Choosing to start a new company is both exhilarating and terrifying. It’s the first of many choices you’ll have to make along the path. Depending on where you reside, you may need to register your company at the state, municipal, and federal levels. This guide will assist you through the process of registering your Pennsylvania company.
Establishing a Business in Pennsylvania
1. Give Your Pennsylvania Business a Name
Naming a new company may be a difficult job for many people. The name should be memorable, letting people know what you have to offer. A strong name, on the other hand, is much more than that. It is a branding tool that provides an inside peek into your organization’s purpose and future goals. The correct name may help you set yourself up for long-term success; the wrong name can destroy a ship before it ever sets sail.
Considering Your Name
While many entrepreneurs are inclined to speed through the name process, you should take your time and investigate all naming options. Take multiple brainstorming sessions and utilize the free internet business tools available today to assist you come up with a variety of choices, narrowing them down as you go.
Pennsylvania Name Lookup
Once you’ve decided on a name, utilize the Pennsylvania Department of State’s business entity search tool to check it isn’t currently in use in your state. You should also make sure that your name isn’t too similar to any existing firm in your state. This will assist to prevent future misunderstanding and legal problems.
It’s time to start legitimizing your firm once you’ve chosen a name that appropriately portrays your brand. These following procedures will differ based on your company structure and the legal requirements of your state. The next section will go through the various company structures.
If you want to utilize a “doing business as” (DBA) name, often known as a fake name in Pennsylvania, our DBA guide will assist you in ensuring you are legally registered at the state, county, and/or local levels. There are a number of advantages to registering your fake name with the state. It provides further protection against competing Pennsylvania firms, establishes your company’s validity, and may be needed by certain suppliers, banks, and lenders.
2. Select a Business Structure for Your Pennsylvania Company
Now that you’ve picked a good name for your brand, it’s time to start the legalization process. Before you begin the registration procedure, you must decide which company structure is appropriate for you. Each has its own set of perks, drawbacks, and tax advantages.
The sole proprietorship
A single proprietorship is the simplest straightforward business form. This informal corporation was created for entrepreneurs who do not want to work with others. It provides no personal asset protection and does not need state filing.
Sole proprietorships operate automatically under the owner’s surname. If you wish to use a fake name, you must apply to the Department of State. A DBA registration in Pennsylvania costs $70 and does not need to be renewed. ears.\s Partnership
A general partnership, like a sole proprietorship, is an informal structure established for entrepreneurs who form a partnership with at least one other person. You and your partners’ surnames may be used for the firm, or you can get a DBA name. Profits and losses would be reported on your (and your partners’) personal tax return, and no personal assets would be protected.
All partnerships in Pennsylvania (including general partnerships, limited partnerships, limited liability partnerships, and limited liability limited partnerships) must submit formal documentation with the state and pay a filing fee.
LLC
If you do not intend to go public in the foreseeable future, a limited liability corporation (LLC) may be the best option. It provides more freedom and protects your personal assets in the case of a lawsuit.
While the state of Pennsylvania does not record registered agents, all LLCs must specify a registered office where legal paperwork may be accepted. Your registered office in Pennsylvania must have a physical address. Many new LLCs choose to use a registered agent service, which costs between $29 and $300 each year.
Pennsylvania also requires you to follow particular name guidelines and obtain a Certificate of Organization, which contains important information about your business.
Corporation
A corporation is a kind of business entity for those who have (or want to have) shareholders. So, if you want to go public in the future, this may be the greatest alternative for you.
Corporations, like LLCs, must establish a registered office where they may receive papers in the event of a legal dispute, compliance documentation, and government contact. Your registered office, like an LLC, may be a professional service.
In addition to a registered agent, you must submit the Articles of Incorporation with the state.
3. Determine whether your company has to be registered in Pennsylvania.
Once you’ve decided on your formal company structure and registered your new business name, you need check with your state to see what the criteria are for business registration. Each state has its own set of rules, which must be strictly followed.
Sole proprietorships are not required to register with the state of Pennsylvania in most situations. Check with your local government to discover whether your single proprietorship has to be registered at the county or municipal level.
Furthermore, certain firms (for example, sole proprietorships and single-member LLCs with no workers) are exempt from registering and filing for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a necessity for your company, you should consider registering regardless since there are various legal and tax advantages.
Even though you are not compelled to register your firm, it is important to recognize that creating an LLC has several legal and financial advantages. Your business debts are considered personal debts if you are a single proprietorship or a partnership. This implies that in the case of a lawsuit, your personal assets might be taken. Personal protection is provided through LLCs, which legally shield your personal assets and minimize your personal liabilities.
Aside from personal protection, LLCs have various additional advantages, including:
Profit distribution, decision-making, and company management flexibility
“Flow-through” taxes permits the LLC’s revenue and costs to pass through to the owners’ personal income tax returns, with no limits on the number and type of owners.
If you don’t have the time or skills to organize your own LLC, there are a variety of trustworthy LLC filing services that may assist you. We analyzed and selected the five finest LLC registration services because we realize how difficult it can be to navigate through the thousands of accessible alternatives. Our LLC service review compares each to ensure you associate with a service that saves you both time and money.
4. Register Your Pennsylvania Business for Taxes
EINs are used by the IRS to identify firms for tax purposes. Every company with workers is obligated to have one. Our EIN guide will assist you in determining the EIN requirements for your company structure and will coach you through each stage of the procedure.
In addition to federal tax registration, most firms in Pennsylvania are required to register for state and county/local taxes. You must register for employer taxes after you obtain your EIN. If you want to sell physical goods, you must register for sales and use tax on the whole amount of each transaction.
Additional business taxes, such as the motor fuels tax or the vehicle rental tax, may be imposed on your company. The Guide to Pennsylvania Taxes from the Pennsylvania Department of Revenue will assist you in determining your company’s lawful tax responsibilities.
5. Obtain Pennsylvania Business Permits and Licenses
While there is no general business license in Pennsylvania, certain professions may be controlled by the state or federal government and need professional permits and licenses. A beauty establishment, for example, will need to seek licenses from the State Board of Cosmetology. For a complete list of all Pennsylvania permit and licensing requirements, go to the Department of State’s Professional Licensing Guides.
Furthermore, certain businesses are governed by a federal agency and need federal licenses and/or permits. A liquor company, for example, would be subject to FDA standards and recommendations. Visit the Small Business Administration (SBA) website to learn more about federal permit requirements and costs.