How to File an LLC in Pennsylvania

If you’re an entrepreneur starting a small business or trying to add legitimacy to a side hustle, you’ve probably considered forming an LLC. But just what does it take to get started? 

We’re here to help get you on the right path and provide you with everything you need to know to get your Pennsylvania LLC up and running in no time.

Key Takeaways

• An LLC is a hybrid business structure that combines a sole proprietorship’s flexibility with a corporation’s limited liability protection.

• You only need to file a decennial report every ten years to remain in good standing with the state of Pennsylvania.

• The Pennsylvania LLC formation process includes choosing a business name, filing a certificate of organization, hiring a registered agent, and filing for an EIN.

What Is LLC Formation?

A limited liability company (LLC) is a legal business structure that pairs a sole proprietorship’s flexibility with a corporation’s liability protection. 

Personal liability protection, which separates your personal assets from your business’s, is the main benefit of forming an LLC. If your business gets involved in a lawsuit, your home, properties, cars, stocks, and other personal assets won’t get tied up in the fallout.

In addition to its limited liability, there are four other primary benefits to Pennsylvania LLC formation.

1. Paperwork and Reporting

Starting and maintaining a Pennsylvania LLC is much simpler than a C Corp or S Corp. These business structures require annual shareholder meetings and much more reporting than an LLC.

Luckily, there’s very little to do in Pennsylvania to set up your LLC and keep it in good standing. As covered in step two later in this article, you will only have to file a decennial report every ten years after filing your Certificate of Organization and Docketing Statement.

2. Pass-through Taxation

According to the IRS, an LLC is usually considered a “disregarded entity” for tax purposes.[1] You won’t pay taxes on your business, and your income will “pass through” to your personal income tax return. This allows companies to avoid costly corporate tax rates.[2] 

For small businesses without a massive abundance of profits or owners, you have flexibility when it comes to reporting your LLC’s income for tax purposes. You can also file as an S Corp, an option some LLC owners choose for larger businesses.

3. Management Flexibility

LLCs have a lot of flexibility when it comes to management and ownership. Namely, multi-member LLCs can be member-managed by the members themselves or manager-managed by outside managers.

Most smaller LLCs choose to be member-managed, whereas larger LLCs with many members tend to be manager-managed, though this is just a generalization. In reality, you can manage your LLC as you see fit, regardless of your LLC’s size.

Additionally, while corporations tend to have a maximum limit of members and shareholders, forming an LLC allows unlimited members.

4. State Fees 

It costs just $125 to file an LLC with the Pennsylvania Secretary of State Bureau of Corporations and Charitable Organizations. Additionally, there is no annual filing fee for annual reports. Instead, you’ll file your decennial report every ten years on years ending in 1 (2031, 2041, etc.) for a state fee of $70.

The low cost of Pennsylvania LLC formation makes it easy to get your business up and running in no time.

Step-By-Step Guide to Starting Your Pennsylvania LLC

The filing process and filing fee to form an LLC in the US vary by state. This is why looking up the exact guidelines for your chosen state is essential.

We’ll take you step-by-step through the process to start an LLC in Pennsylvania, so you can have the confidence to get your LLC off the ground.

Step 1: Choose a Business Name for Your Pennsylvania LLC

Choosing the right name is a critical step in starting your LLC. Your name is the essence of your brand, so it’s crucial to select one that represents your LLC in the most appropriate and memorable light possible.

You’ll also want to ensure your business name follows all Pennsylvania naming requirements. Your LLC name must:

• Not be used by any other business in the state of Pennsylvania

• Include the words “Limited Liability Company,” “Company,” “Limited,” or any abbreviations thereof

• Not include misleading words about the business type, such as “Incorporated” or “Corporation”

Once you’ve decided on a business name for your LLC, you’ll need to conduct a name search to see if it’s available in Pennsylvania. We have a free business name search tool, or you can go to the Pennsylvania Department of State website to conduct a business search.

If your name is available but you’re not ready to proceed, you can reserve your business name for up to 120 days by filing a name reservation online or by mail. There is a $70 fee.

Trademarking Your Name

Another good way to ensure your LLC name is your own is to register a trademark. A trademark protects a brand and prevents anyone from conducting business using deceptively similar names.

The Commonwealth of Pennsylvania offers state business name trademarks which must be renewed every five years. 

A federal trademark with the United States Patent and Trademark Office (USPTO) protects all 50 states. This is especially important if your business grows through online sales. You can use a service like Trademark Engine to start the trademark registration process today.

Registering a Domain

A customer’s first introduction to your business is often by searching online. That’s why it’s vital to secure a domain name for your business’s website that corresponds with your chosen LLC name.

Once you settle on a domain name for your LLC’s business website, you should search online to ensure your selected domain name is available. There are many resources online to search for the availability of domain names. We recommend this one from Squarespace. 

Step 2: Fill Out Your Pennsylvania Certificate of Organization

Your Pennslyvania Certificate of Organization, often called Articles of Organization in other states, serves as your official application for LLC formation with the Pennsylvania Department of State. 

You need the following information to fill out your Pennsylvania Certificate of Organization:

• LLC’s name

• Address of your principal place of business

• Name and address of your PA resident agent

• Names of every LLC member

• Effective date of LLC formation (if not immediate)

• Signature of organizer

Filing a Certificate of Organization in Pennsylvania costs $125 in state fees. We’ll handle the paperwork and file your Pennsylvania LLC for you today. You can also file online by searching for the Certificate of Organization Limited Liability Company form on the PA Department of State website.

In addition to your Certificate of Organization, all new business entities need to file a Docketing Statement at the same time with the following information:

• LLC name

• Name and address of the tax-responsible party

• Description of business activity

• FEIN (Federal Employer Identification Number)

• Date of the tax year or fiscal year-end

The Pennsylvania Department of State will usually process your Certificate of Organization in about a week and send your approval by mail. You will have the chance to correct and refile your application if it gets rejected on any grounds.

Foreign LLCs

If you originally started your LLC in a different state and are expanding into Pennsylvania, your business will be a foreign LLC. You must file as a foreign association and complete a Foreign Registration Statement for a filing fee of $250.

Pennsylvania also allows for LLC domestication, which is when you change the home state of your LLC. Registering as a domestic LLC in Pennsylvania will make you a foreign LLC in the state you initially formed your LLC.

To register as a domestic LLC in Pennsylvania, you can file the Statement of Domestication form for a filing fee of $70.

Decennial Report

In most states, you’ll have to file an annual report every year on the anniversary of your LLC effective date. A Pennsylvania LLC requires less upkeep; you’ll only need to file your decennial report every ten years. 

Under Pennsylvania law, decennial reports are due each year that ends in a 1. So, if you file your LLC formation in 2023, your first decennial report will be due in 2031, then in 2041, and so on.

Your decennial report includes the same information from your Certificate of Organization and any business updates since the last filing. It costs $70 to file your decennial report. You can do so online or by mail.

Step 3: Hire a Pennsylvania Registered Agent

You might have noticed that you must include your registered agent information on your Pennsylvania Certificate of Organization. According to Pennsylvania law, your registered agent is where officials will send all of your business paperwork, legal documents, and service of process.

Your registered agent is a person or entity and business address you appoint to receive all official and legal correspondence for your Pennsylvania LLC. Your registered agent is the main point of contact between your business and the state.

In most cases, you’ll hire a registered agent service to handle your Pennsylvania registered office needs. Of course, you may wonder if you should even bother shelling out the extra expense when you can act as your own Pennsylvania registered agent. While that’s an option available to any business owner, here are four reasons why it might not be a good idea.

1. Privacy

The information on your LLC’s Certificate of Organization will be public record, including your registered office street address. If you use your home or office address, you risk your privacy and litigants showing up at your place of business and serving you in front of your customers.

Instead, hiring a registered agent service keeps your privacy secure and ensures you don’t have to face the negative optics of being sued in front of your clientele.

2. Business Hours

A registered agent must maintain regular business hours, meaning you must be at your registered office address during your scheduled business hours. This doesn’t easily allow you to step out occasionally, go on extended business lunches, take vacations, or even have a sick day.

A registered agent service allows you to offload all those required business hours to a dependable professional who can reliably accept all your legal documents and service of process.

3. Mail Processing

As a business owner, you already have mountains of mail to deal with. Adding the responsibility of a registered agent to the mix only means more mail to process, increasing the likelihood that important correspondence slips through the cracks.

Your LLC could face severe consequences if you don’t respond to your registered agent’s mail promptly, such as hefty fines or even dissolution. That’s why it’s best to designate another party to handle your registered office mail and ensure you never miss a deadline.

4. Requirements

You must have one registered agent for every state you’re registered to do business in. Because you can’t be present at physical addresses in multiple states simultaneously, you’ll inevitably have to open additional offices and hire other agents as your business expands.

We can handle all your registered agent needs in one fell swoop. Available in all 50 states, our registered agent service ensures that you’ll have a designated, reliable agent available to process all of your LLC’s official and legal documents as they come in.

Why choose our registered agent service?

• 24/7 access to a secure online dashboard to review all of your important documents

• Compliance with state requirements, with reminders for upcoming due dates and deadlines 

• Privacy protection, guaranteeing your personal or business address is off the public record

Swyft Filings’s registered agent service costs just $199 annually.

Step 4: Create an LLC Operating Agreement

An LLC operating agreement is an internal document outlining how your Pennsylvania LLC will run. This helps all members agree on business procedures and prevent future conflict.

While the Pennsylvania Department of State does not require a written operating agreement on record, it’s still a good idea to draft one for a variety of reasons, including:

• Allowing you to determine how your LLC will operate instead of the state

• Creating legitimacy for your business in the eyes of institutions like banks and investors 

• Ensuring that members are on the same page regarding the minutiae of LLC operation

• Providing a roadmap for navigating future changes in the LLC’s structure, such as electing new members, members leaving, or LLC dissolution

Even if you’re running a single-member LLC, you can benefit from creating an operating agreement. The legitimacy it lends to business owners conveys that you’ve well thought out your LLC’s current and future operation.

LLC operating agreements can vary a lot in content but generally outline the following:

1. General Business Information

This section includes your principal business address, a general business description, and your LLC’s duration.

2. Management Structure

Is your LLC member-managed or manager-managed? How are voting rights determined?

3. Tax Designation

How will you tax your LLC initially? As a sole proprietorship, partnership, S Corp, or C Corp? You should also include procedures for changing tax designations in the future.

4. Member Information

This section includes the names and addresses of all initial members, along with members’ roles, profit distributions, management power, contribution, and ownership percentages.

5. Decision Making

When decisions come to a vote, will majority rule suffice, or will you make each decision unanimously?

6. Membership Changes

In what manner will ownership be transferred or distributed when a member leaves? What about when a member joins?

7. LLC Dissolution

This section includes guidelines for voting on dissolution, profit and asset distribution, wrapping up legal cases, and debt repayment if you put your LLC to rest.

Step 5: File for an Employer Identification Number

The final step is to apply for your employer identification number (EIN) for your Pennsylvania business. Also known as a federal tax identification (FTID) or federal employer identification number (FEIN), an EIN is a nine-digit federal ID for businesses similar to a social security number. 

The Internal Revenue Service (IRS) assigns an EIN to your business so they can easily identify you when reporting employment taxes on your federal tax return. Your LLC will also need an EIN when it comes to:

• Hiring employees

• Reporting federal income tax

• Opening a business bank account

• Registering for a PA tax account with the Pennsylvania Department of Revenue[4]

• Filing business taxes

• Applying for a business credit card

• Applying for various local business licenses

We can get your EIN filed for you, or you can also apply for an EIN online on the IRS website.

Let Us Handle Your LLC Paperwork

If all the above looks like a headache, let Swyft Filings come to the rescue. Our LLC service can help you with all of your filing for your Pennsylvania LLC and more.

LLC formation doesn’t have to be confusing. Give us the necessary information, and we’ll handle all your filing needs. Thousands of satisfied customers have used our trusted service, and it takes as little as 10 minutes to get started.

At Swyft Filings, we help entrepreneurs get their small businesses off the ground. If you’re ready to start an LLC in Pennsylvania, we can help set you up so you can focus on what you do best.

FAQs:

How much does it cost to set up an LLC in Pennsylvania?

It costs $125 to start an LLC in Pennsylvania. 

How is an LLC taxed in Pennsylvania?

An LLC is federally taxed automatically as a disregarded entity unless you elect to be taxed as a partnership, S Corp, or C Corp. 

All Pennsylvania corporations and LLCs are taxed at the corporate net income tax rate of 9.99%. LLCs electing to get taxed as partnerships or S Corps are subject to the personal net income tax rate of 3.07%, according to the Pennsylvania Department of Revenue.[3]

To register for your Pennsylvania LLC tax accounts, complete the PA Enterprise Registration form PA-100. The PA-100 allows you to open multiple tax accounts for the following:

• Employer withholding tax

• Promoter license

• Promotor Transportation Assistance Tax License

• Sales, Use, Hotel Occupancy Tax License

• Tobacco Products’ License

• Transient Vendor Certificate

• Unemployment Compensation

• Use Tax, Wholesaler Certificate

• Workers’ Compensation Coverage

• Vehicle Rental Tax[5]

The sales tax rate for Pennsylvania businesses selling tangible goods or services is 6%. However, Allegheny has an additional 1% sales tax rate, and Philadelphia County has an extra 2%.

What are the benefits of a Pennsylvania LLC?

There are many benefits to forming an LLC. These include:

1. Limited liability and personal asset protection

2. Less paperwork and reporting

3. Pass-through taxation

4. Management flexibility

5. Low state fees

Pennsylvania is also an excellent state to start an LLC. There’s a relatively low unemployment rate of 4.8%, meaning Pennsylvania has a competitive labor market conducive to hiring great talent.[4] The state’s geographic and economic diversity also provides a market for all types of businesses.

How do you dissolve an LLC in Pennsylvania?

You should consult your LLC operating agreement when dissolving an LLC in Pennsylvania. This document often includes steps for closing a business, including voting arrangements, profit and loss distribution, and debt repayment.

The Pennsylvania Department of Revenue outlines further steps you’ll need to take:

1. Ensure all liabilities and filing requirements are satisfied with the PA Department of Revenue by contacting the Customer Experience Center by phone at 717-783-8434.

2. Close all PA Department of Revenue business tax accounts.

3. File your Articles of Dissolution with the Department of State after receiving Tax Clearance Certificates from the Department of Revenue and the Department of Labor & Industry[5].

You can file your Articles of Dissolution online through the Department of State website. The fee for LLC dissolution is $70.

Bibliography

1. Internal Revenue Service. “Limited Liability Company (LLC).” Accessed January 28, 2022.

2. Tax Foundation. “Pass-through Business: Data and Policy.” Accessed January 28, 2022.

3. Pennsylvania Department of Revenue. “Partnerships/S Corporations/Limited Liability Companies.” Accessed January 28, 2022.

4. Pennsylvania Department of Revenue. “Starting a Business in Pennsylvania: A Guide to Pennsylvania Taxes.” Accessed January 28, 2022.

5. Pennsylvania Department of Revenue. “How Do I Dissolve a Business Entity in Pennsylvania?” Accessed January 28, 2022.