Setting up a Pennsylvania LLC is Easy
You can start a Pennsylvania LLC (Limited Liability Company) yourself by filing the Pennsylvania Certificate of Organization with the Department of State. The cost to create an LLC in Pennsylvania is $125.
Follow our free How to Form an LLC in Pennsylvania guide below to get started today.
If you are thinking about hiring a professional service to form an LLC, read our Best LLC Formation Services review.
Step 1: Create A Name For Your Pennsylvania LLC
First off, in order to launch a successful Pennsylvania LLC, you need to give it a name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes. We go into depth on this topic in our LLC naming guide, but we’ll go over the legal basics below.
Legally, your business name must:
- Contain the words limited liability company, limited company, or the abbreviation LLC or L.L.C.
- Not contain the words bank, engineer, pharmacy, or doctor, or the plural of these words.
- Not implying that the corporation is an insurance company.
- Be distinguishable from any other entity or trade name registered in Pennsylvania.
For a complete list of naming rules, you can review the complete Pennsylvania state LLC code.
If you’re having trouble coming up with a name that captures your brand, don’t let that stop you from forming your LLC. For now, you can focus on the legal requirements and consider applying for a fictitious name after you’ve nailed down your branding.
What To Do:
Once you’ve decided what you’d like to call your LLC in Pennsylvania, do a business name search to find out whether or not it’s in the cards. If your business name is available, you’ll be able to lock it down when you file your Certificate of Organization.
Need help naming your LLC? Check out our LLC name generator to find the best name for your LLC.
Quick Note: Before you commit 100% to a name, you should see if there’s a decent URL available. Use GoDaddy to search for your options. If there’s a quality domain name for purchase, we advise buying it right away because even if launching a business website isn’t on your radar right now, it’s going to be soon.
Step 2: Appoint a Registered Office
The next step is appointing a Pennsylvania registered office or commercial registered office provider to officially receive and help to handle official documents like state filings, tax forms, legal notices, etc. To be considered, the office must have a physical street address, not a P.O. Box.
Also, you can hire a professional (commercial registered office provider) that charges as much as $160/year or get a qualified/certified agent for free by registering your LLC through a filing service like ZenBusiness.
If you’re leaning toward hiring a professional, we recommend using an LLC formation service as your registered agent. Many registered agent services offer up to one year of registered agent service free when you form your Pennsylvania LLC with them.
Step 3: File A Certificate of Organization
Now it’s time to officially form your LLC by filing your Certificate of Organization with the State of Pennsylvania. You can do this on your own, with the help of a lawyer, or through a professional LLC filing service.
What To Do:
If you choose to complete this step on your own, you can either file online with thePennsylvania Department of State or fill out hard copies of the Certificate of Organization form and Docketing Statement form and mail them in. The filing fee is $125. If you choose to mail in a hard copy, send the forms and payment (payable to the Commonwealth of Pennsylvania) to the following address:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
P.O. Box 8722
Harrisburg, PA 17105
Processing time is 2 to 3 days.
Sure, you can handle this step on your own, but we still recommend considering the help of an LLC formation service. Why? Not only will they take the reins and make sure you file everything properly, but they’ll also provide other necessary products and services at very competitive prices.
One great option is ZenBusiness. In addition to great service, they give you a free year of registered agent service when you sign up.
Step 4: Create A Pennsylvania LLC Operating Agreement
Creating a Pennsylvania LLC operating agreement is the only way for you and your members to fully define your roles and lock down your LLC’s management and ownership structure. Having this document in place will also give you all something to return to if a dispute or lawsuit arises.
Your operating agreement should outline the following:
- each member’s responsibilities
- how new members will be admitted
- how existing members may transfer or terminate their membership
- how profits and dividends are to be distributed
From there, you can add as many provisions as you want, provided they are not in conflict with Pennsylvania business law. Learn more about Operating Agreements in Pennsylvania.
Quick Note: Download a template or create a custom Free LLC Operating Agreement using our tool on How to Start an LLC. No credit card required, ever.
Step 5: Obtain An EIN (Employer Identification Number) For Your LLC
The Employer Identification Number (EIN), Federal Employer Identifcation Number (FEIN), or Federal Tax Identification Number (FTIN), is essentially a Social Security number (SSN) for your company. State and federal agencies use this number to track your business activity.
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
We think the best way to get an EIN for your Pennsylvania LLC is by using the free online application on the IRS website. We prefer this method because it's the most efficient, but you can apply by phone, fax, or mail. You can read through our How to Get an EIN guide to find out how.
Maintain Your LLC's Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
Now that you’ve made it through the formation process for your Pennsylvania LLC, you’ll need to take steps to protect your personal assets and establish your business as an independent entity.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your Pennsylvania LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can go a long way in protecting your assets with these three steps:
1. Open a business bank account.
A business bank account separates your personal assets from your company's assets, which is necessary for personal asset protection. A designated business bank account also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Startups and Entrepreneurs review to find the best online bank, eCommerce banks, the best for tech startups, real estate investment banks, and more.
2. Get a business credit card.
A business credit card helps you separate personal and business expenses. A business credit card will also build your company's credit history, which can be useful to raise capital later on.
3. Designate an authorized representative.
Make sure all documents are signed by a representative of your Pennsylvania LLC and not by you (or other LLC members) directly. This will help separate you from liability incurred by the LLC.
4. Learn how to build business credit
A good business credit score will help establish your business’s fundability. It can help with many things, including credit cards that are issued in your business’s name and score instead of depending on your personal credit score, better interest rates on loans, higher lines of credit, and more.
Reduce the Liability of Your Pennsylvania LLC
Business insurance helps you manage risk and focus on growing your LLC in Pennsylvania. Carrying the right coverage protects your LLC from liability and keeps you safe in the event of a loss.
The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers claims of malpractice and other business errors.
There are free services available that quickly assess your business’s insurance needs. These services suggest customized policies with various insurance carriers so that you can choose the best value. One such reliable service is CoverWallet.
You can reduce your LLC’s liability by being fully compliant with employment laws such as:
- Verifying new employees are allowed to work in the US.
- Reporting employees as "new hires" to the state.
- Withholding employee taxes.
- Printing workplace compliance posters and placing them in visible areas of your workspace.
If you plan to hire employees, you might also be required to invest in Workers' Compensation Insurance. This type of policy provides coverage for employee job-related illnesses, injuries, or loss of life.
As a new LLC in Pennsylvania, you will need to stay compliant with permits, licenses, taxes, and state filings. This is serious business; failure to comply can lead to fines, tax penalties, and dissolution (the end) of your Pennsylvania LLC.
Business Licenses and Permits
To operate your Pennsylvania LLC, you must comply with federal, state, and local government regulations. The details of business licenses and permits vary from state to state, so make sure you research carefully and plan accordingly.
Find out how to obtain necessary licenses and permits for your business or have a professional business licensing service do it for you:
Federal: Use the U.S. Small Business Administration (SBA) guide.
State: Use the Pennsylvania Department of State website.
Local: Contact your local county clerk and ask about local licenses and permits.
This certificate allows a business to collect sales tax on taxable sales.
Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Here’s a sales tax guide to find out more.
If you have employees in Pennsylvania, you will need to register for Unemployment Insurance Tax through the Pennsylvania Office of Unemployment Compensation. You will also need to sign up for Employee Withholding Tax through the Pennsylvania Department of Revenue.
Pennsylvania requires all LLCs to file a decennial report. If you miss state filings like the annual report, you could face fines or even automatic dissolution. A quality registered agent service can help protect your assets by keeping track of filing requirements for you.
Pennsylvania Department of State Bureau of Corporations and Charitable Organizations
P.O. Box 8722
Harrisburg, PA 17105
Due Date: The decennial report must be filed every ten years in the years ending with the numeral "1" (e.g. in the calendar year 2011, from January 1, 2011, through December 31, 2011; in the calendar year 2021, from January 1, 2021, through December 31, 2021).
Late Filings: An LLC that has failed to file a report from January 1 through December 31, of the deadline year may do so at any later time, which will reinstate the name of the corporation or other association on the register unless its name has been appropriated during the period of the delinquency.
Reduce Administrative Burden
There will be lots of demands on your time once you start your business. With that in mind, it’s a good idea to streamline your workflow and reduce administrative overhead from the get-go.
Accounting For Your Pennsylvania LLC
It's important to get your books in order — even if you haven't officially opened for business. A well-managed accounting system will help you:
- Track your business finances, including bills, expenses, and income.
- Simplify and file your annual taxes.
You can maintain your accounting in two ways:
- Use DIY accounting software. This can come with an increased risk of errors especially when starting a new business.
- Hire an accounting service. They can provide comprehensive advice to help optimize your bookkeeping and taxes as well as additional services such as payroll etc.
Recommended: For most small businesses, we recommend using a reputable accounting service. Schedule a free tax consultation for your business now to avoid costly errors in the future.
If you have employees, a payroll service will save you a lot of time and also save you from having to become an expert on state compliance or employee tax withholdings and filings.
Gusto is a reliable and good payroll service for small businesses.
Need Help Creating an LLC in Pennsylvania?
Have a Professional Service Form Your Pennsylvania LLC For You
If you’ve got too much on your agenda to worry about all the paperwork and state-requirements, there are a handful of LLC formation services that can take care of everything for you.
Here are the two most popular:
– ZenBusiness ($39 + state fee) = Best Price & Overall Value
– LegalZoom ($79 + state fee) = Best For Brand Recognition