Starting an LLC in Pennsylvania 2024: Complete Business Formation Guide

Using an LLC Formation Service

Small business entrepreneurs can benefit from online LLC services to establish their Limited Liability Companies (LLC). These services will help file the necessary documents, allowing small business owners to focus on running their businesses. They have features like guaranteed acceptance by the state, assistance with the EIN application, registered agent service, and drafting of operating agreements. Online LLC services can be a reasonable and worthwhile cost.

Business owners can customize these packages to suit their individual needs. If you want to compare services and costs before deciding, you can choose from several options. Northwest Registered Agent, Swiftfilings, and Bizee LLC services are the most popular choices and have the best ratings.

Starting a Limited Liability Company (LLC) in Pennsylvania is an exciting step towards entrepreneurship. Whether you want to turn a hobby into a business or formalize an existing operation, an LLC can offer you the flexibility, protection, and credibility of a partnership or sole proprietorship. This guide is designed to help you establish your LLC in Pennsylvania.

Step 1: Choose a Business Name

The first step in creating your LLC is picking a unique name. Pennsylvania has specific guidelines for naming your LLC, including the need for the name to differ from other businesses registered in the state.

Here are the guidelines you must follow: 

• Your LLC’s name must include “Limited Liability Company” or its abbreviations (LLC or L.L.C.).
• It must be distinguishable from the names of existing businesses registered in Pennsylvania. You can check for name availability on the Pennsylvania Department of State website.
• Avoid restricted words unless you have the required licenses (e.g., Bank, Attorney).

If you are considering getting a website name that matches your business name, You can find good deals for your domain names on Namecheap.

Step 2: Hire a Registered Agent

Like other states, your LLC must have a registered agent in Pennsylvania. A registered agent is a person or company that agrees to receive legal papers on behalf of your LLC, ensuring you get all important legal notices. The agent must have a physical address in Pennsylvania and be available during business hours. You can act as your registered agent, choose someone you trust, or hire a professional service like Northwest Registered Agent, Swiftfilings, or Bizee.

Check out our blog: ‘Is a Registered Agent Necessary? Your Guide to Finding an Affordable Option‘

Step 3: File Your Certificate of Formation

Let’s make your Pennsylvania LLC official by filing the Certificate of Formation. This document is crucial as it formally registers your LLC with the state of Pennsylvania. Here’s what you need to include in your Certificate of Formation:

• LLC Name: Ensure you include the full legal name of your LLC, followed by “LLC” or “Limited Liability Company.”
• Mailing Address: If your business receives mail at a location different from its physical address, list that here.
• Registered Agent: Designate a registered agent who will handle official documents for your LLC. Include their full name, address, and contact information. They must formally agree to act as your registered agent.
• Management Structure: Indicate whether your LLC will be member-managed (by you and any other owners) or manager-managed. List the names and addresses of the members or managers. For privacy, you may use a P.O. box for addresses.
• Purpose: Provide a brief description of your business.
• LLC Organizer: Identify the person or entity completing and filing your work. This role is crucial for correctly setting up your LLC.
• Formation Date: Specify the date your LLC will officially begin. You can set this to the filing date or choose a date up to 90 days.
• Signature: After reviewing your Certificate of Formation for accuracy, sign and date the document. Ensure your registered agent has consented to their appointment.

How to Send Your Form

When you’re ready to establish your LLC in Pennsylvania, filing your Certificate of Formation is crucial. This document officially registers your business with the state. Here’s how you can file your Certificate of Formation in Pennsylvania:

 

• Online: For the fastest processing, file your Certificate of Organization online through the Pennsylvania Department of State’s PENN File website. This platform provides an efficient way to submit your paperwork and payment. 
• By Mail: If you prefer traditional methods, you can also file by mail. Complete the Certificate of Organization and send it with the appropriate fee to the Pennsylvania Department of State, Corporation Bureau, P.O. Box 8722, Harrisburg, PA 17105-8722. 
• In-Person: For those who wish to file in person, you can bring your completed Certificate of Formation to the Department of State’s office at 401 North Street, Harrisburg, PA.

Filing Fee: The cost to file the Certificate of Organization in Pennsylvania is $125 for both domestic and foreign LLCs.

Ensure all information in your Certificate of Organization is accurate and complete to successfully establish your LLC in Pennsylvania.

Step 4: Making an Operating Agreement for Your Business

Let’s discuss setting up some ground rules for your business. This is where an Operating Agreement comes in. Think of it as a handbook that explains how your business runs. It’s important because it helps everyone understand their role and what’s expected in your LLC.

Here’s what an Operating Agreement usually includes:

• Ownership: This part talks about who owns what percentage of the business. 
• Member’s Rights and Responsibilities: Here, you’ll write down what each person in the LLC can and cannot do and what they’re responsible for. It’s like a job description for each member.
• Joining & Leaving: This section covers how new people can enter your business and what happens if someone decides to leave. It’s good to have this figured out so there are no surprises later.
• Dissolution: This might sound a bit gloomy, but it’s practical. It’s about how to close down the LLC if you ever need to. It includes the steps to take and how to handle everything when wrapping up the business.

Creating an Operating Agreement is a smart move. It keeps things clear and organized so everyone knows what to expect, and it can save you a lot of time. 

Step 5: Getting Your EIN from the IRS

Your business needs a number called an EIN from the IRS. It’s like an ID number for your business. This number will help you as an identification number when getting bank accounts and credit accounts, filing taxes, and hiring employees.

It’s free, and you can get it from the IRS website.

Step 6: Steps After Forming Your LLC 

Open a Business Bank Account 

Keeping your personal and business finances separate is crucial for financial management and legal protection. Opening a business bank account requires your EIN and Articles of Organization. It makes tracking business expenses easier and simplifies tax filing.

Get a Business Credit Card

A business credit card is an excellent tool for handling business purchases and can help build your company’s credit history. Just like with personal credit, a good business credit score can make it easier to get loans and may qualify you for better terms. Visit our website to see our favorite business cards review.  

Check out our blog: Novo Review: The Best Business Banking Account in 2024?

Hire an Accountant

Managing finances can get complicated, especially as your business grows. An accountant can help you navigate tax laws, handle bookkeeping, and plan for financial growth. This professional guidance can save you time and money in the long run.

Create a Professional Website 

A website makes your business look legit. WordPress is a great tool to build your site. You can check out SiteGround or Hostinger for web hosting. They’re both good options to get your site up and running.

 

Pennsylvania LLC: Permits, Licenses, Tax Requirements, and Annual Reporting

Creating an LLC in Pennsylvania involves navigating state regulations to ensure your business operates smoothly. This includes obtaining the proper permits and licenses, understanding tax obligations, and fulfilling annual reporting requirements.

 

Obtain Any Additional Permits and Licenses

Depending on your LLC’s activities and location, you may need specific permits and licenses:

• Local Business Licenses: Check with your city or county clerk’s office for any required business licenses.
• Professional Licenses: Some professions may require state-issued licenses. For information on professional licensing, visit the Pennsylvania Department of State’s website.
• Health Permits: Businesses in food service, healthcare, or beauty industries may require health permits, usually issued by the Pennsylvania Department of Health or local health departments.

Tax Requirements in Pennsylvania

Managing your LLC’s tax obligations is essential for legal compliance and financial health:

• Sales and Use Tax: If your LLC sells goods or taxable services, you must register for a Sales and Use Tax license through the Pennsylvania Department of Revenue.
• Employer Taxes: If you have employees, register with the Pennsylvania Department of Labor & Industry for Unemployment Compensation Tax and the Department of Revenue for Employee Withholding Tax.
• EIN: All LLCs need an Employer Identification Number (EIN) from the IRS for tax purposes, hiring employees, and opening a business bank account.

Annual Registration in Pennsylvania

Certain types of LLCs in Pennsylvania are required to file an annual registration:

• Filing Requirements: This applies primarily to professional LLCs.
• Fees and Filing: The cost varies, and the registration can be filed through the Pennsylvania Department of State’s website.

Decennial Report:

• LLCs in Pennsylvania may be required to file a Decennial Report every ten years to confirm that the business is still active. The next due date is 2024.

Compliance with these guidelines for permits, licenses, tax obligations, and annual or decennial reporting ensures the successful operation of your Pennsylvania LLC and compliance with state laws. For the most accurate and detailed information, visit the official Pennsylvania Department of State website and the Pennsylvania Department of Revenue website. These resources comprehensively support your LLC’s compliance and operational needs in Pennsylvania.

 

New 2024 Reporting Requirements (BOI)

Effective from January 1, 2024

Big news! Starting January 1, 2024, there are new reporting requirements for both domestic and foreign reporting companies. This includes LLCs, corporations, and other entities. Here’s what you need to know:

First Report Deadlines:

• Existing Entities: If your LLC was already around before 2024, you’ve got until January 1, 2025, to submit your first report.
• New Entities: If you’re forming your LLC in 2024, you must file your report within 90 days of your company’s creation.

Who Needs to Report:

• Domestic Reporting Companies: This includes LLCs and similar entities within the U.S.
• Foreign Reporting Companies: Entities registered foreign entities must also adhere to these new rules.

Exceptions to Reporting:

• For specific exceptions, you’ll want to refer to the Beneficial Ownership Information Reporting Regulations at 31 CFR § 1010.380(c)(2) and the Small Entity Compliance Guide.

What Must Be Reported

What you need to report is all about transparency. The exact details can be found in the compliance guide, but it generally involves information about your LLC’s ownership and control.

When Must Reporting File Reports

Remember, if you’re an existing entity, your deadline is January 1, 2025. For new LLCs formed in 2024, it’s within 90 days of creation.

Filing Reports & Noncompliance Penalties

Starting January 1, 2024, all BOI reports must be filed electronically. Here are some critical points:

• Filing Before the Date: You must file on January 1, 2024.
• Accuracy: Filer certification of accuracy is mandatory – you need to double-check that everything you report is correct and accurate.

Penalties for Noncompliance:

• False Information Penalties: Mistakes or misinformation can result in a fine of up to $10,000 or up to two years in prison.
• Penalties: If you slip up here, you could face a fine of up to $10,000 or even imprisonment for up to 2 years.
• FinCEN’s Approach: The Financial Crimes Enforcement Network (FinCEN) focuses on education and outreach to ensure compliance. 
• Safe Harbor Rule: Did you make a mistake? If you discover inaccuracies in your initial report, you have a 90-day grace period to submit a corrected report.
  

If you need more information or specific guidance, please visit the FinCEN website for all the details.

If you’re considering starting a Limited Liability Company (LLC) in Pennsylvania, there are a few things to remember. This process may take some time but can lead to building a foundation for your LLC. By following these steps, you’ll be on your way to establishing a flexible, legally recognized business structure that can protect your assets while offering potential tax advantages. If you need help, services like Northwest Registered Agent, Swiftfiling, or Bizee exist. They can handle any legal details your LLC requires, like getting your EIN and sorting out your operating agreement.