Before you can open the doors of a Pennsylvania business, you’ll need to complete several registration steps. Many new business owners can find this process challenging, unsure which forms to file or agencies to contact.
This guide simplifies the process by breaking down Pennsylvania business registration into manageable steps. We cover everything from selecting your business structure to obtaining required licenses, providing you with the information you need to start your business.
Related: Starting A Business In Pennsylvania Checklist
Step 1: Business Structure
The first step when registering a business is forming a business structure (also called a business entity), which refers to how a business is legally structured to operate. This decision will impact how the business is taxed, owner(s) liabilities, and more. In Pennsylvania, the most popular choices include sole proprietorships, general partnerships, corporations, and Limited Liability Companies (LLC).
Related: Comparison of Business Structures
Sole proprietorships are the most inexpensive and easy to set up, where one individual owns and manages the entire business without a separate legal entity. The downside is the owner’s personal assets are fully exposed in case of debt or lawsuits.
Related: How to Start a Sole Proprietorship in Pennsylvania
General partnerships combine two or more individuals who agree to share the ownership, management responsibilities, and profits of a business. Like a sole proprietorship, each partner is personally liable for the business’s debts, and the business income is reported on the partners’ personal tax returns. General partnerships are relatively easy to establish but come with the risk of personal liability for all partners.
Corporations are independent legal entities that exist separately from members (called shareholders). They provide personal asset protection, as shareholders are not personally responsible for the corporation. While offering limited liability, corporations have higher setup costs, administrative requirements, and ongoing maintenance costs.
Related: How to Form a Pennsylvania Corporation
Limited Liability Company (LLCs) merge elements of sole proprietorships or partnerships and corporations, as they combine the limited liability protection of a corporation with the pass-through taxation simplicity of a sole proprietorship or partnership. LLCs also offer more flexibility in management structure compared to corporations. However, they have higher setup and maintenance costs than sole proprietorships or general partnerships.
Related: How to Form a Pennsylvania LLC
Step 2: Business Name
After deciding on a business structure, the next step for many Pennsylvania businesses is choosing a business name. This process varies depending on the type of business entity you’ve selected.
For sole proprietors and general partnerships in Pennsylvania, the default business name is the owner’s legal name. However, if you want to operate under a different name, you’ll need to register a Pennsylvania Fictitious Name, also known as a DBA (Doing Business As).
For instance, John Smith is planning to start his own auto repair business. As a sole proprietor, his business could legally operate under his full name, “John Smith,” without registering. If he decides to call his business “Steel City Auto Care,” John needs to register “Steel City Auto Care” as a fictitious name with the Pennsylvania Department of State.
Corporations and Limited Liability Companies (LLCs) typically don’t need to register a Fictitious Name, as they create a unique entity name during formation. However, if these entities want to operate under an additional name or brand, they may choose to register additional names.
Before finalizing your business name, it must be checked to verify it’s not already in use. You can verify by searching the Pennsylvania business entity database on the Secretary of State’s website.
Step 3: Federal Employer Identification Number
The next step for many businesses is obtaining a Federal Employer Identification Number (FEIN), also known as an EIN. This unique nine-digit number is assigned by the Internal Revenue Service (IRS) to identify businesses for tax purposes.
You’ll need an EIN if:
- Your business has employees
- Your business is structured as a corporation, partnership, or multi-member LLC
While sole proprietorships and single-member LLCs without employees can use the owner’s Social Security number for tax purposes, they may still choose to obtain an EIN to protect the owner’s Social Security number.
Obtaining an EIN is a straightforward process that doesn’t cost anything. The quickest method is to apply online through the IRS website, which typically takes only a few minutes to complete. Alternatively, you can submit Form SS-4 by mail or fax, though these methods generally take longer to process.
Step 4: Professional & Industry Licensing
Many professions and industries in Pennsylvania require licensing before offering licensed services.
The Pennsylvania Department of State oversees most professional licensing through various boards. Some common professions requiring licenses include:
- Architects (State Architects Licensure Board)
- Barbers (State Board of Barber Examiners)
- Vehicle Dealers (State Board of Vehicle Manufacturers, Dealers and Salespersons)
- Accountants (State Board of Accountancy)
- Nurses (State Board of Nursing)
- Real Estate Agents (State Real Estate Commission)
For detailed information on fees, requirements, and application processes, visit the Pennsylvania Department of State website.
In addition to professional licensing, certain industries in Pennsylvania require specific licenses beyond professional credentials. These include:
- Food establishments
- Daycares
- Salvage yards
- Liquor stores
- Construction contractors
Each industry has its own licensing requirements and governing body. Check with the relevant state department or local authorities for specific licensing needs in your industry.
Step 5: State Enterprise Registration
Most new businesses in Pennsylvania need to complete the Pennsylvania Enterprise Registration Form (PA-100). This form serves as a unified registration for various state taxes and services.
Who needs to register:
- Businesses collecting sales tax (Sales Tax License)
- Employers withholding state income tax
- Corporations paying corporate taxes
- Businesses needing Workers’ Compensation coverage
Where to register: File the PA-100 with the Pennsylvania Department of Revenue. You can submit this form online through the PA Business MyPath website or by mail.
Step 6: Sales Tax Exemption Certificate
A Pennsylvania Sales Tax Exemption Certificate, commonly known as a Resale Certificate, is a valuable tool for businesses that purchase goods for resale. This certificate allows businesses to buy inventory without paying sales tax at the time of purchase. Then, these businesses will collect sales tax from the end customer when the product is sold.
Who needs an Exemption Certificate:
- Retailers
- Wholesalers
- Manufacturers who resell finished products
- Service providers who resell products as part of their services
To obtain an Exemption Certificate, businesses must first register for a sales tax license through the Pennsylvania Enterprise Registration Form (PA-100). Once registered, they can use their Sales/Use Tax License Number to complete the exemption certificate (Form REV-1220).
Step 7: Local Business Licenses
Many cities and towns in Pennsylvania require local business licenses. Common local licenses include:
- General Business License: This basic license allows a business to operate within city limits. For example, the City of Philadelphia requires most businesses to obtain a Commercial Activity License from the Department of Licenses and Inspections.
- Food Service License: Restaurants, cafes, and food trucks typically need a food service license, usually issued by the local health department. The City of Pittsburgh, for instance, requires food businesses to obtain a Health License from the Allegheny County Health Department.
- Contractor License: Many municipalities require contractors to obtain a local license. In Allentown, contractors must register with the city’s Bureau of Building Standards and Safety.
- Retail License: Businesses selling goods directly to consumers often need a specific retail license. In Harrisburg, retail businesses must obtain a Mercantile License from the Tax and Enforcement Office.
It’s important to check with your specific city or county government, as local licensing requirements vary significantly across Pennsylvania municipalities.
Step 8: Local Building & Zoning Permits
Before finalizing the purchase or lease of a property for your business, it’s important to understand and comply with local building and zoning requirements. Here are some common requirements you might encounter:
Zoning Permits: These permits confirm that your intended business use aligns with local zoning requirements. Local zoning offices typically handle these permits.
Building Permits: If you plan to construct, renovate, or alter a building for your business, you’ll likely need a building permit. This ensures that any changes meet local building codes and safety standards.
Certificate of Occupancy: Many municipalities require businesses to obtain a Certificate of Occupancy before they can start operating in a building. This document certifies that the space is safe and compliant with local codes.
Home Occupation Permit: If you’re planning to run a business from your home, some areas require a special permit. The City of Erie, for example, requires home-based businesses to obtain a Home Occupation Permit from the Department of Economic and Community Development.
Sign Permits: Many localities also have specific regulations about business signage. You may need a permit before installing any exterior signs for your business.
These requirements are often managed by local government departments such as the Building Department, Zoning Office, or Department of Planning and Development. The specific names and structures can vary by municipality, so it’s advisable to check with your local government offices for the exact requirements in your area.
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