
As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website.
No. Never mail these documents or payments to the Secretary of State directly.
The reason you might need an E.I.N. is that it would help for three reasons:
>Opening a business bank account
>Filing and managing federal and state taxes
>Hiring employees or agents
You are not required a Social Security number when getting an EIN You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
International EIN applicants do not need an SSN to get an EIN.