As the most affordable state in the Northeast, Pennsylvania is quickly becoming a hot spot for entrepreneurs looking to start a business up north without the notoriously high cost of living.
This coupled with the fact that it has the 2nd most diverse state economy in the U.S. makes starting a business in PA the perfect location for entrepreneurs! It makes sense then that so many entrepreneurs would want to know how to start a business in PA.
So, let’s dive into starting a business in PA, step by step!
Choose a Business Entity
When you’re trying to figure out questions like, “do I create an LLC in PA?” it all begins with entity formation. The most popular entity structures are Limited Liability Companies (LLCs) or Corporations. What’s the difference between a Corporation and LLC in PA? The answer is simple…
A corporation is a legal entity created separately from those who own and operate it. A corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S and C corporations.
LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, forming an LLC in PA protects the owners and operators from personal liability similar to a corporation, and they possess the “pass-through” tax benefits of a partnership.
Create a Business Name
Choosing a business name may not seem as important as choosing a business entity, but it is. Matter of fact, many legal issues can arise from choosing the wrong name.
So, let’s look at how to register a business name in PA:
- First off, come up with a unique business name that captures what your business will do, is easy to pronounce, and isn’t era specific or too niche. This is easier said than done, so take your time.
- Once you’ve decided on a name, search the web to make sure no one is using it. This may force you to go back to the drawing board. Also, check if your desired sire name or URL isn’t taken yet.
- After doing a basic search, you’ll need to do a more thorough trademark search. This is an important step that can lead to a lawsuit if done incorrectly. A good rule of thumb to follow when doing a trademark search is to search for misspellings, plurals, variations of spelling, sound-alike, and more…
- The last step is to run your chosen name through the Pennsylvania Secretary of State’s business entity database making sure to follow the same rules mentioned above.
Register Your Business
Before registering a business in PA, you must choose a city as each has different rules and regulations. Philadelphia is a popular location, so let’s look at how to register a business in Philadelphia, including payables such as LLC cost, PA government fees, and so on.
Creating an LLC in PA
You’ll need to file what is known as Articles of Organization with the Pennsylvania Secretary of State LLC Department.
Once filed and approved, you’ll need to properly organize your LLC with an Operating Agreement, which discusses the structure of the LLC, its members, as well as its terms and conditions.
Creating a Corporation in PA
Similar to setting up an LLC in PA, you’ll first need to file Articles of Incorporation with the Pennsylvania Secretary of State Corporation Division.
After that, you’ll need to hold an “Organizational Meeting” to determine the percentage of ownership for each shareholder as well as resolve to do a number of other tasks.
To elect S-Corporation status with the IRS, corporations must file IRS Form 2553.
Some entrepreneurs try to tackle these steps on their own, but most find a business formation company, like Inc Authority, to handle these steps for them.
So, if in the process of learning how to start a business in PA you get a little overwhelmed, contact the business experts at Inc Authority!
Get Your Employee Identification Number or EIN
The next step you’ll want to tackle is getting your EIN or Tax ID number (TIN). This number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.
Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services and credit cards, and pay for any LLC cost PA laws require.
Attain Your Business Licenses and Permits
The final step you must perform regarding how to get an LLC in PA up and running is to get a business license. Getting the proper licenses and permits for your small business, authorizes your company to do business in your city/county.
Pennsylvania uses an easy-to-use system called PALS to help entrepreneurs easily discover what licenses/permits they need. Using this Penn file system also tells you the fees (LLC cost, PA state fees, etc.) involved. This will vary depending on your operating city county and industry.
Let’s get started
Starting an LLC in PA (or any other business for that matter) is an exciting opportunity, but like starting any business it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?
We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the licenses and permits needed to run your business in PA. We can also advise you on the things you need to pay, such as LLC cost, PA state fees and other payables.
Not to mention we offer a ton of free management and report tools to help make running your business as simple as possible. Please contact us or visit our website today to get started!
Incorporating is the most powerful thing you can do to legitimize your new business. And at IncAuthority.com, getting an LLC in PA set up is 100% free. Always. So, don’t wait. Form your LLC today and enjoy the protection due to you and your business under the law. Start now for free