Having an LLC in PA is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Pennsylvania.
On this page, you’ll learn about the following:
- How to Start an LLC in Pennsylvania
- After Starting your Pennsylvania LLC
- Pennsylvania Foreign LLC
- Why an LLC in Pennsylvania
- Pennsylvania LLC Formation Review
How to Start an LLC in Pennsylvania
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in PA.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Pennsylvania, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Pennsylvania business naming requirements. Once you pass through them, you can successfully name your business.
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.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Pennsylvania. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Pennsylvania. The cost for a name reservation is $70.
Important Quick Links:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
P.O. Box 8722
Harrisburg, Pennsylvania 17105-8722
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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:
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Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Pennsylvania. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service 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. LLC cost in Pennsylvania includes other taxes and fees. You may file them online or by mail.
This Pennsylvania 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. Visit the Pennsylvania Certificate of Formation to get the online registration process.
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.
Mail To: Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
P.O. Box 8722
Harrisburg, PA 17105
Step 4: Create Your Pennsylvania LLC Operating Agreement
An 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.
When it comes to an LLC operating agreement Pennsylvania does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Pennsylvania LLC later.
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 and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need 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.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Pennsylvania LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
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 bank account
- File Pennsylvania business permits & licenses
- Get liability for business and professional liability 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 Pennsylvania foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Pennsylvania Foreign LLC
To register a Pennsylvania foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Pennsylvania. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Pennsylvania Foreign LLC to know more about having a foreign LLC.
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: 5 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 be unique, easy to find, and available in the state.
- 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.
If you are a resident of Pennsylvania, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $125 (domestic LLC) and $125 (foreign LLC), LLC costs in Pennsylvania include $70 for Decennial Reports every 10 years. LLCs are liable to pay sales tax of 6% every year
It takes 2 to 3 business days to get an LLC in Pennsylvania if you file it online or via mail.
Every year all the LLC have to submit an Annual Report and pay $70 to the Pennsylvania Secretary of State every 10 years and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Pennsylvania at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.