How to Start an LLC in Pennsylvania: A Step-by-Step Guide
Pennsylvania can be a great place to start your professional venture with its location near business hotspots New York and Delaware. Forming an LLC is an easy way to set up a business and we’re here to help you learn how to start an LLC in Pa.
1. It’s All in a Name
Coming up with a name for your Pa. LLC provides you an opportunity to be creative, develop your brand and stand out from your competitors. Of course, you’ll want to choose a unique name that is distinguishable; however, be aware that starting an LLC in Pa. requires following certain naming guidelines.
In Pennsylvania, all LLCs are required to include the following terms in the name: “limited liability company,” “company,” “limited” or an abbreviation of those terms. The state does not provide a list of accepted abbreviations so you should use your best judgment and pick something that is commonly known. For example, you could use “Co.” for “company” or “Ltd.” for “limited.”
Searching for Your Name
Once you have a name for your company, you’ll need to make sure it’s available for use. You may think that your idea of “Cheesy, Chee-Z, Cheesesteaks, Co.” can’t possibly be taken, but you never know. A lot of people like cheesesteaks.
There are a couple of places you can check to see if your name is already in use:
- The first place to check is the Pennsylvania Business Entity database
- Check the United States Patent and Trademark Office to see if anyone has trademarked your business name
- Search multiple internet domain search engines to see if the URL is available
Reserving Your Name
If you find your business name is available, you might want to reserve it so no one else can use it. You can reserve a name for 120 days by filing the Name Reservation Form. The fee is $70. After 120 days, you can reserve the name again if you need more time to file your documents.
Using a Trade Name
Once your company is formed, you don’t have to necessarily use its legal name in everyday use. If for some reason you want to call your company “Chee-Z Steaks,” you can operate under a “doing business as (DBA)” name also known as a “fictitious” or “assumed” name. Simply file the Registration of Fictitious Name form and pay $70 to the Pennsylvania Department of State.
2. Select Your LLC Category
When you’re thinking about how to start an LLC in Pa., you should keep the purpose of your business in mind. If you’re going to operate a specific business, Pennsylvania requires additional formation conditions. The state refers to these specific businesses as “restricted” or “benefit.”
Restricted LLC
Under state law, when you’re forming an LLC in Pa., certain professionals who hold a state license need to form a restricted LLC. Pennsylvania companies that require a restricted class include:
- Law
- Optometry
- Dentistry
- Chiropractic
- Psychology
- Medicine and surgery
- Osteopathic medicine and surgery
- Veterinary medicine
- Podiatric medicine
- Public accounting
Restricted LLCs must file a Certificate of Annual Registration and pay a fee of $610 times the number of members in the LLC.
Benefit LLC
If your business creates a “general public benefit” you should register your LLC as a Benefit LLC. A general public benefit is one that has a positive impact on society and the environment.
Pennsylvania holds the following types of businesses as having a public benefit:
- Provides low-income individuals/communities with beneficial products and services
- Promotes economic opportunity beyond job creation
- Promotes economic development by funding new and existing technology companies
- Preserves the environment
- Improves health
- Promotes the arts, sciences or advancement of knowledge
Benefit LLCs should file an Annual Benefit Report and pay a fee of $70.
Foreign LLC
If your business is based in another state (referred to as “foreign”), you may be wondering how to go about creating an LLC in Pa. The Department of State only requires that you register your foreign LLC in Pennsylvania so that you can legally operate your business in the state. The registration cost for a foreign LLC is $250.
Single-Member LLC
Forming a single-member LLC in Pennsylvania is simple. In this business structure, you will be the sole owner or member of your company. Because you have no employees or other members, your business will be treated as a sole proprietorship.
The benefit of this is that the income from your business will “pass-through” to you as the owner and you will only have to pay taxes once. This differs from an LLC that is treated as a corporation where members are taxed twice, once as an individual and a second time based on their share of the corporation’s profits.
3. Secure a Registered Office
When learning how to get an LLC in Pa, you may come across information on designating an agent. In most states a registered agent is the person or company responsible for receiving legal notification on behalf of your LLC. In Pennsylvania, the phrase “registered office” is used for the same purpose.
The registered office can be an individual if they are 18 and have a street address in the state. Otherwise, you may select a service to act as a registered office. Again, the address must be a physical street address and not a P.O. box.
4. File Certificate of Organization
A large part of learning how to start an LLC in Pa. is making it formal. To create your LLC, you’ll need to file a Certificate of Organization and a Docketing Statement with the Pennsylvania Department of State.
The Certificate of Organization is where you’ll be able to note if you plan to have a restricted or benefit LLC. Other information you will need to include:
- Name of LLC
- Name and address of registered office/agent
- Name and signature of each organizer
- Whether LLC will be classified as restricted or benefit
- Effective date of Certificate of Organization (date of filing or date of your choice)
Your Docketing Statement should include the following information:
- Name of LLC
- Name and address of person responsible for tax reports
- EIN
- Description of LLC’s business activity
- Date of fiscal year end
File your Certificate of Organization and Docketing Statement for your PA LLC registration online. The Department of State charges a $125 fee for filing your paperwork.
Inside Scoop: If you’re a veteran/reservist business owner, you may qualify for a fee exemption. You can find out more information on the Department of State website.
5. Get an EIN
If your LLC has more than one member, you will need to secure an employer identification number (EIN) from the IRS. You can apply for an EIN online for free.
6. Draft an Operating Agreement
Pennsylvania does not require LLC owners to have an operating agreement, but it’s a good policy to have one. An operating agreement is an internal document that states the voting rights, responsibilities, duties and obligations of each member or manager. You don’t have to file this document but it’s a good idea for everyone in your LLC to keep a copy.
If you elect not to have an operating agreement, Pennsylvania law presides over your LLC. To avoid this, stating the management style in an operating agreement can help your LLC handle conflict or disagreements.
There are two management styles that your LLC can follow:
- Member-managed. The members listed in the articles of organization jointly run the company’s operations and can make ordinary business decisions
- Manager-managed. The members will appoint one or more managers to handle the day-to-day operations of the LLC and vote on extraordinary business decisions (dissolving, adding a member)
Frequently Asked Questions
What are the benefits of LLC in Pa.?
The most important benefits of having an LLC are tax benefits, liability protection and easy management structure.
How do you file for a Pennsylvania LLC?
You can file for your LLC online or by filling out a paper copy and mailing it to the Pennsylvania Department of State.
How long does it take to get an LLC in Pa.?
It will take 3-5 business days to form your LLC if you file online. If you file by mail, it may take six to eight weeks. It will take anywhere from three to eight weeks to receive your paperwork after filing.
What are the disadvantages of starting an LLC in Pa?
Unlike most states that charge an annual registration fee for the LLC, Pennsylvania charges based on the number of members in your company. At $610 per member, the annual fees for maintaining your LLC can be expensive.
Do I have to file an annual certificate for my LLC?
Only owners of restricted and benefit LLCs must file annually. Restricted LLC owners must file a Certificate of Annual Registration and pay $610 times the number of members. Benefit LLC owners must file an Annual Benefit Report and pay $70.
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Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
