To set up a business in any state, there are certain rules that must be followed and paperwork that must be filed. The process is fairly simple, but for new entrepreneurs, it can seem a bit daunting.
Certain documents must be filled out and signed, a registered agent must be selected, an operating agreement should be created, and an employer identification number is required by the IRS. To help entrepreneurs work through each step in the process, we’ve created this guide.
We’ll explain how to set up an LLC in Pennsylvania and discuss the role of a registered agent. A registered agent will receive important business documents on behalf of your company. Selecting who will fill this role is the first big decision you’ll make as a company owner.
To help work through the steps of creating a Pennsylvania LLC, follow these steps:
How is an LLC formed in Pennsylvania?
To establish an LLC in Pennsylvania, entrepreneurs must obtain a Certificate of Organization. To do so, the business owner fills out a one-to-two page document and submits it to the state. However, there are a few steps that must be done before filing this document to officially create a business in Pennsylvania. Follow these steps to make sure nothing is missed:
1. Name the company
As you might expect, every company needs a name. Not just any name, a unique name. State laws say that no two businesses in Pennsylvania can have the same name. To make sure the name that you like isn’t already in use, run a business name check on the Pennsylvania Department of State website. If the name is unique, it’s still not a done deal. The name must also pass these state requirements:
- The name must include “Limited Liability Company” in the title or its abbreviation, “LLC.”
- No company name should allude to a connection with the government. For that reason, company names that refer to government agencies aren’t allowed. (For instance, a company name can’t have “FBI” in its name).
- Be aware that some names may require additional approval or explanation.
Before officially filing any paperwork, this is also a good time to check on the availability of a domain name. Most companies want the domain name to match the company name, but domain names aren’t always available. This is important to figure out before submitting any documents.
2. Pick a registered agent
Every company, in every state, must have a registered agent. In Pennsylvania, the business owner or LLC organizer picks the company’s registered agent. A registered agent will receive official documents for the company. Documents like tax notices or service of process papers (served during a lawsuit) will be directed to the company’s registered agent.
Since the registered agent will receive sensitive information, it’s vital to select someone trustworthy. The owner can fill this role, but so can another person or company.
3. Obtain an EIN
Next on the entrepreneurial to-do list is to obtain an EIN or an employer identification number. The State of Pennsylvania requires this number on part of the LLC formation papers, so it must be obtained before moving forward.
An EIN is a nine-digit number that’s issued by the IRS. It’s primarily used for tax purposes but is also used for other financial actions like setting up business bank accounts, paying employees, or applying for a business loan.
To get an EIN, log onto the IRS website, answer a few questions, and an EIN is given at the end of the session. It takes about five minutes.
4. File the Certificate of Organization
To legally establish a business in the state, it’s time to fill out and file a Certificate of Organization. This is the official LLC formation paperwork for the State of Pennsylvania. In other states, the LLC formation documents are called Articles of Formation or Articles of Organization. No matter the name, they all serve the same purpose: To establish a company in the state.
The Certificate of Organization will ask the business owner to fill out the company name and address, the registered agent’s name and address, provide the purpose of the company, and a list of products or services, and it may also require a list of managing members. The LLC organizer must sign it and submit it to the Pennsylvania Department of State.
The state also requires LLCs to file a New Entity Docketing Statement. This document is unique to Pennsylvania. It asks for the company name, the name of the person responsible for filing the company taxes, a description of the company’s activity, and a federal EIN or employer identification number.
The cost to file both the Certificate of Organization and the New Entity Docketing Statement is $125. It can be completed online or by mail.
It takes 2-3 business days for the state to approve the paperwork. Once approved, an LLC is officially set up in Pennsylvania.
5. Create a company operating agreement
Every company, no matter what state it resides in, should create an operating agreement. An operating agreement is as it sounds, a document that outlines how the company will run. It’s meant to outline the roles of each managing member, the decision-making process, and explain how profits and losses are managed. The purpose of the document is to avoid problems in the future.
The state doesn’t require an operating agreement to be submitted, but it’s still advisable to create one.
6. File an annual report
While most states require LLCs to file an annual report and pay a filing fee, only certain LLCs must do so in Pennsylvania. Professional LLCs and foreign LLCs that are engaged in professional services must file one. To learn more, check with the Pennsylvania Department of State.
What is a Pennsylvania registered agent?
A Pennsylvania registered agent is a person or company that’s willing to accept official documents for your company. The registered agent will likely receive these notices by registered mail or in-person delivery.
Do I really need a registered agent in Pennsylvania?
Yes. The State of Pennsylvania requires all LLCs to list a registered agent on its LLC formation paperwork and maintain an up-to-date contact.
Can I be my own registered agent in Pennsylvania?
Yes. An owner can be a registered agent in Pennsylvania. It’s fairly common practice in most states for the owner to be the company’s registered agent. However, another employee, a friend, or even a family member can serve in this role too. A professional registered agent service can also be hired to handle incoming correspondence.
Who can be a registered agent in Pennsylvania?
In Pennsylvania, as in other states, a registered agent can be a person or a company. A person must be over the age of 18 and must have a street address in Pennsylvania. If a company is selected, the company must be in good standing with the state and must have a physical street address in the state, not a P.O. box.
In addition, the person or company must be able to accept documents during regular business hours. Regular business hours are defined as Monday through Friday between (roughly) 9 a.m.-5 p.m.
Why would a company choose to work with a registered agent service?
A registered agent service can receive company documents, notify the owner of delivery, and scan the documents into an online portal before mailing them to the owner. There are many reasons for companies to elect a registered agent service, but here are the most common reasons:
- Convenience. It’s often easier for busy owners to have a company be “on-call” to accept documents for the company. Between traveling and managing the day-to-day operations of a company, hiring a service is convenient.
- Peace of mind. Owners often feel more secure when a registered agent service is set up to accept documents. It ensures that nothing gets missed.
- Privacy. Some of the documents delivered to a registered agent are sensitive. If the company is sued, for example, the registered agent will “be served” documents. For privacy, some owners prefer to have these documents delivered offsite.
List of Pennsylvania registered agent services
Pennsylvania has a list of qualified registered agent services, but here’s a list of three choices so entrepreneurs can get an idea of what’s available. Note that all of these choices offer a broad range of services, including a registered agent service.
- Incfile.com: Incfile.com can help entrepreneurs file their LLC formation paperwork and serve as the company’s registered agent. The online company offers a host of beneficial business services that includes filing reports and other necessary documents with the state. The first year is free. After that, it’s $119 a year.
- Northwest Registered Agent: For $125 a year, Northwest Registered Agent offers an online portal, real-time updates when mail is received, and pricing that remains the same each year. The company offers its services in several states and has years of experience in the field. Additional business services are also offered.
- Swyft Filings: Swyft Filings offers registered agent services that start at $149 a year. Users get an online dashboard, report and filing reminders, and secure document storage for this fee. In addition, the company has a buffet of other business services available when you have a need.
How much does a registered agent service cost in Pennsylvania?
Wondering how much a registered agent service costs? The cost may surprise you. For just $50 a year, a company will be “on-call” to receive documents for your business and notify the owner of any delivery.
Of course, there are companies that charge more than $50 a year. These companies offer more features though, like assistance with compliance and annual reports.
How does an owner select a registered agent in Pennsylvania?
An owner selects a registered agent by listing the person or company on the Certificate of Organization. The form requires the person’s name and address.
Can a company change its registered agent?
Yes. The state has a change form that can be filed to switch a company’s registered agent. The form is filed with the Pennsylvania Department of State, Corporations Bureau. There is a $70 filing fee to complete this change with the state.
What’s a statutory agent?
A statutory agent is the same as a registered agent. Different states use different names. In Pennsylvania, the most common name is registered agent. Additional names include service of process agent and resident agent.
What’s a commercial registered agent?
A company has a commercial agent if a registered agent service is hired to accept documents. If a person, like an owner or a spouse, is selected, the company is said to have a non-commercial agent. In some cases, the state will ask if your company has a commercial or noncommercial registered agent, so it’s important to know the difference.