How much does an llc cost in pa

You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.

And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Pennsylvania.

Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Pennsylvania startup fees here.

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Overall Pennsylvania LLC Formation Costs

LLC Name Reservation Fee

Reserving a business name isn’t a mandatory step in the LLC formation process. However, it can be a useful option. If you’ve come up with a great business name but you aren’t ready to start your business, consider applying for a name reservation, which costs $70 but gives you exclusive rights to that name for 120 days. On the other hand, filing the Certificate of Organization will automatically register your name, so if you’re ready to start your LLC, skip ahead to that step instead.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

Whether you reserve your business name or not, you should always perform a Pennsylvania business name search to make sure the name you want is available.

Certificate of Organization Fee

This is the big one, the most important (and most expensive) form that you’ll file to start your Pennsylvania LLC. Successfully filing the Certificate of Organization is what officially registers your business with the Department of State, allowing you to begin doing business. The filing fee is $125 and you can complete it online or using a hard copy. If time is short, you can also select one of three expedited processing options: same-day service for $100, three-hour service for $300, or one-hour service for $1,000.

The information required to file your Certificate of Organization includes an indication that your business is eligible for a veteran/reservist-owned small business fee exemption (if applicable), the official business name of your LLC, the address of your registered office or the name of your commercial registered agent, the names and signatures of your LLC organizers, the effective date of your LLC formation, the professional services to be offered by your LLC (if applicable), an indication that your LLC will be “creating general public benefit” (if applicable), and the date.

Before we move on, we’ll mention that if you’re forming a Pennsylvania restricted professional company, you’ll still use the same Certificate of Organization used by a standard LLC.

Business and Professional Licenses

Not every Pennsylvania needs to obtain specific licensure before commencing business, but some do. Even after your Certificate of Organization has been accepted, you may still need to apply for a license through commonwealth agencies or local governments. For example, accountancy firms must apply for licensure with the State Board of Accountancy, and barbershops with the State Board of Barber Examiners.

Further, cities and/or counties often have their own licensure requirements. The cost of these license applications depends on the type and location. Check with the Department of State Licensing Services page and your local government to see which your LLC needs.

What are some of the most commonly required business licenses for Pennsylvania LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

LLC Formation Service

Starting an LLC in Pennsylvania can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC registration company. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.

Most of these services (which are often frequently used alternatives to LegalZoom) offer LLC registration services like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.

Registered Agent Service

Appointing a Pennsylvania registered office is an important part of your LLC formation process. Your registered office provider is responsible for handling sensitive legal and tax documents and keeping your business compliant with Pennsylvania business law. In short, you need someone you can trust.

While you can be the registered office provider for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your LLC maintenance filings are submitted efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.

If you need to change registered agents in Pennsylvania or resign as a Pennsylvania registered agent, consult our full guides on each topic.

Attorney Fees

If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.

Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.

Cost variations depend on the experience and location of the lawyer. You’ll want to do some research to make sure you’re finding a good fit for your LLC. Search, compare, and contact Pennsylvania business attorneys using a site like Avvo. Dig into Avvo’s extensive lawyer database and you’ll be confident in your selection.

If you don’t want to go searching for your own attorney, we compiled the following list of highly rated business lawyers in Pennsylvania. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

• Kathleen Hyneman
• Antranig Garibian (also active in DE)
• Marshal Davis
• Bruce Baldwin
• Bradley Dornish

Foreign Qualification Fee

This only applies if your LLC was formed in another state and is now expanding into Pennsylvania. Any foreign LLC looking to do business in Pennsylvania will file a “Foreign Registration Statement” rather than a Certificate of Organization.

All foreign business entities are required to foreign qualify in Pennsylvania, or they could incur some pretty severe penalties. To foreign qualify, submit a Foreign Registration Statement either online or by mail. There’s a $150 application fee, but like the Certificate of Organization, you only need to pay this fee once.

LLC Annual Fees

Many states require their businesses to complete annual reports, but Pennsylvania is not one of them. Instead, this state only requires that each LLC file the Decennial Report of Association Continued Existence once per decade. These reports cost $70 to file, and they are due by December 31 of each year ending with a 1: 2021, 2031, 2041, etc.

The information required to file your decennial report includes the official business name of your LLC, the address of your registered office or the name of your commercial registered agent, the date, your title, and your signature.

For more info on decennial reports for Pennsylvania LLCs, check out our full article on this topic!

Taxes

Income taxes are fairly straightforward for Pennsylvania LLCs — they aren’t required. By default, the federal government considers LLCs “pass-through” entities, which means that they don’t need to file separate corporate tax returns; instead, their owners and/or members report income and losses on their personal returns. At the state level, Pennsylvania doesn’t impose a “franchise” or “privilege” tax on its LLCs.

But this doesn’t mean you’re completely off the hook for business-related taxes. If your LLC hires employees, it will be responsible for paying a Withholding Tax and an Unemployment Compensation Tax. Or, if it sells merchandise, it will owe a Sales and Use Tax. There are other specific taxes it might owe as well, depending on the type of business you do. Learn more on the Department of Revenue website and register for necessary taxes using Pennsylvania’s Online Business Registration.

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Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.

Let’s say you don’t file the Certificate of Organization or Foreign Registration Statement. Your LLC will not be allowed to do business in the state, and if it does, you could be fined or penalized. Failure to keep the Commonwealth in the loop on registered office updates and other changes can result in your business losing its good standing and potentially being administratively dissolved. Without good standing, an LLC cannot foreign qualify in most other states, renew business licenses, apply for business loans, and more. And an LLC that has been administratively dissolved can no longer transact business in Pennsylvania.

Missing tax payments can result in serious consequences as well. Late tax filings will incur monetary fines and accrue interest, although the amounts depend on the type of tax and how overdue it is. You can determine how much you might owe using the Department of Revenue Penalty and Interest Calculator.

Planning Your Expenses

By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Pennsylvania.

Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few maintenance fees — like decennial reports and registered office changes — so your business doesn’t fall out of good standing.

Key Steps for Starting a Pennsylvania LLC

• The first step to forming a Pennsylvania LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
• Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Pennsylvania, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
• The third step involves the preparation and filing of your Certificate of Organization. You’ll need to fill out the paperwork and pay a $125 fee. Once the state processes this document, your LLC will be officially open for business!
• That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Pennsylvania LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
• You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
• Next, you’ll need to register for any relevant taxes with the Pennsylvania Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Pennsylvania!

Key Steps for Maintaining a Pennsylvania LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, decennial reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.

Frequently Asked Questions

Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Pennsylvania.

What are the state business tax rates in Pennsylvania?

If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rate of 3.07%. If your LLC is taxed like a corporation, you’re required to pay Pennsylvania’s 9.99% corporate income tax on your business revenue.

How quickly does Pennsylvania process LLC formations?

The Department of State should be able to process your LLC’s formation within 7-10 business days. If you’re in a hurry, you can pay an extra expediting fee to speed things up: same-day service for $100, three-hour service for $300, or one-hour service for $1,000.

How many small businesses are there in Pennsylvania today?

The state of Pennsylvania is home to nearly 1 million small businesses. Entrepreneurs of all backgrounds and business types find that Pennsylvania is a great place to own and operate a small business.

Should I form my LLC in Pennsylvania, or choose a state like Delaware or Wyoming?

Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.

However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.

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