How to Form a Pennslyvania LLC

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Pennsylvania LLC Quick Facts

Pennsylvania LLC Costs

Initial LLC Filing Fee – $125

 

Recurring State Fee: Decennial Report – $70

 

LLC Processing Time

By Mail: 7-10 business days

 

Expedited and in-person processing is also available for an additional fee.

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in Pennsylvania. The LLC provides personal liability protection and has the potential to save money on taxes. With our guide, you can learn how to form an LLC in Pennsylvania without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Costs to form a Pennsylvania LLC

To form a Limited Liability Company in Pennsylvania, file the Certificate of Organization with the Pennsylvania Department of State.  The LLC filing fee is $125.

Approval for the LLC is typically around two weeks.  Expedited filing is available if formation needs to happen faster.  For an additional $100 filing is the same day, $300 receives 3-hour filing, and $1,000 gets 1-hour filing.

Guide to Forming an LLC in Pennsylvania

The steps for filing online or by mail are largely the same.  The screenshots show how to file online.  To file by mail, download the Pennsylvania LLC Certificate of Organization (Form DSCB:15-8821).

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Step 1: Create an Account with the Secretary of State

  • Begin by creating an account on the Pennsylvania Department of State’s website.
  • After logging into the account, scroll down to “Start or Manage Business Filings,” select “Domestic Limited Liability Company: and then select “Certificate of Organization – Domestic Limited Liability Company (8821)

How to Form a Pennsylvania LLC.png

Step2: Veteran Status

If you are a Veteran or active reservist, check the box, otherwise leave it blank and then “Save and Continue.”

Pennsylvania Veteran Status LLC

Step 3: LLC Name Search

Enter the name you want for the LLC.  Under Pennsylvania law, the LLC’s name has to be different from other entity names registered with the Department of State.  You can check on available Pennsylvania LLC names availability before filing to ensure the one you want is available.

The name of the LLC must also include a designator at the end of the business name.  A designator is a phrase of abbreviation used to describe the type of business entity.

Available designators include:
​​​Limited Liability Company
Limited Liability Co.
Ltd. Liability Company
Ltd. Liability Co.
Company
Co.
LLC
L.L.C.
Limited
LTD
Ltd.

Select the available designators from the drop-down box.

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

Before settling on a name, you may want to see if a domain name is also available in order to match your business name and website address.

Enter the name and designator and click “Search.”  If the name is available, a message says it appears to be available but won’t be finalized until the Department of State reviews the application.

If there is a name you want, but are not ready to register the LLC, you can file the Name Reservation Form (SSCB:15-208). The name reservation will hold a name for up to 120 days, at a cost of $70.

Pennsylvania LLC Name Registration

Step 4: Business Details

(a) Initial Registered Office – If the initial registered office is the LLC’s physical address or the address where the business records are stored, select (a) and enter the address below. A Post Office Box is not allowed. The Registered Office Address can be your home address or any physical street address in the state.

(b) Commercial Registered Office Provider (CROP) – If hiring a commercial registered office service, they must first be registered with the Department of State.  If they are, select (b) and enter their name and county from the drop-down menus.

You are not required to pay for a Commercial Registered Office (sometimes called a Registered Agent). Hiring a Registered Agent Service such as Northwest Registered Agent is more important for some entrepreneurs, especially when doing business from home or are still employed and don’t want their employer to find out.

Pennsylvania LLC Registered Agent

Step 5: Organizer Information

An LLC Organizer is someone involved with the formation of the Certificate of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any of the initial members can be listed as an organizer.

At least one organizer and their address must be listed.  After all of the organizers have been listed, click on “Save and Continue.”

Step 6: Form Questions

Effective date of Certification of Organization – If you want the LLC to start immediately, choose the box that says, “The Certification of Organization shall be effective upon filing in the Dept of State.”.  If you want to LLC to start later, select the box that says “The Certification of Organization shall be effective on (month date year hour, if any)” and enter the date of your choice.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business isn’t going to have any activity until the start of the year.  By delaying until the following year, they will reduce the number of end-of-year filings.

PN LLC Effective Date

Professional Company – If the services of the LLC have to be licensed by the state, enter “Applicable” in the drop-down menu and select the types of licenses services.  For more information about professional licensing, see Pennslyvania Business Licenses and Permits in our state guide.  Some common licenses are for Chiropractic, Dentistry, Law, Medicine, Optometry, Podiatric, Public accounting, Psychology, or Veterinarians.

Public Benefit – A public benefit LLC is one that intends to have a positive impact on society and the environment.  Most filers will select “Not Applicable.”

Step 7: Docketing Statement

Name & Address – Enter the name and address of the person responsible for filing the initial tax reports.

FEIN – The FEIN (Federal Employer Identification Number) is a unique federal business identification number, much like a social security number for an individual.  We recommend leaving this field blank until the LLC is filed with the Department of State.  If the name you plan to use can’t be registered, it will need to be revised with the IRS.  More information about how to apply for an LLC FEIN.

Description of Business Activity – Provide some basic information about what the business does.  If you want to keep the business purpose more open-ended, you can enter “Any lawful business activity for which a Limited Liability Company may be organized in Pennsylvania.”

Related: How to Answer the Business Purpose Statement.

Step 8: Attachments

This is an optional section and not used by most LLCs.  Here you would include additional rules for the operation of the LLC.

Step 9: Declaration & Signatures

The person signing verifies they are authorized to execute the Certificate of Formation, and they are the ones submitting this document to the Department of State.

Step 10: Review

Review that all of the information is correct.

Step 11: Pay and File

Pay and file the Certificate of Organization.

If mailing in the Certificate of Organization, ​​​Docketing Statement (DSCB:15-134A) and payment to:
​​​PA Department of State Bureau of Corporations
PO Box 8722
Harrisburg, PA 17105-8722

The docketing statement requires the entry of the Employer Identification Number (EIN), fiscal year, and other details.

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Pennsylvania LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Pennsylvania operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally, the bank will request the Pennsylvania Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Sales Tax License – In order to sell products and certain services, registration with the Pennsylvania Department of Revenue will be necessary.

Related: What Business Licenses are Needed in Pennsylvania?

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

File the Decennial Report

LLCs are required to file a decennial report with the Pennsylvania Secretary of State.  The annual report updates ownership information and other details.

The Limited Liability Partnership, Limited Liability Limited Partnership, and Restricted Professional Limited Liability Company have to file the Certificate of Annual Registration by April 15th of each year.

Related: How to File a Pennsylvania LLC Annual Report

 

FAQ’s

What is a Foreign Limited Liability Company?
An out-of-state LLC wanting to do business in Pennsylvania will have to register as a foreign LLC by filing a Foreign Registration Statement Limited Liability Company Application for Registration with the Pennsylvania Department of State.

What is a Professional Limited Liability Company?
Businesses that require state licensing and offer professional services such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc. must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.