If you’re ready to form an LLC in Pennsylvania, chances are you’ve already done a substantial amount of work. Coming up with a business idea and creating a product or service is no easy task.
Still, no matter how much skill you have, dealing with the legalities of starting a business can be confusing. You’ll want to ensure you do it properly now to avoid any issues arising in the future. We’ve broken down the process into six simple steps so that you can form your LLC and get back to creating a thriving business.
6 Steps to Start an LLC in Pennsylvania
To form an LLC in Pennsylvania, you’ll need to work directly with the Pennsylvania Department of State. This office sets the regulations for forming a business and requires that you register with them before beginning operation.
1. Decide on a Type of LLC
An LLC (limited liability company) allows you to separate your personal and business assets, which is likely why you want to create one in the first place. Pennsylvania has a variety of types of LLCs to choose from. It’s important to consider each type to decide what structure is best for your particular business.
The different types of LLC include:
- Single-Member LLC
- Member-Managed LLC
- Manager-Managed LLC
- Benefit LLC
- Restricted LLC
- Domestic LLC
- Foreign LLC
Generally speaking, if you’re the sole owner of the LLC, it’s best to go with a single-member LLC. If you have partners and each of you wants to have some authority, a member-managed LLC is best. Or, you can elect a single decision-maker by forming a manager-managed LLC. Be sure to consider all the options before making a choice.
2. Choose a Name
Pennsylvania has regulations that affect what you can name your LLC, so it's important to consider these as you decide on a name. The state requires that each LLC name is unique, meaning that it's distinguishable from other existing LLCs. This ensures that there’s no confusion between your business and the public.
The state also requires that your business name includes one of the following terms which signify that it is an LLC:
- Limited liability company
Your business name cannot include any words that would mislead people to think that it is a corporation, like “incorporated” or “corporation.” It’s also important to note that if you’re a licensed professional opening a practice, like a doctor’s office, you’ll need to create a restricted professional company rather than an LLC (unlike some other states).
3. Reserve Your Business Name
You can check the availability of your business name by searching for it on Pennsylvania’s online business name database. If it isn’t taken, you might consider reserving the name. This ensures that no one else can claim the name for 120 days while you complete the rest of the steps to forming your LLC.
The process is simple – just submit a name reservation request online or by mail. There’s a $70 fee to file the form, but that could be worth it to ensure you don’t lose out on your ideal name.
4. Select a Registered Office
Every LLC in Pennsylvania must have a registered office that will accept the business’ legal correspondence. Most other states call this the registered agent, but it functions the same: this is the main point of contact between your business and the state. You’ll get a notification from your registered office anytime there’s official mail, including any potential legal papers.
You can use your own address or the address of one of your LLC’s members. You may also ask a trusted family member or friend to fill the role. To qualify, individuals must be 18 years old or older and a resident of Pennsylvania.
You can also use a commercial provider or an authorized company to serve as your registered agent. It’s also important to note that Pennsylvania requires that your registered office has a physical address - not a P.O. box.
5. File LLC Paperwork
With your business name and registered office in place, you’re ready for paperwork. You’ll need to fill out and submit a Certificate of Organization. This is Form DSCF:15-8821 in Pennsylvania. You can complete the process online or by mail with the Pennsylvania Department of State. There’s a $125 fee to process the paperwork.
The form is relatively simple. You’ll just need to include your LLC’s name, principal place of business, registered office address, LLC member names, effective date, and the signature of the organizer completing the form.
You’ll also fill out a Docketing Statement, also known as DSCB:15-134A, which requires some basic details, like the fiscal year. The Department of State typically takes a week to process the documents. After that, it will provide approval via a mailed certificate.
6. Get a Business License
You may need a business license to operate in Pennsylvania, depending on what industry you’re in. A few examples of licenses include zoning permits, environmental licenses, health and safety licenses, professional licenses, sales tax permits, regulatory permits, and local licenses.
At a minimum, your business likely requires a sales tax permit, which is necessary for any business that sells taxable goods or services. You can submit a PA-100 Business Entity Registration Form, which can get you most of the state business licenses you need. You may also want to check with your local city or county clerk to ensure you have the right licenses for your specific area.
The Next Steps After Forming an LLC in Pennsylvania
While setting up an LLC is a major step in forming your business, there’s still work to do to ensure you have a functioning business. Here are the next tasks you should complete.
1. Write an LLC Operating Agreement
Pennsylvania does not require that you have an LLC operating agreement, but it’s still very beneficial. Your operating agreement provides guidelines for how you manage and run your LLC, which is particularly important if there are multiple members in your LLC.
Your operating agreement can include:
- Information about your LLC’s services and products
- The name(s) and address(es) of each member
- The name and address of the manager (if applicable)
- The ownership stake of each member in the company
- Voting rights and profit shares of each member
- Capital contributions of each member
- The procedure for electing a manager or adding new members
- Dissolution procedures
- Meeting and voting procedures
2. Get an EIN
The IRS (Internal Revenue Service) assigns EINs (Employer Identification Numbers), so they’re federally controlled. The IRS only requires businesses with employees to get an EIN. However, even if you have a single-member LLC, you may benefit from getting an EIN.
An EIN allows you to tax your LLC as a corporation instead of like a sole proprietorship. You may also find an EIN useful when signing up for a business bank account or filling out tax forms. If you do intend to hire employees later on, you may save time by getting an EIN now. Use our step-by-step guide to get an EIN.
3. Set Up a Payment System
With your business up and running, it’s critical that you choose the right payment service provider. Pay.com makes getting paid easy, with a quick onboarding process and a straightforward user dashboard. You can even set up a customized checkout page that looks and feels like your website. Or, send payment requests directly to your customers via Pay Links.
Plus, Pay.com has a wide variety of payment methods to choose from. That includes credit and debit cards, digital wallets, ACH transfers, and more. You can add them to your checkout page in just a few clicks.
Pay.com also prioritizes security, which is why it has Level 1 PCI DSS compliance and 3D Secure 2.0 (3DS2). You can add security badges to your checkout page so that your customers always feel safe shopping with you.
4. Open Financial Accounts
An LLC allows you to separate your personal and business assets. It’s important to further support this separation by opening a separate business bank account. This is a fairly simple process that you can complete online or in person. Check out our guide on opening a business bank account.
You may also consider getting a business credit card or other financial software at this point. A business credit card can be helpful for day-to-day purchases, like office supplies or subscriptions. Bookkeeping software can help you stay organized and prepare you for tax season.
The Bottom Line
Forming an LLC is a big step in creating your business. While the legalities of the process can be daunting, it really just comes down to a few simple steps. As long as you take your time and carefully complete each, you’ll successfully create an LLC the right way.
Once your LLC is in place, you can move on to more exciting tasks – like setting up a payment system. You can make sure you’re prepared for your first customers by signing up with Pay.com. With our payment system, you can get set up quickly and start getting paid in no time.