Starting a small business in Pennsylvania can be overwhelming, given all the steps involved. One of the early steps is deciding on the business structure, and one popular option is the Limited Liability Company.
Our guide is designed to help you start your Pennsylvania LLC step by step. It simplifies the process by breaking down the legal jargon and paperwork into clear, easy-to-understand steps.
Related: Starting A Business In Pennsylvania Checklist
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Steps To Form A Pennsylvania LLC
Step 1: Choose a Name for the LLC
The first step in forming a Pennsylvania Limited Liability Company is to make sure the name you want is available. Before trying to set up an LLC, you need to do this search because the name of each LLC must be distinguishable from other entity names registered in the state of Pennsylvania. The Pennsylvania Department of State makes it easy to do a Pennsylvania LLC name search to verify if your LLC name is available.
In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
- Limited Liability Company
- Limited Liability Co.
- Ltd. Liability Company
- Ltd. Liability Co.
- Company
- Co.
- LLC
- L.L.C.
- Limited
- LTD
- Ltd.
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) with the Pennsylvania Department of State to hold a name for up to 120 days.
Step 2: Designate a Pennsylvania Registered Office Address
Every LLC in Pennsylvania is required to have a Registered Office Address (sometimes referred to as a Registered Agent in some states). A Registered Office Address is a street address where legal documents, tax notices, summons, subpoenas, etc. (Service of Process) can be sent to the LLC.
Related: How To Appoint A Pennsylvania Registered Office?
Step 3: File the Pennsylvania Certificate of Organization
The paperwork to officially create an LLC in Pennsylvania is called the Certificate of Organization. To submit the paperwork, either file online through the Pennsylvania Department of State’s website or download and mail the Pennsylvania LLC Certificate of Organization (Form DSCB:15-8821).
Related: How To Fill Out The Pennsylvania Certificate Of Organization
When filling out the Certificate of Organization, a few sections may be difficult to answer, so I’ll provide details that may help.
Initial registered office: If the initial registered office is the LLC’s physical address or the location where the business records are stored, select (a) and enter the address below.
The Registered Office Address can be your home address or any physical street address in the state; however, a Post Office Box is not allowed.
Commercial Registered Office Provider (CROP): Before hiring a commercial registered office service, it must first be registered with the Department of State. If it is, select (b) and enter its name and county from the drop-down menus.
Organizer information: An LLC Organizer is someone involved with forming the Certificate of Organization. The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any LLC member can be listed as an organizer.
At least one organizer and their address must be listed. After all the organizers have been listed, click “Save and Continue.”
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 start the LLC 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 the start date until the following year, you can eliminate the need to file a partial-year business tax return.
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 licensed 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 a for-profit LLC that intends to impact society or the environment positively.
A public benefit LLC is more complicated than a Domestic LLC as, in addition to filing a Certificate of Organization [DSCB:15-8821], a docketing statement [DSCB:15-134A] will also be filed with the Bureau of Corporations and Charitable Organizations.
FEIN: The FEIN (Federal Employer Identification Number) is a unique federal business identification number, much like an individual’s social security number. We recommend leaving this field blank until after the LLC is filed with the Department of State. If the LLC name you plan to use can’t be registered, you will need to revise your FEIN with the IRS. See how to apply for an LLC FEIN.
Description of business activity: Provide some basic information about what the business will do.
Step 4: File Form DSCB:15-134A New Entity Docketing Statement
In addition to filing the Certificate of Organization, Form DSCB:15-134A Docketing Statement – New Entity must be filed at the same time.
The docketing statement obtains information such as the entity name, tax responsible party, description of the business activity, FEIN (Federal Employer Identification Number), and LLC tax year.
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What To Do After Starting A Pennsylvania LLC
Once the LLC has been formed, there are a few additional steps to take. Below is a list of the most common tasks.
Prepare a Pennsylvania LLC Operating Agreement
The LLC operating agreement is a document that governs the framework of an LLC. It covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.
Most states (including Pennsylvania) 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.
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 show the LLC’s creation.
- 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.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, various business licenses and permits will likely be 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: A Pennsylvania sales tax license from the Pennsylvania Department of Revenue is necessary to sell products and certain services.
Related: How To Register A Business In Pennsylvania
File the Pennsylvania LLC Annual Report
LLCs are required to file a Pennsylvania LLC Annual 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 will file the Certificate of Annual Registration by April 15th of each year.
Pennsylvania LLC FAQs
What is an LLC?
An LLC, or Limited Liability Company, is a type of business structure (also called a business entity) used in Pennsylvania that combines the flexibility of a sole proprietorship with the liability protection of a corporation.
This means that owners, also known as members, generally have protection from being personally responsible for business debts and claims that help keep their personal assets, like personal savings or a house or car, separate from their business ones. This setup is popular because it offers flexibility in how the business is run and how profits are shared without a corporation’s strict rules and formalities.
How much does it cost to start an LLC in Pennsylvania?
To form an LLC in Pennsylvania, the Certificate of Organization will need to be filed with the Department of State. The cost to file the certificate is $125.
How long does it take to get an LLC in Pennsylvania?
It normally takes 7-10 business days for the Pennsylvania Department of State to process the paperwork to form an LLC in Pennsylvania.
Is there a yearly fee for an LLC in Pennsylvania?
LLCs in Pennsylvania will need to file an Annual Report and a $7 filing fee to the Department of State.
What is a Foreign Limited Liability Company?
A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC formed in another state (domestic LLC) that wants to operate physically in Pennsylvania. Physically operating means having a presence, such as having an office or hiring an employee.
What is a Professional Limited Liability Company?
Businesses in Pennsylvania that require licensing from the state to offer their services, such as accountants, attorneys, psychologists, veterinarians, and more., are required to file as a Professional Limited Liability Company (PLLC) instead of an LLC.
