Pennsylvania is a popular state to live and work in. If you want to start your own company, registering a business in the state is a relatively straightforward process due to the state’s support and assistance for new and existing small businesses.
There are many different economic development centers in place in Pennsylvania to help entrepreneurs and those with existing businesses grow and flourish in their community, throughout the state, nationally, and even on the international stage.
Pennsylvania’s continued support for its small businesses is evident in its approach to encouraging new businesses to register in the state. With access to a number of resources, from business and financial assistance programs to small business development centers, reasonable licensing fees, tax incentives, affordable Pennsylvania Department of State registration fees, and quick filling times, it is no wonder why so many people register a business in Pennsylvania and start their entrepreneurial journey.
The state is business-friendly and for a modest capital outlay, you can get your new business started and registered in Pennsylvania quickly, easily, and cost-efficiently.
Not only is Pennsylvania always very pro-business (big or small), but it also boasts some stunning attractions, beautiful landscapes, and the iconic city of Philadelphia (and authentic Philly Cheesesteaks that come with it!).
How to Register a Business Name in Pennsylvania – 7 Easy Steps
The Pennsylvania Department of State makes it reasonably easy to register your business name. There are three ways you can do this:
- 1. Do it yourself directly on their website.
- 2. Pay a document filing company that can register everything online for you – there is a modest fee for this but it saves a lot of time and ensures it is done correctly.
- 3. Hire an attorney or accountant to file and register your new company – there are higher fees associated with this.
Step 1 – Determine your registered name
Firstly, you must determine that your business name is unique and not being used by someone else. A business registration company can do this research on your behalf or alternatively, you can search directly on the Pennsylvania Department of State website.
Once you have established your name is available you can register a business name in Pennsylvania directly on their website if you are comfortable with the process. Or, if you want a company to do this for you that specializes in this, you can use an online registration service to do it.
These companies usually offer a free registered agent service for one year with most of their packages which is often a necessity for new businesses and those being registered by foreigners with no U.S. address.
Before doing any of this, you must decide on the right structure.
Step 2 – Choose the right entity
You need to choose the right type of business to register and the most common options are a limited liability company (LLC) or an incorporated company (Inc). If you are keeping things really small and simple (one or two people), then you may consider a sole proprietorship or a general partnership.
Even if you plan to be a solopreneur, it is usually more beneficial for you to register a Pennsylvania LLC to make sure, as the owner, you have limited liability under this structure, and so you can benefit from the pass-through tax advantages.
Here is a quick rundown of the various options and what they might mean to you:
- Limited Liability Company: A Pennsylvania LLC is often the best route for most entrepreneurs because the structure comes with personal asset protection, no double taxation, is fairly easy to maintain and does not have high registration or annual renewal costs. Through LLC formation you have better tax flexibility and income can be taxed as a pass-through entity like a sole proprietor or partnership, or as a corporation.
- Incorporated Company: A Pennsylvania Corporation offers personal asset protection and your company can own property, vehicles, incur liabilities, and is responsible for its own debts and can conduct business without the owners risking their personal assets such as their homes, cars, personal savings, retirement, etc. On the flip side, owners of sole proprietorships or partnerships face unlimited liability for both business and personal assets.
Step 3 – Make sure your name is not being used by another company
This may seem obvious, but if you check the Pennsylvania Department of State website and see that your chosen business name is available, that is all well and good, but that doesn’t mean someone else is not using that same or similar name, particularly in another state.
Many people register an “official business entity name” and trade under a different name. This is called a Pennsylvania dba, or “doing business as” name or assumed trading name, and needs a separate DBA certificate.
You will want to do a Google search for your official name and your desired trading name (if different) to make sure no one else is using this name. Most importantly, you will want to make sure you can get an easy-to-remember website domain name that is not being used by someone else.
Having an awesome name or trading name for your business can be crucial to your success, so making sure the domain name is available too, and registering it right away, is equally as important.
Finally, if you go to the Pennsylvania Department of State website and discover that someone else has registered the name you would like, you can search for variations of that name by adding a word before it or after it, or using some other variations until you find a name that is available and acceptable for you.
Step 4 – Request an Employer Identification Number (EIN)
Once you have registered your new business in Pennsylvania you will need to get an EIN for a number of reasons. These include paying taxes for your business, opening a bank account, obtaining credit cards or lines of credit, establishing terms with vendors and suppliers, hiring employees, and more.
There are only a few instances where you likely won’t need an EIN. More often than not, many business activities are just not possible without having an EIN.
An EIN is the business equivalent of a social security number and is used to track your business dealings. Even if you do not intend to hire employees, you will almost certainly still need an EIN for your Pennsylvania company and it protects you from having to use your social security number.
An EIN (also known as a federal tax id) is free to obtain from the IRS and you can apply online but if you are not comfortable filling in forms you can use a third-party document filing service to do this for you for a small fee. This ensures you are 100% compliant with the law and they handle everything with the IRS.
Step 5 – Obtain the Required Business Licenses and Permits
To operate your business in Pennsylvania you must comply with federal, state, and local government regulations. Pennsylvania law does not require all small business owners to have a “general” license to operate.
You will, however, need specific permits for specific businesses. For example, if you open a restaurant or similar food-related business you will most likely need a health permit, sales tax permit, facilities permit, and others. If you plan to sell alcohol, you will need a liquor license, essentially it all depends on the type of products and services your business is going to offer.
The business licenses you will need to acquire in order to register a business in Pennsylvania will also differ depending on the location of the business too.
You must find out how to obtain the necessary Pennsylvania business licenses and permits for your business and fill out the appropriate forms. Alternatively, you could hire a professional document filing company to do this for you. It eliminates a lot of time and hassle and ensures you are correctly complying with Pennsylvania law.
Step 6 – Determine Your Business Employer Requirements
There are several things you need to check regarding your responsibilities as an employer in Pennsylvania because there are requirements you must meet at the federal and state level. These could include various workforce commissions, safety, and state tax obligations, as well as labor law requirements including the minimum wage in Pennsylvania and employee rights and remedies under the Pennsylvania minimum wage act.
To learn more about Pennsylvania employer resources take a look at the Pennsylvania Department of Labor and Industry website.
Step 7 – Open a Business Bank Account for your Pennsylvania Company
As a new business owner, you should seriously consider separating your personal and business bank accounts to make it easier to track and account for your income and expenses. For certain business types, such as an LLC or a Corporation, it is essential that you open a separate business bank account to maintain your liability protection.
Once you have your EIN and your company registration documents, coupled with your driver’s license, you are ready to go to the bank and open your checking account.
Don’t worry, this won’t be expensive or leave you burdened with hefty monthly fees to pay – there are many free business bank accounts out there for you to choose from. Each has its different features and benefits, so you can decide what bank and checking account best suits your needs.
Summarizing Registering a Business in Pennsylvania
Pennsylvania offers a great business ecosystem for businesses both large and small with access to a large consumer base. The top industries in the state are telecommunications, administrative and support services, health care services, and construction. Not only this, but there are available business grants as well as consulting and counseling services to help entrepreneurs start, grow, and flourish with their businesses.
The state offers a multitude of pro-business benefits, with one of the more significant being the proximity to New York City – the business capital of the world. While not New York City, businesses operating in Pennsylvania can reach the undeniably booming market the Big Apple provides due to the closeness of both the state and the city. Not only this but small businesses have access to partnerships and investment opportunities that tend to cluster around major metropolitan areas within the state.
Small Businesses dominate in Pennsylvania due to its business-friendly climate, an abundance of business opportunities, business taxes, relatively low income tax (9.99% corporate income tax rate and 3.07% income tax rate), and a highly-skilled workforce (40% college-educated).
The state fee for registering a business in Pennsylvania is $125 for an LLC and $125 for a corporation. The annual filing fee to maintain your company in Pennsylvania is only $25 for a corporation and $25 for an LLC.
The Keystone State is committed to your success and has many resources at your disposal that you can take advantage of.