How to Start an LLC in Pennsylvania: Cost and Registration Steps

Playing a massive role in the history of the American nation and its values, is a Keystone State good enough for starting a business? Today, Pennsylvania hosts principal offices of a few nationwide companies proving that it provides a solid foundation for ambitious ventures. Yet, if you want to start small, the state welcomes startup projects and promising bold initiatives too.

Located in a geographically favorable position, Pennsylvania is close to the large markets of New York, Washington, and Boston with attractive tech-friendly environments. To help starter businesses rise and stand strong on their feet, the state comes up with great tax incentives for small entities entitled to pass-through taxation. Thus, personal income tax, sales, and property tax rates in Pennsylvania are at a relatively low level as compared to other states.

Having distinct four seasons and varying landscapes, Pennsylvania offers a number of different opportunities to businesses in the sphere of tourism and recreation. Meanwhile, the Pittsburgh area is a cradle for many technological startups.

While you can hardly go wrong with Pennsylvania as a state to launch a private business, creating and pushing a new enterprise to the market is not an easy task involving a whole number of processes. One of the first steps to take on your long business journey is to give your venture a legal form. More and more businessmen-to-be choose an LLC structure for their enterprises.

Detailed Instructions on How to Set up an LLC in Pennsylvania

Formally, creating an LLC in Pennsylvania is as easy as registering your LLC statute with the state. However, to start your entity on the right foot and make it move in the right direction, you should complete a multi-step process split into preparation, filing, and post-formation stages, each being its integral part. 

Besides, though an LLC formation is a pretty standardized procedure across the states, each jurisdiction has specific regulatory details and tweaks to be observed to comply with the law. So, follow our virtual Pennsylvania LLC registration tour to form your entity without a hassle.

Giving Your Pennsylvania LLC a Name

A legal route to your Pennsylvania LLC starts with the choice of the name for your future company. Naming an LLC is somewhat different than naming an unincorporated entity. LLCs are not necessarily named after their owners. You could name your enterprise nearly anything you want. On the other hand, though, there are still rules you need to stick to when picking a moniker for your entity.

Business Naming Rules in Pennsylvania

LLC naming instructions and requirements are set forth in Chapter 17, Title 19 of the PA Code. Overall, you are not limited in your creative endeavors, yet, there are a few key rules to keep in mind when inventing an LLC moniker in Pennsylvania:

1. An LLC designator is a must-have part that clearly defines the type of entity for your company. The variations you are allowed to use cover abbreviated forms like “LLC”, “L.L.C.”, “LTD”, “Ltd.”, “Limited”, “Company”, or “Co.” and full forms like “Limited Liability Company”, “Limited Liability Co.”, “Ltd. Liability Company”, or “Ltd. Liability Co.”;
2. You are not allowed to use other entity designators that will sound confusing and indicate another entity type. Restricted designators include “Corporation”, “Corp.”, “Incorporated”, and “Inc.’;
3. Your Pennsylvania LLC name should be unique in the state, i.e. distinguishable from all existing or registration pending entity names.
4. Minor modifications won’t make the name unique but rather make it confusingly similar. Thus, by switching to plurals or changing word forms as well as by using articles, punctuation marks, other designators, conjunctions, suffixes, prefixes, or numerals, you won’t make the existing moniker sound different for the Pennsylvania Bureau of Corporations;
5. The PA Code has a whole bunch of restricted words you can’t use in the name of your LLC in this state. Government names (agency, bureau, commission, department), insurance names (indemnity, guarantee, insurance), banking names (bank, trust), foul language, blasphemy words, politically incorrect words, and words showing racism, intolerance, or aggression, and educational names (institution, college, school) are under the ban;
6. Professional designators such as “accountant”, “architect”, “dentist”, “doctor”, “engineer”, “drug store”, etc. can be used only if you have an appropriate professional license in place or any other permissive document allowing for their use. You can check the whole list in the code;
7. You cannot refer to public utility names unless you have permission from the PA Public UItility Commission or the Federal Regulatory Commission.

Quick Naming Tips

A company name is a sort of your LLC’s business card. It should somehow relate to the activity you’ll be engaged in and imply the purpose of your enterprise. In other words, it should be indicative of your business. On the other hand, the moniker should let your LLC stand out from the crowd to make it noticeable and easy to market.

At the same time, though, the name should comply with all the above-mentioned rules and be different from the names of the companies already operating in the Pennsylvania market. To help you come up with the original and compliant LLC name, we have a few simple yet efficient tips:

• Instead of using common words, search for less common synonyms;
• Mix in foreign words, acronyms, or extraordinary abbreviations into your LLC name;
• By integrating your personal name into the business moniker, you’ll increase the chances to get a distinguishable name;
• Jungle with words to create some unexpected combos that will set your name apart among the rivals;
• Feel free to refer to literature, geographical, artistic, and scientific terms;
• Refrain from using popular brand names and tradenames to modify them into something new. This might not only cause your filing application to be rejected by the state but also lead to copyright lawsuits and other legal problems.

Performing a Name Search in Pennsylvania

Our strong recommendation is that you avoid using random name versions or the options that first come to your mind. Before introducing any moniker to your LLC statute, you should make sure the variant you choose for your enterprise is available in the state.

Checking the name availability in Pennsylvania is easy. You can do it via a free name search tool on the Pennsylvania Bureau of Corporation’s website. It will scrutinize the state registries and business databases to pinpoint the names that sound similar to the name version you have in mind. 

It’s advisable that you perform a search not only by a full name but also by separate words or word combos to detect all possible coincidences and pick the alternative that will be 100% unique and accepted by the state regulator afterward.
If you hit the spot with a distinguishable business name but are not quite ready to proceed to file the statute with the state, you can put the chosen name version on hold and reserve it for a period of up to 120 days. For that purpose, you should submit the name reservation form with the state department and pay a $70 fee.

Using a Fictitious Name in Pennsylvania

The company name you file with the state when starting an LLC in Pennsylvania will be your LLC’s legal or registered name. It’s the one you can’t change without making amendments to your foundation documents and the one that should appear in all formal and official papers and be entered in regulatory registries and databases.

However, the state of Pennsylvania allows running your LLC under a different name, which is called a fictitious, assumed, or trade name or DBA (doing business as). Though it also requires state registration to be lawfully used, it allows omitting an “LLC” tag and could look and sound different from your LLC’s registered name.

The biggest benefit of a fictitious name is that you can register multiple DBAs for a single LLC. This will enable you to launch different product series and promote different brands without the need to form multiple entities and have all the accounting and reporting work done for a single legal entity.

Convenience and practicality apart, fictitious names give an opportunity to expand or move your activity to other states without a problem as well as try yourself in some new business areas or industries without the hassle of registering and maintaining multiple legal entities.
Filing a DBA in Pennsylvania is easy. You can do it online or via mail by simply submitting a Fictitious Name Registration Form and paying a registration fee of $70 per DBA.

Assigning a Registered Agent to Form an LLC in Pennsylvania

With the name chosen and checked, it’s high time to proceed to the next vital step that precedes the LLC statute filing. At this point, you need to find and designate a Pennsylvania registered agent for your future LLC.

An agent rep is a law requirement for all LLCs in the US, so you can’t skip it in Pennsylvania. The law in this state calls for LLCs to have a registered office (called a registered or resident agent in most other states) to receive business mail and service of process.

A rule of thumb is that a registered office should have a physical address, with no P.O. boxes allowed. It should stay open from 9 a.m. to 5 p.m. on business days, with someone available in it to receive correspondence and sign for it if necessary. For this purpose, you can use a registered address of any adult individual or a legal entity that is a Pennsylvania resident.

While a state requirement, the role of the registered agent for your LLC registration in Pennsylvania should not be underestimated. Since all state notifications, tax notes, filing requests, public letters, court summons, and lawsuits are automatically addressed to the registered office, your Pennsylvania agent functions as a permanent mailing hub between you and the state. As such, this rep will stand on guard of your business compliance status by timely informing you about any vital letters and ensuring you’ll keep up with the state requirements.

Who Can Serve Your Registered Agent in Pennsylvania

When selecting a candidate for this position, your choice is only limited by the Pennsylvania registered address as well as by the age of individuals and by the legitimacy of entities. No educational or professional background and specific skills or expertise are required. As a result, you have the following alternatives:

• You can entrust this task to any of your adult family members, neighbors, or friends who reside in Pennsylvania and could be present under their registered addresses most part of the day;
• You can appoint your accountant, attorney, or tax advisor to this role who can combine it with their main job responsibilities. The plus about this option is that those specialists could use their office addresses for your registered office since they work there and are present there during business hours;
• You can hire one of the dedicated agent services that come in numbers today and are devoted solely to this task. One of those companies will handle your mail in a set-and-forget manner so that you won’t have to bother about anything at all;
• You can serve as your own registered agent and process all your mail by yourself.

Third-Party Registered Agent Benefits

Many beginner entrepreneurs don’t treat the agent’s function seriously enough and choose to perform this job on their own. There are certainly some pluses about this option. Thus, you’ll save on paying someone else for handling this task, keep all your mail totally confidential and private, and won’t depend on anyone in this aspect.

However, the garden is not all rosy. Being your own agent might be a good alternative for small or home-run businesses when you don’t have too many business chores on your plate. Yet, it’s not the best option for an enterprise with ambitious plans or a business that quickly gains pace. At some point, you’ll understand that this function is an added burden, and you’ll sacrifice the diligence for other tasks and activities that seem more important and urgent.

Hence, delegating the agent’s work to a third party is a better alternative that offers a number of benefits from the start:

• You won’t have to reveal your personal data to the public and can stay private since it’s the agent’s address that will be entered into state registries; 
• You won’t be bound to your home or office and have an opportunity to plan your day as you deem necessary. Thus, you’ll get more freedom both for business activities and for personal life; 
• You won’t have to tackle piles of junk mail to sort out crucial correspondence and, as a result, won’t miss anything important;
• You’ll be able to use the registered office address for your business purposes or even use it to file your LLC in Pennsylvania. 

To get complete peace of mind and rest assured your vital mail is taken care of by professionals, a specialized registered agent service is presumably your best option for a Pennsylvania registered office. The average service cost is about $100 -$150 per annum, yet, it’s well worth paying that price. Most often than not, providers also include added compliance assistance and handy online maintenance into that price.

Besides, a big advantage of such services is that they operate across the US and will cover your needs in any state, should you decide to expand your activity at some point.

Pennsylvania LLC Registration: Filing the Statute

Technically, setting up an LLC in Pennsylvania is about registering your LLC statute with the state. In practice, though, you can proceed to this step only after selecting and checking your business name and appointing a registered agent.

Notably, Pennsylvania regulations are a bit different in some aspects including LLC filing. Thus, more habitual Articles of Organization are called Certificate of Organization here. And this document is submitted along with the Docketing Statement.

Foundation or organizational documents are what will officially bring your Pennsylvania LLC to life and give it an eligible status of an independent legal entity after registration. These are the formation docs that activate a proverbial LLC’s corporate veil and separate you from your business at a legal level.

Pennsylvania LLC Statute Provisions

By and large, an LLC statute is a standardized document that covers basic company info to create your LLC profile in state registries or databases and enter your business data into public records.

The Pennsylvania Certificate of Organization has a more or less generic form too and embraces the following points:

• Full name of your company;
• Registered office address and agent’s name;
• Effective date if it’s different from the filing date; 
• Your LLC duration period if applicable;
• Statement about providing professional services when creating a professional LLC in Pennsylvania;
• Statement about being a public benefit company if you choose this type of LLC in Pennsylvania;
• Your LLC organizer names and signatures.

As mentioned above, the LLC statute in Pennsylvania is to be accompanied by yet another form, which is a Docketing Statement enlisting the following data:

• LLC name;
• Name and address of the individual who will be in charge of initial tax reports;
• Brief description of your main business activity;
• Your LLC’s federal tax ID or Employer Identification Number (EIN);
• The end of the tax year.

Pennsylvania LLC Statute: Filing Methods

For now, there are two filing methods available in Pennsylvania. You can file online by first registering on the PA Bureau of Corporations’ website and getting a Keystone Login via the PA Business One-Stop Hub. This way, you’ll also get secure and safe access to your online dashboard and online depot of your business docs.

The second method is submitting the documents by mail. You can use either tried and tested regular mail or express mail to expedite the delivery. The Certificate of Organization and Docketing Statement forms should be filled out, printed, signed, and sent to the following address:

206 North Office Building

401 North Street

Harrisburg, PA 17120

Your approved LLC docs could be forwarded back to you via mail or email as you choose.

Both online and mail filings are reviewed and approved within 7 to 10 business days. Till the end of 2020, the state used to have walk-in filing in place that allowed for same-day or nearly immediate document approval. This option is not available for now, and we don’t know when it will be renewed.

Drafting an Operating Agreement for Your Pennsylvania LLC

Pennsylvania is among the states that don’t require an Operating Agreement to file an LLC since it’s an internal document. However, we recommend that you get one, especially if you open a multi-member LLC in Pennsylvania.

The instrument is meant to fix and reflect the covenants and contracts between the LLC owners concerning the powers and rights of the company members and key points in the decision-making process. Thus, it will avert and prevent any serious disputes and disagreements between the members and managers related to the business operation and ensure smooth control over the business.

At a legal level, an Operating Agreement has a priority over default laws and gives you more freedom in operating the entity your way. Besides, Agreement provisions are taken into account by courts.

To continue, this document will add to your business reputation and image and make your LLC look more reliable to creditors, sponsors, investors, vendors, and clients. Likewise, it will further strengthen and maintain your LLC’s liability protections.

Pennsylvania Operating Agreement Content

Your Operating Agreement in Pennsylvania needs no state registration and could be compiled in a free form. The owners are enabled to input provisions they deem necessary and are not limited to any specific info. In the end, this document is aimed to maintain your business from within and should be customized to your current business situation.

However, there are certain common points normally included in the Operating Agreement that will help you tailor your own doc:

• LLC membership and management structures;
• Manager and owner rights, powers, and duties;
• Voting issues and voting rights;
• Key operating procedures;
• Principles of profit distribution;
• Rules for changing the management and ownership structure;
• LLC dissolution procedure.

Acquiring an EIN for Your Pennsylvania LLC

An EIN or a federal tax ID is a nine-digit code assigned to business entities by the Internal Revenue Service (IRS). It functions in the same way as a Social Security Number for individuals and identifies businesses as taxpayers.

Starting a single-member LLC in Pennsylvania, you don’t have to get an EIN and can use your individual tax number for business purposes. Meanwhile, multi-member LLCs require obtaining EINs right after formation.

However, state requirements aside, you'll need an EIN to open a bank account, get a business credit or loan, hire employees, elect S-Corp status, or even pay certain types of taxes.

So, don’t keep this task for later and consider getting an EIN as soon as you file your LLC in Pennsylvania. The EIN registration is as easy as submitting an online application with the IRS and acquiring your number in a matter of minutes. This service is not only quick but also free.

Pennsylvania LLC Cost: How Much is an LLC in PA?

Each state has a compulsory filing fee, which falls anywhere between $40 and $500. Pennsylvania LLC cost is $125 for domestic companies. Should you want to operate a foreign LLC, get ready to pay $250 for its registration.

Noteworthy, Pennsylvania is one of the states that make LLC filing free for veterans and active reservists. You just need to provide certain documents proving your military status.

If you choose to hire an attorney or professional service to help you file an LLC in Pennsylvania, you’ll have to add the cost of service to a compulsory filing fee. While lawyers work at hourly rates, LLC service prices range from $50 to $300 and more depending on the scope of service you order.

Prime Tasks to Handle After Forming an LLC in Pennsylvania

The filing process will finalize your Pennsylvania LLC formation stage, yet, there will be still more tasks waiting for you afterward.

Open a Checking Account for Your Pennsylvania LLC

An LLC structure legally separates you from your business. However, to best use the benefits and protections it offers, you’ll have to further maintain this status. And split assets are one of the major conditions for that.

By opening a dedicated bank account for your newly formed LLC, you’ll draw a clear line between your individual money and business funds. By avoiding confusion, you will not only facilitate the accounting and bookkeeping but also gain more trust from credit agencies and banks when applying for added financing for your enterprise.

Register Business Insurance for Your Pennsylvania LLC

Business insurance is something that will deliver an added layer of protection for your company against any potential future risks. The type of insurance you’ll need for your venture will depend on the activity you run and the area you operate in since different industries and localities are exposed to different types of damages and threats.

The most common business insurance policies to get include general liability insurance, business income insurance, workers’ compensation insurance, professional liability insurance, and business liability insurance.

Observe Compulsory State Requirements for Your Pennsylvania LLC

To be in good standing with the state, you’ll have to maintain a few compliance requirements for your LLC on a regular basis:

• Reporting taxes: Taxed as disregarded entities by default, LLCs don’t have to report income taxes since they are payable under the personal tax returns of LLC owners. However, there might be property, commercial, and payroll taxes to report depending on your entrepreneurial activity. To figure out all types of charges your business is exposed to, contact the IRS;
• Filing annual reports: In contrast to most other states, Pennsylvania has no annual reporting requirements for LLCs. The exception is foreign and some professional LLCs that will have to file a Certificate of Annual Registration before April, 15 and pay $560 for each LLC member;
• Maintaining appropriate licenses: All states require licenses and permits for LLCs to operate on their territories. The same is true for Pennsylvania. Common types of licenses you might need to register in this state include local permits, professional and environmental licenses, health and safety licenses, and sales and zoning permits. To find out a complete list of permissive documents specific to your LLC, you can file a Business Entity Registration Form on the PA Department of Revenue website.

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