STEP 1: Name your LLC
This is the first and most important step in starting your LLC. Do some research to make sure the name you choose is suited to your business venture and is easily searchable for potential clients.
- Follow the naming guidelines: Your entity name must contain the words Limited Liability Company or the abbreviation L.L.C. or LLC. Restricted words require additional paperwork (e.g. Banc, Bank, Banque, etc) and/or licensed individuals (e.g. Doctor, Engineer, etc). to be part of the LLC. Prohibited words are those that would confuse the name of your LLC with a federal or state agency e.g. FBI, Secret Service, Treasury etc.
- Is the name available in Pennsylvania? Make sure the name isn't already taken by doing a name search on the State of Pennsylvania website.
- Is the URL available? Check to see if the name of your LLC is available so that you can reserve your domain name. Even if you don't plan to make a website today, you may want to buy the domain name in order to prevent others from acquiring it.
STEP 2: Choose a Registered Agent
You are required to nominate a Registered Agent for your Pennsylvania LLC
What is a Registered Agent? A registered agent is a person or business nominated by your company to officially receive and send papers on your behalf including annual state filings.
Who can be a Registered Agent? The registered agent must be a resident of Pennsylvania or a corporation authorized to transact business in Pennsylvania. You may elect an individual within the company including yourself.
Click here to find out why you may want to use a registered agent service.
Recommended: INCFILE.COM provides free registered agent service for the first year as part of their LLC Packages.
STEP 3: Certificate of Organization
How to register your LLC with the State of Pennsylvania
File the Certificate of Organization for a Domestic LLC
Download the PDF:
Certificate of Organization - Domestic Pennsylvania LLC
Fee: Nonrefundable $125, payable to Commonwealth of Pennsylvania.
Follow the instructions on the PDF.
Important: If you're expanding your existing LLC to the State of Pennsylvania you are forming a Foreign LLC. Learn how.
STEP 4: Create an Operating Agreement
What is an Operating Agreement? An operating agreement is a legal document outlining the ownership and operating procedures of your LLC. This agreement allows you to form financial/working relationships with co-owners into an established system suitable to your business. An Operating Agreement is not required to form an LLC in Pennsylvania, but is good practice to have one.
Recommended: We provide a free sample operating agreement however we recommend getting one professional drafted by a lawyer, especially if you are starting a multi-member LLC.
STEP 5: Obtain an EIN
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity. It is essentially a social security number for the company.
Why do I need an EIN? An EIN is required for the following:
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done by one of two ways:
Important: An EIN is obtained after the LLC is formed. Obtaining an EIN registers the company for federal taxes.
1. Separate Personal Assets from the LLC
Opening a business bank account is an important first step, as it:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Getting a business credit card allows you to:
- Separate personal and business expenses.
- Build your company's credit history, which can be useful to raise money for your company later.
Proper accounting for a business can avoid future complications and is important for many reasons, including:
- Tracking the financial wellbeing of your business, including assets, expenses and income.
- Also makes filing your tax returns a lot easier.
Bookkeeping and accounting can be daunting to many people. The right accounting software can make the process simple and easy for most business owners.
Recommended: Try Xero Small Business Accounting Software for free, with an easy mobile app to manage your finances on-the-go.
3. Register Your LLC for Pennsylvania State Tax
Do I need to register for State taxes?
- If you have hired Employees in Pennsylvania, you will need to register for Pennsylvania payroll tax, which includes:
- State income tax withholding on behalf of your Employees
- Unemployment Compensation Tax
- If you are selling a Product in Pennsylvania, you will need to register for Pennsylvania sales tax. Your sales tax registration needs to be renewed every 5 years.
Register for Pennsylvania payroll tax and sales tax by filling out Pennsylvania’s Online Business Tax Registration (PA-100)
** Additional state taxes may apply depending upon your business or industry. More information about Pennsylvania business taxes can be found here
4. Obtain Business Licenses & Permits
Do I need business licenses & permits and how do I obtain them?
To operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.
Find out what types of special licensing you need by doing the following:
- Fill out the U.S Small Business Administration (SBA) comprehensive guide. Follow the directions to obtaining the correct licenses and permits.
- Contact your local Chamber of Commerce and ask about local licenses and permits.
- Apply for or learn more about licenses, permits and registration with Pennsylvania's Department of State.
The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.
Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.
5. Get Insurance
What is Workers Compensation Insurance? This form of insurance is required for most businesses with employees, but varies by State. Click here to learn more.
What is General Liability Insurance? This is an important service, but is not required in most States. Click here to learn why.
How much will the right insurance cost you? Click here to find out.
6. Employee Hiring Compliance
Once a business decides to hire employees, certain legal obligations are required, such as:
- Ensuring that potential employees are eligible to work in the US
- Reporting employees as "new hires" to the State
- Providing workers compensation insurance for employees
- Withholding income taxes
- Printing compliance posters and place in a conspicuous location
- Ensuring payment of employees in specific increments as required by the state
Learn more about hiring employees for your small business.
What is an annual report?
Many states require LLCs to file an annual or biennial report. These reports typically include basic information about your business and involve a filing fee
Do I need to file an annual report for my Pennsylvania LLC?
No, Pennsylvania does not require any such report.
LLCs are considered “pass-through” entities and do not ordinarily pay income tax directly. Nevertheless, some states require LLCs to report annual income for informational purposes. Pennsylvania requires multi-member LLCs to report income and withhold income from members residing out of state.
Instructions and Filing Form: Pennsylvania Department of Revenue
If you have an existing LLC and want to register to do business in Pennsylvania, you will need to form a foreign LLC.
File a Foreign LLC in the State of Pennsylvania
Download the PDF:
Application for Registration of Foreign Limited Liability Company
Department of State:
Bureau of Corporations and Charitable Organizations
Fee: $250 — Follow the instructions on the PDF.
Benefits of Forming a Foreign LLC
The major benefit of becoming a foreign corporation is that it allows your company to operate as one entity in many jurisdictions. For example, if you originally incorporate your LLC the State of Delaware, you can file your existing domestic LLC as a foreign corporation in other states.