Forming an LLC in Pennsylvania

Here is an outline of the steps you need to follow in order to form an LLC in Pennsylvania. You should also read the general section on forming an LLC for information that is applicable in any state.

1. Choose a business name for the LLC and check for availability.

  • Pennsylvania law requires that an LLC name contain the words "company," "limited," "limited liability company," or an abbreviation of one of those terms. Additionally, your business name must be distinguishable from other names on file with the Department of State (limited exceptions apply). There are a large number of words that cannot be included in the name without prior approval. For a full list, see 15 Pa. Cons. Stat. § 1303 (link is to entire code, choose Title 15, Part II, Subpart B, Article B, Chapter 13, Subchapter A, and then locate the specific provision).
  • The Name Availabilities page on the Pennsylvania Department of State's website has additional information about checking the availability of your desired business name in Pennsylvania. You can also use the Search for a Business Entity page.

2. Prepare and file a certificate of organization with the Department of State.

  • If the LLC will be managed by one or more managers, rather than all the members together, then you should put a clause saying that in the certificate of organization (see box 5 of the form certificate). For general information on the certificate of organization (usually called "articles of organization"), see the Articles of Organization page.

3. File a Docketing Statement.

  • When you file a certificate of organization, you must also file a Docketing Statement with the Department of State. The Docketing Statement contains only basic business information including the name and type of business organization and a description of business activities. There is no fee to file this form.

4. Negotiate and execute an operating agreement.

  • Pennsylvania does not require an operating agreement in order to form an LLC, but executing one is highly advisable. There is no set criteria for the content of an operating agreement, but it typically includes topics such as how meetings are conducted, how the company will be managed, what capital contributions are required from each member, and how profits and losses will be allocated. The operating agreement does not need to be filed with the state. Please see the Operating Agreement page for details.

5. Obtain any required local licenses.

6. Determine what tax and other regulatory obligations the LLC has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • Whenever you hire an employee in Pennsylvania, you must inform both the IRS and the Commonwealth of Pennsylvania. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Pennsylvania New Hire Reporting website.
  • If you have an employee or employees in Pennsylvania, you are required to carry workers' compensation insurance. The Pennsylvania Department of Labor & Industry administers the program.
  • As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
  • LLCs are required to pay the Pennsylvania capital stock tax, depending on their income and net worth. The amount of tax is determined by first adding net income divided by .095 to net worth multiplied by .75 (NI/.095 + .75*NW). If the number you get is less than $300,000, you do not owe capital stock tax. If the number you get is greater than $300,000, the tax will amount to .389% (.00389) of all dollars over $300,000. The capital stock tax is being phased out and will no longer be in effect starting in 2011. Most small online publishing operations probably will not have sufficient net worth or income to trigger this tax obligation.

7. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your business. You will probably need a Tax ID number (EIN), a copy of the certificate of organization, and a resolution identifying authorized signers if those names are not listed in the certificate. Here is one example of the documentation that banks ask for.
Other Notable Requirements for Maintaining an LLC in Pennsylvania
  • Pennsylvania does not have a specific statutory provision stating what documents and records must be stored at an LLC's principal place of business. Nevertheless, it is a good idea to keep certain records -- see the LLC Records page for details.
 

Last updated on September 29th, 2010

   
 
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