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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Forming an LLC in the State of Pennsylvania follows a similar procedure to those found in other U.S. states, although the state does require an additional document known as a New Entity Docketing Statement to be filed during registration. Additionally, Pennsylvania imposes special requirements on foreign and domestic LLCs offering certain restricted professional services.
To avoid a misstep in the filing process, follow these steps to start an LLC in Pennsylvania, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Pennsylvania step-by-step
1. Select a name for your Pennsylvania LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the State of Pennsylvania:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the Pennsylvania Department of State.
- An LLC’s name must contain one of the following: “Limited Liability Company,” “Limited,” or “Limited Liability Company.” Standard abbreviations of these words are also acceptable.
Check the availability of your chosen LLC name
Confirm that your LLC name is available in Pennsylvania using the Pennsylvania Department of State Search Business Entity tool.
Reserve your LLC name with the Department of State
It’s a good idea to reserve your name with the Department of State to prevent another Pennsylvania business entity from using it before you file your Certificate of Organization.
2. Designate a registered agent (registered office)
As in every U.S. state, forming an LLC in Pennsylvania requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf. However, the state refers to a registered agent as a registered office.
The registered office must either be a state resident or business entity with a street address in Pennsylvania OR if the individual or business is based out-of-state, they must have a business office in Pennsylvania.
3. File a Certificate of Organization and New Entity Docketing Statement
An LLC is created in Pennsylvania through the filing of a Certificate of Organization Domestic Limited Liability Company and a New Entity Docketing Statement with the Pennsylvania Department of State.
You can file the certificate online using PENN file or print and complete a form and file by mail. The filing fee is $125.
The Certificate of Organization must provide the following information:
- LLC’s name
- Registered office name and address
- The effective date of the Certificate of Organization
- Whether the LLC provides professional services
- Whether the LLC is a public benefit company
- LLC organizers’ names and signatures
Unlike most other states, the Pennsylvania Department of State requires an LLC to submit a New Entity Docketing Statement in addition to its Certificate of Organization. The statement must include the following details:
- LLC’s name
- Name and address of the individual that will file the LLC’s initial tax reports
- LLC business description
- Federal employer identification number
- The date ending the LLC’s fiscal year
Foreign LLC registration
An LLC formed out-of-state that intends to do business in Pennsylvania must register with the Pennsylvania Department of State.
Follow these steps to do business in Pennsylvania as a foreign LLC:
- Comply with Pennsylvania LLC naming guidelines and confirm that your LLC name is available in the state using the Pennsylvania Department of State Search Business Entity tool.
- If the name is already in use, you must file a Registration of Fictitious Name to use a different name in the state and pay the $70 filing fee.
- Appoint a Pennsylvania registered office (registered agent).
- File a Foreign Registration Statement and New Entity Docketing Statement (see section above) with the Pennsylvania Department of State. The statement can be filed online or through the mail. The filing fee is $250.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Pennsylvania, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Pennsylvania LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
File Annual Registration (Restricted foreign and professional LLCs only)
Foreign and domestic LLCs active in Pennsylvania that offer certain restricted professional services are required to file a Certificate of Annual Registration with the Department of State Corporation Bureau every year by April 15. LLCs that do not fit this description are not required to file an annual registration.
The certificate may be filed online or by mail. The annual registration filing fee amounts to $560 for every member of the LLC. For example, if an LLC has 4 members, it must pay a filing fee of $2,240.
Register with the Pennsylvania Department of Revenue
Certain LLCs active in Pennsylvania must register with the Pennsylvania Department of Revenue in order to fulfill a number of state tax obligations. This includes LLCs that collect sales tax and those that have employees.
Registering for most state taxes can be done using the DOR e-Services Center. The website also includes a list of major state business taxes.
Obtain business licenses and permits
LLCs active in Pennsylvania may be required to obtain one or more state or local business licenses or permits depending on their type of business and location.
The Pennsylvania Business One-Stop Shop can help in determining which state and local licenses an LLC may need to obtain.
For additional information on local licensing regulations, contact a city or county clerk in the city or county where your LLC is located.
Pennsylvania LLC checklist
A Pennsylvania LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the Pennsylvania Department of State.
- Must contain one of the following: “Limited Liability Company,” “Limited,” or “Limited Liability Company.” Standard abbreviations of these words are also acceptable.
Formational documents and filing fees:
- Name Reservation – $70 filing fee (optional yet recommended)
- Certificate of Organization Domestic Limited Liability Company – $125 filing fee
- Foreign Registration Statement – $250 filing fee (Foreign LLCs only)
- New Entity Docketing Statement – Required of both foreign and domestic LLCs upon initial registration
- An LLC is created in Pennsylvania through the filing of a Certificate of Organization Domestic Limited Liability Company and a New Entity Docketing Statement with the Pennsylvania Department of State.
Additional legal obligations:
- File a Certificate of Annual Registration – Required for professional LLCs and foreign LLCs engaged in specific restricted professional services
- Register with the Pennsylvania Department of Revenue – Required for some certain LLCs, including those with employees and those that collect sales tax
- Obtain business licenses and permits – Required for certain LLCs depending on their business type and location