When considering the many business forms available in Pennsylvania, an LLC is likely to stand out due to its tax advantages and flexibility. Nonetheless, there is a set process for forming an LLC in Pennsylvania that you must follow if you want your firm to be registered.
You will discover everything you need to know about how to form an LLC in Pennsylvania, including the cost, the steps, what to do once the business is up and operating, and how to dissolve it if necessary.
|State||Pennsylvania||New York||Maryland||Ohio||US Average|
|LLC Filing Fee||$125||$200||$100||$99||$130.38|
|LLC Annual/Biennial Fee||$70 (every 10 years)||$9 (every 2 years)||$300 (every year)||$0 (no fee and no information report)||$89.34 (every year)|
|Corporate Tax Rate||9.99%||6.50-7.25%||8.25%||0%*||5.60%|
|Nominal GDP per capita||$64,751||$93,463||$71,083||$62,517||$64, 773.08|
Before You Set Up An LLC In Pennsylvania
Before delving into the specifics of forming an LLC in Pennsylvania, it’s a good idea to look at the registering process. You will essentially walk through six steps, which are as follows:
- Choosing your LLC name
- Nominating or hiring a registered agent
- Certificate of organization filing
- Gathering/submitting any other required documents
- Drafting an Operating Agreement
- Getting an EIN
Pay attention to the required document section, as this can differ based on your type of business and your location.
It’s in your best interest to find out what the state and local requirements are before you start your filing process.
How Much Does It Cost To Start An LLC In Pennsylvania?
Knowing how much it is to start an LLC in Pennsylvania is crucial as you want to be financially prepared for your venture. First, it’s essential to cover the required forming costs.
There is a fee to file your Certificate of Organization with the Pennsylvania Department of State, which costs $125. Note that if you already have an LLC registered in another state that you’re expanding, you would just register the LLC As foreign. Unlike some other states, the cost here is the same $125 as local entity registration.
The next required cost is that of a registered agent, which typically runs anywhere from $50 to $300 annually. You can circumvent this by becoming your own agent or nominating someone else internally, but this is not recommended.
Based on your location and business nature, business licenses and permits may be required and could present mandatory costs. Check out the Pennsylvania Business One-Stop Shop to find out about state licensing requirements and find out about local license requirements from the clerk in the city that houses your LLC.
Optionally, you can reserve your LLC name for $70, register a business name other than your legal one for $70, get certified document copies at varying fees, or get a Pennsylvania certificate of good standing (Certificate of Subsistence) for $40. The Certificate of Subsistence is typically required by lending institutions and banks.
If you’re wondering how to start an LLC in Pennsylvania for free, you cannot do so. The minimum total can pay is 125 dollars. Assuming there are no permits or license costs, you forego all optional costs, and if you decide not to hire an external registered agent.
Typically, you can expect to pay about $200, which accounts for your Certificate of Organization filing fee and your registered agent cost. The total will vary as you add optional elements.
Steps To Start An LLC In Pennsylvania
Now it’s time to get a little more detailed about creating an LLC in Pennsylvania. Here are the six steps you need to bear in mind and how they work:
- Pick a Name for Your LLC – First, you need to choose your business name. This is not as easy as picking a name from a hat. No other Pennsylvania corporation, limited liability partnership, limited partnership, or limited liability company should be indistinguishable from yours by name.
Additionally, you cannot use reserved words such as “FBI” or “State Department” and the phrase “limited liability company” or one of its abbreviations must be a part of the name. It’s a good idea for you to check out the full list of Pennsylvania’s naming rules before getting started. After that, you also want to verify that the name you want is not currently in use.
- Find a Registered Agent in Pennsylvania – You must also submit your registered office address, which serves as the official mailing address for all legal state mail. Hiring an outside organization provides the benefits of compliance maintenance and keeping you informed of any steps you must take to prevent late penalties. You can choose one of the registered offices in Pennsylvania from a list.
It is important to note that you can appoint someone internally or act as the registered agent yourself. The agent just needs to be 18 years old, a company employee, and have a physical residence in the state. However, you lose the benefits of outsourcing this function.
|ZenBusiness – $49 + state fees to register your LLC (read review)|
|Incfile – $0 + $50 state fees to register your LLC (read review)|
- Certificate of Organization – Forming an LLC in Pennsylvania requires you to file a Certificate of Organization and docking statement via the Pennsylvania Department of State. This process can be carried out either with an online filing or via mail filing.
- Other Required Documents – depending on your location and the nature of your business, you may have a significant number of other required documents or none. For example, if your LLC falls under the medical umbrella, you would need to review and meet the requirements of the State Board of Medicine.
- Operating Agreement – By law, Pennsylvania doesn’t require that an LLC have an operating agreement in place, but taking the time to establish one makes for a smoother internal flow. It ensures that all owners are on the same page and ensures easier conflict resolution in the future if necessary.
- Get an EIN – Finally, you need to get your EIN. This is an acronym that translates to Employer Identification Number. The IRS assigns these nine-digit numbers to businesses, which helps it to identify them for tax purposes, as a Social Security number does for an individual.
Apart from this, an EIN is necessary for you to hire employees, file and manage your state and federal taxes, and open business bank accounts. The process is straightforward and can be done either online or by mail.
The Forms You Need To Register An LLC In Pennsylvania
The forms you need to register your LLC falls under mandatory and optional categories. Under the mandatory category, you have the following:
Depending on your unique needs, location, and business nature, other forms may be required, and these can include:
|Did You Know?|
Pennsylvania enacted its limited liability company (“LLC”) act on December 7, 1994. While other states use the verbiage “articles of organization,” Pennsylvania instead calls it a “certificate of organization.”Pennsylvania is the only state in which LLCs must file a decennial report (every 10 years).
LLC Taxes In Pennsylvania
Understanding taxation requires breaking things down to the state and federal levels of tax compliance.
At the federal level, LLCs are treated as pass-through entities, meaning members report their share of income on personal tax returns. However, should the members decide to have the LLC taxed differently, such as a C corporation would, for example, a flat 21% federal corporate tax is imposed.
The state of Pennsylvania also typically treats LLCs as pass-through entities unless a different tax structure is chosen. However, if your LLC has employees, it must withhold taxes from their wages and pay unemployment taxes. Additionally, the state requires a Certificate of Annual Registration to be submitted by April 15 annually. The cost is $560 multiplied by the number of LLC members.
How Long To Form An LLC In Pennsylvania
Starting an LLC in Pennsylvania is going to run a minimum of four weeks, considering this is the processing time after you have submitted your documentation online.
If you went the mail route, then you could be waiting for up to six weeks instead.
How Much Does It Cost To Run An LLC In Pennsylvania?
Apart from the formation step, you want to consider how much it’s going to cost you to run the LLC after that. Annually, the only mandatory concern is typically the fee for your registered agent, which tends to fall between $50 and $300.
There is no annual reporting requirement in Pennsylvania as the state instead opts for a decennial report. Therefore, every decade, you will need to budget $70 to file it.
Any other costs would either be optional or specific to the nature and location of your business, so you would need to factor these in and add them after that.
What To Do After Formation?
While forming an LLC is a significant accomplishment, it is only the beginning of your business’s journey. If you want to run a successful business, you’ll need to take care of a few more details. They are as follows:
- Create a logo – A logo associates a visual element with your business brand. It should be attractive and easily distinguishable from others. You may want to hire a professional graphic artist for this one.
- Build a website/eCommerce store – In today’s world, it’s almost impossible for a business to survive without an e-commerce store for its products and services. At the very least, you need to have a website that you can direct people to. Again, get this professionally done.
- Bank account – Establish a business bank account to assist in proper fund maintenance. It’s recommended that your day-to-day account is separated so you can easily budget for and handle operational expenditure.
- Business insurance – Insurance helps you manage your risk factors, which means you can stay focused on growth. General liability insurance and workers’ compensation insurance should provide the coverage you need. Other insurance types for your motor vehicle fleet or professional liability, for example, may be needed in specific cases.
- Decennial reports – You don’t have to worry about annual reporting with a Pennsylvania-based LLC, but you should ensure that your decennial reports are prepared and filed on time.
Resources To Start A Successful LLC In Pennsylvania
Here are some useful links to help you start an LLC in Pennsylvania:
- Business Name Uniqueness Validation
- Certificate of Organization
- Name Reservation Form
- Pennsylvania Business One-Stop Shop
- PA-100 Business Entity Registration Form
- Foreign LLC
Start Marketing Your LLC In Pennsylvania
Marketing is a non-negotiable element of any business, even beyond the LLC structure. You must stand out to get eyes and ears on your business, which translates to sales. Your best bet is to have an internal marketing team or outsource the function to a reputable business.
Some of these essential bases to cover are your social media presence, press releases, brand strategy, market research, and feedback channels.
How To Dissolve An LLC In Pennsylvania
Pennsylvania’s unique tax requirement means you must fill out the Department of Revenue’s DOR Form REV-181 before you can dissolve your LLC. Essentially, it’s in place to ensure that all required state taxes are paid before you receive clearance.
Beyond that, you can refer to your operating agreement or Certificate of Organization to go through the established internal dissolution process.
You will also have to file the Certificate of Dissolution to complete the dissolution process.
The information above provided all the essentials you need to know about how to start an LLC in Pennsylvania. This includes cost information, the steps, all required forms, how taxation works, the lead time for approval, what you should do after the LLC is established, and how dissolution works.
Good luck with your Pennsylvania LLC.