The Keystone State has a rich history of laying the foundation stone of the USA. Pennsylvania has witnessed notable business revolutions – from the invention of the first computer to Hershey being the chocolate capital of the world; PA has seen it all. It is now home to diverse business sectors such as manufacturing steel, food processing, etc.
A business needs proper structure to thrive; forming an LLC in PA is one of the easiest and fastest ways to do so. An LLC acts as the backbone for small to medium-sized businesses.
Some points to consider before setting up an LLC in PA are:
- It is a legal structure that separates personal assets from business liabilities.
- It merges the benefits of a corporation and a partnership. Members in an LLC enjoy the same legal protection as shareholders in a corporation with minimal formalities.
- Low filling and maintaining cost
- Provides flexibility in tax and management structure
- Tax advantages
Start an LLC in PA in five simple steps
Step 1: Choose a Name for your PA LLC
Choosing a unique business name for your LLC is the first step in the LLC formation. The name of your LLC must follow the Pennsylvania naming guidelines and be easily accessible to potential customers.
Consider the following points:
- The name of your PA LLC must have the words “Limited Liability Company,” “Limited,” or “Company,” or its abbreviations such as “L.L.C.,” “Ltd.,” or “LLC”.
- The name must be unique on the record with the Pennsylvania Secretary of State.
- The name cannot contain words that imply a corporation, such as “corporation” or “incorporated,” or abbreviation of these words.
- The name cannot contain words such as Federal, Bureau, etc., that show affiliation with the government agency.
- The name cannot include state-restricted or prohibited words such as pharmacy, engineer, etc. unless your LLC has permission to operate as such or a licensed individual is a member of the LLC.
- The words like college, insurance, trust, etc., must get clearance from respective departments before being used.
- To look for an original name, do a business entity name search with the Pennsylvania Department of State to avoid any confusion or similarity with existing entities in the state.
- (Optional) You may want to do a search for the desired web domain name. This is not necessary but advisable.
Note: You can reserve a name by filing the Name Reservation/Transfer of Reservation (Form DSCB:15-208) with the Pennsylvania Department of State. The filing fee is $70, and the name gets reserved for 120 days. You can file online or via mail.
FAQ
- How can I register an assumed/fictitious name?
To operate your business with a name other than the one registered in your Certificate of Organization, you must register a fictitious name, or an assumed name, or a DBA with the Pennsylvania Department of State. File the Registration of Fictitious Name by paying a $70 filing fee. This can be done online or via mail.
Step 2: Appoint a Registered Agent
A registered agent is a legal contact bridge connecting your LLC with the State. Any individual or business entity legalized to do business in PA can become a registered agent if they have an in-state physical address. PO Box alone cannot be counted as an address.
It is mandatory for all LLCs in Pennsylvania to have a registered agent that will be available during conventional business hours. A registered agent is entitled to accept legal notices and service of processes on behalf of your company. Here is a list of Commercial Registered Office Providers.
Benefits of having a registered agent:
- Available during traditional business hours
- Filters junk mails from necessary documents before forwarding them to you
- Accepts lawsuits on behalf of your company
FAQ
- Can I be a registered agent for my LLC?
Yes, you can be a registered agent for your LLC. In fact, anybody from your LLC can be a registered agent if they meet all the requirements.
Step 3: File a Certificate of Organization for your PA LLC
A Certificate of Organization must be filed with the Pennsylvania Department of State to officially register your LLC in PA. This certificate contains basic details about your LLC that legally establishes the company in the state.
The details required for the Certificate of Organization are:
- Name of the LLC
- Name and address of the registered agent
- Name of every organizer
- Effective date of Certificate of Organization
- For restricted professional companies (if applicable)
- For Benefit companies (if applicable)
- Signature of organizer(s)
A Docking Statement has to be submitted along with the Certificate of Organization while filing via mail. This document registers your LLC with the Pennsylvania Department of Revenue by generating a unique Revenue ID Number.
The details required for the Docking statement are:
- Name of entity
- Name and address of a person responsible for initial tax reports
- Description of the entity’s business activity
- Employer Identification Number/Federal Tax Identification Number (EIN/FEIN)
- Date of Fiscal Year End (FYE)
The filing fee is $125 and can be filed online or via mail.
File online: Certificate of Organization
File via mail: Certificate of Organization and Docketing Statement – New Entity
Mail to:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
PO Box 8722
Harrisburg, PA 17105-8722
Note: There is no PA LLC filing fee for a United States veteran or active reservist.
FAQs
- How much does a PA LLC cost?
A decennial report is to be filed by domestic LLCs once in a decade whose filing fee is $70 in addition to the one-time filing fee of $125.
- How long does it take to get an LLC in PA?
The PA LLC takes a couple of weeks to process.
- What is a foreign LLC? How to register a foreign LLC in PA?
An LLC that has spread its operation in states other in addition to the domestic state is known as a foreign LLC in the other states.
To register a foreign LLC in Pennsylvania, file the Foreign Registration Statement with the Pennsylvania Department of State. A Docketing Statement – New Entity has to be filed along with the Foreign Registration Statement. The filing fee is $250.
- How to obtain a Certificate of Good Standing in PA?
A Certificate of Good Standing, known as Certificate of Subsistence in PA, shows that your LLC is compliant with the state regulations. This can be requested online or through the mail from the Pennsylvania Department of State. The fee is $40 for both modes.
Request Certificate of Subsistence: Download form
Mail to:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
PO Box 8722
Harrisburg, PA 17105-8722
Step 4: Drafting a PA LLC Operating Agreement
An operating agreement clearly states the governing principles of your LLC. It outlines every detail required for the smooth functioning of your company. It is an internal document that states fundamental points such as profit and asset allocation, voting rights of members, etc.
An operating agreement is not required by the PA government, but it is advised to draft one for obvious reasons. A well-structured operating agreement leaves no room for disharmony among the members. Each member must have a signed copy of this document. In case of strife, this agreement can be looked up to settle any dispute.
The operating agreement can have the following points:
- Management structure
- Voting right for decision-making
- Membership interest
- Tax classification
- Profit and loss allocation
- Indemnification
- Dissolution process
FAQ
- What is membership interest?
Membership interest states the ownership stand of a member in the LLC. It includes voting rights, profit allocation, and the right to receive information in the interest of business matters.
Step 5: Get an EIN
Employer Identification Number, commonly referred to as EIN, is a unique nine-digit number issued by the IRS. The IRS uses this number to legally recognize your LLC and keep tax records of employers. Getting an EIN is easy and free of cost.
Getting an EIN broadens business opportunities – open a bank account, apply for a business loan, get a credit card, file federal and state taxes, hire employees, etc. One of the major benefits of EIN is, it keeps your Social Security Number private. You can apply for an EIN online, via mail, or by fax.
Apply for EIN online
Apply via mail or fax: Download Application for EIN (Form SS-4)
Mail to: Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
FAQs
- How much time is required to get an EIN?
You would get an EIN immediately if applied online. If you applied via mail, it might take about 4-8 weeks, whereas the fax arrives in 4-7 days.
- Do LLCs pay taxes in Pennsylvania? If so, what are the tax filing requirements for a PA LLC?
Yes, LLCs are liable to pay taxes in PA. By default, the IRS taxes an LLC as a sole proprietorship for a single-member LLC, whereas, for multi-member LLC, it is taxed as a partnership unless opted for some other option. Based on the number of members, the IRS will tell you about the tax options available for your LLC.
Before choosing a tax option, we recommend speaking to a tax professional. A lot of factors influence your tax structure, type and location of the business, number of members, etc. Every detail must be thoroughly explored before selecting the tax status for your LLC. Refer to the Tax information sub-section in the Pennsylvania Department of Revenue website for more details.
- Which license and permits are required for business in Pennsylvania?
Different licenses and permits are required to operate a business in PA based on the location and type of your business.
For getting a federal license, visit the official US SBA site to Apply for licenses and permits.
For information regarding state licenses, you may have to contact an agency to know the license and permit requirements for your business.
For a local license, contact your local county clerk. For verification of license, visit the Pennsylvania Licensing System Verification service.
Filing an annual report
Only Foreign LLCs and PA Professional LLCs are required to file an annual report. A Certificate of Annual Registration has to be filed with the Pennsylvania Department of State Corporation Bureau every year before 15th April. This can be done online or via mail.
File online or Download the Certificate of Annual Registration form.
Decennial report
Domestic LLCs are required to file a decennial report once every ten years (in the years ending with numeral “1”, such as 2021, 2031, etc.) with the Pennsylvania Department of State. This can only be filed via mail. The filing fee is $70 (Nonrefundable), payable to the PA Department of State.
Download Decennial Report of Association Continued Existence (Form DSCB:54-503).
Mail to:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
PO Box 8722
Harrisburg, PA 17105-8722
Dissolve an LLC in PA
Refer to your operating agreement for the process to dissolve the LLC. The dissolution methods must be mentioned in it. If not, follow the below procedure:
- The first step is to acquire tax clearance from the Department of Revenue and the Department of Labor and Industry. To obtain a tax clearance certificate, file the Application for Tax Clearance Certificate with the Department of Revenue and the Department of Labor and Industry. It may take a month to get a tax clearance certificate. This certificate states that you have paid all the taxes. Applying for a tax clearance certificate is free of cost.
- Get consent from the members by conducting a unanimous voting process. Record the votes.
- Wind up
After dissolution, wind up your business activities. Notify creditors about the dissolution of your LLC. The winding up process includes the following tasks:
- Pay off creditors
- Make provisions to pay future claimants
- Discharge liabilities and obligations of the LLC
- Distribute assets among members or prior members as per contract
- File Certificate of Dissolution
To officially dissolve your LLC, file the Certificate of Dissolution with the PA Secretary of State. The form must include the following details:
- Name of the LLC
- Name and address of the registered agent
- Authorized signature
The tax clearance certificate must be attached along with the Certificate of Dissolution. The filing fee is $70 and can be filed via mail. The processing time is about a week. Download Certificate of Dissolution form.
Read the instructions carefully.
Mail to:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
PO Box 8722
Harrisburg, PA 17105-8722
FAQ
- How to dissolve a foreign LLC?
If your LLC was formed outside PA, you will have to file the Statement of Withdrawal of Foreign Registration with the Pennsylvania Department of State to dissolve it. A tax clearance will be required, just like a domestic LLC.
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