Forming a Limited Liability Company (LLC) in Pennsylvania is an easy process, but it involves a few steps.
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To form an LLC in Pennsylvania for free + state fee, we have listed 3 options to consider:
You can go online and visit the Pennsylvania Secretary of State’s website and do it yourself or you can use the ‘free’ basic service from Incfile or ZenBusiness.
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Forming an LLC in Pennsylvania for $0 (DIY Summary)
To form a Limited Liability Company (LLC) in Pennsylvania, you need to follow several steps. Here is a step-by-step guide along with relevant links for further information:
Choose a Name for Your LLC:
- Visit the Pennsylvania Secretary of State’s website. Select a unique name that complies with Pennsylvania’s naming requirements, such as including “Limited Liability Company” or its abbreviation.
- Check the availability of your desired name by conducting a business entity search through the Pennsylvania Department of State’s Corporations Bureau website.
Appoint a Registered Agent:
- Pennsylvania requires every LLC to have a registered agent who will receive legal and official documents on behalf of the company.
- The registered agent can be an individual resident of Pennsylvania or a business entity authorized to conduct business in the state.
File Articles of Organization:
- Prepare and file the Articles of Organization with the Pennsylvania Department of State.
- You can file online or by mail. Online filing is quicker and recommended.
- The Articles of Organization include essential information about your LLC, such as its name, registered agent’s name and address, purpose, management structure, and duration if not perpetual.
- The filing fee for Articles of Organization is $125.
Create an LLC Operating Agreement:
- While not legally required in Pennsylvania, it is advisable to create an Operating Agreement for your LLC.
- The LLC Operating Agreement outlines the internal operations, ownership structure, rights, and responsibilities of the LLC’s members.
- It helps maintain limited liability protection and clarifies the relationships among members.
Obtain an EIN:
- An Employer Identification Number (EIN) is required for LLCs with employees or if you plan to open a business bank account.
- You can obtain an EIN from the Internal Revenue Service (IRS) for free.
- Apply for an EIN online through the IRS website. (Link: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online)
Comply with Tax and Regulatory Requirements:
- Register for state and local taxes with the Pennsylvania Department of Revenue and the local tax authority.
- Depending on your business activities, you may need additional licenses, permits, or registrations. Use the Pennsylvania Business One-Stop Shop to identify specific requirements. (Link: https://business.pa.gov/)
Remember to consult with a legal professional or business advisor to ensure compliance with all legal and regulatory obligations.
In-depth Details
Pennsylvania’s LLC process is different from one state to the next. The process will vary depending on the type of LLC that you are creating and your status.
It can be confusing for new business owners to set up an LLC. This guide will help you eliminate the confusion. Learn how to appoint a registered agent, draft an LLC operating agreement, and form an LLC in Pennsylvania.
If you want to use an LLC service, visit our list of the best LLC services in Pennsylvania.
Step 1: Learn about the different types of LLCs before you register
Before you set up an LLC, make sure you know what is required. You should gather all the paperwork you need and double-check the fees. These items can change at any time. You can check the official Pennsylvania Department of State Website to see the forms as well as the fees.
It is important to know what type of LLC you will need before you start. A standard LLC is the best choice for small business owners.
Some businesses may require the registration of restricted professional LLCs. Or you might be eligible to form a benefit LLC.
You should also decide whether your LLC will be managed by members or managers.
Benefit LLCs and Restricted LLCs
Pennsylvania law prohibits certain services and professionals from operating as regular LLCs. They must instead form a restricted professional LLC. These businesses include:
- Law
- Dentistry
- Optometry
- Chiropractic
- Medicine and surgery (including osteopathy)
- Podiatric medicine
- Public accounting
- Psychology
- Veterinary medicine
Restricted LLCs must file a Certificate of Annual Registration each year and pay $560 multiplied with the number of LLC members.
A benefit LLC may be a good idea if your company has a mission to make a positive difference in society and the environment. Benefit LLCs are created to offer a public benefit.
These LLCs could:
- Offer services to households or individuals with low income
- Protect, preserve, and rebuild the environment
- Encourage arts and sciences, and support technological advancements
- Facilitate job creation and economic opportunities
The state website contains a complete list of ways you can qualify for a Benefit LLC.
Benefit LLCs must submit an Annual Benefit Report document detailing the company’s efforts for the public good. The filing fee is $70.
Member-managed vs. manager-managed LLCs
It is easy to distinguish between a member-managed LLC and a manager-managed LLC. Each owner or “member”, takes part in the management of member-managed LLCs.
Manager-managed LLCs are managed by one or more people. The other owners are passive investors.
Step 2: Choose a Unique Name for Your LLC
Imagine filing an LLC, only to have it rejected. The name you selected was already taken. This can happen because Pennsylvania law requires that new business names be distinguished from existing businesses registered with the Secretary. Rejection is never a pleasant experience. It is possible to avoid it.
To determine if the name you are looking for is available, you should first search Pennsylvania’s entity search engine before filing an LLC. It can help you save time and money by determining availability before you file. Be aware that Pennsylvania LLC names must contain “limited liability company,” the abbreviation “limited”, or “company” in addition to “company”.
Step 3: Designate an Office Registered or CROP
Pennsylvania law requires that entities provide an official mailing address, or “registered offices” in Pennsylvania that can accept all legal mail. It must be a physical address, such as P.O. Boxes are not allowed.
An address may be the residence of a Pennsylvania resident, or a company authorized in Pennsylvania to do business. A Commercial Registered Office Provider (CROP) can also be contacted to provide you with a registered address.
Before listing a CROP, it is essential that you enter into a contract agreement with them. Failure to do so could result in criminal and civil penalties. The state has a large list of CROPs.
Step 4: File Your LLC Paperwork
You can now set up your LLC by submitting a Certificate of Organization form and docketing statements to the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations. Veterans and reservists are eligible to apply for a waiver of the fee for small businesses.
You will need to file a Foreign Register Statement if your business is located outside of the United States. This costs $250. International restricted professional LLCs must submit an annual Certificate of Annual Registration, along with a $560 filing fee.
Pennsylvania allows LLC domestication. This is when your LLC can be transferred from the state it was formed to another state. This cost is $70 and involves the submission of a Declaration of Domestication form.
Step 5: After You Obtain a Pennsylvania LLC…
After you have set up your Pennsylvania LLC successfully, there are two additional steps: getting an EIN through IRS and creating an Operating Agreement.
Get an Employer Identification Number, (EIN).
An EIN is required if your LLC has more members or employees. EINs are nine-digit numbers which can be viewed as a type of social security number for your company. An EIN can be obtained online via , the official website of the IRS.
Make an Operating Agreement
An operating agreement is not required to get an LLC. Operating agreements are a great way for your business to have a well-structured foundation.
The operating agreement document
- This document outlines the financial and functional decisions made by the LLC
- Regulates internal operations and assigns responsibilities
- The details of how to meet the needs and wants of business owners
Operating agreements emphasize the separation of the company and its members. It is a critical step in providing liability coverage for owners or members.
A written agreement is a good way to avoid any confusion regarding policies and roles for LLCs that have multiple members. An operating agreement ensures that everyone is clear about what is expected, financial obligations, and responsibilities.
Your LLC’s operating agreement is a foundation that will guide your business’ professional future.
Step 6: Separate personal and business assets
After you have established an LLC, it is important to seperate your personal and business assets. Get an EIN first, then open a bank account for your business. This is necessary because personal assets like your home, residential properties, stocks, and other items could be at risk in case of a lawsuit against the company. If you run an LLC correctly, it can protect you from these concerns.
Do it Yourself, or hire professionals?
You can start your LLC by doing some research. It is common to hire qualified businesses to help you set up an LLC. Although there is an additional cost, these professionals can greatly simplify the process.
Working with professionals can provide additional coverage. A law firm that helps you form your business may be able to help with legal issues later. Online legal service providers are available that specialize in business formation. These companies will usually prepare all necessary paperwork for you and answer your questions about the process. They can also provide legal advice and guidance.
We recommend that you use one of the companies in our best LLC service ranking if you are going to rely online.
Most Frequently Asked Questions
What is an LLC?
LLC stands for “limited liability company.” LLCs can be described as a hybrid of corporations and partnerships. LLCs offer better liability protection than partnership and are more flexible in ownership, management, and taxation than corporations.
What is the difference between an LLC or a DBA?
There are two types of business registrations: an LLC and a DBA. A DBA, or “doing company as”, is a business registration that does not distinguish between the owner of the business and the business. An LLC allows you to manage your personal finances and other business transactions. They are separate from the business. An LLC can help you reduce your personal liability as well as protect your assets from creditors. Find out more about LLC registrations vs DBA.
What is the cost of registering an LLC in Pennsylvania?
The current registration fee for a domestic LLC is $125 in Pennsylvania. However, this can change at any time so it is worth checking with PA Department of State to get the most up-to date information.
Can an LLC be registered in another state?
Yes. You can register your LLC in another state. Your situation may dictate that you need to register your LLC in a different state. Both states will require that you maintain a registered agent as well as comply with the annual reporting requirements. It is usually cheaper and easier to create an LLC in the state you intend to transact business.
What tax flexibility can an LLC offer?
LLCs can be taxed in a variety of ways: as partnerships, sole proprietorships, C corporations, or S corporations. This allows LLC members to reduce their tax burden.
