How to Start a Business in Pennsylvania

Starting a business in Pennsylvania can be an exciting and rewarding endeavor, but it also comes with legal obligations and considerations. Ensuring that you take the right steps during the formation process can protect your business and set the foundation for long-term success.

This guide will walk you through the essential legal steps to starting a business in Pennsylvania, including choosing the right business entity, registering with the state, and understanding compliance requirements.

Step 1: Choose the Right Business Structure

Selecting the right business entity is critical to your company’s legal and financial future. In Pennsylvania, the most common options include:

Sole Proprietorship

A sole proprietorship is the simplest business structure. It’s owned and operated by one person, and there’s no formal registration required. However, the owner is personally liable for all business debts and obligations.

Partnership

A partnership involves two or more people who share ownership and responsibilities. There are two main types:

• General Partnership: All partners share equal responsibility and liability.

• Limited Partnership (LP): Includes general partners who manage the business and limited partners with limited liability.

Limited Liability Company (LLC)

An LLC provides limited liability protection for its owners while offering flexibility in management and taxation. It’s a popular choice for small businesses in Pennsylvania.

Corporation

A corporation is a separate legal entity from its owners, providing strong liability protection. There are two types:

• C Corporation: Offers unlimited growth potential but is subject to double taxation.

• S Corporation: Avoids double taxation by passing income directly to shareholders.

Professional Corporation (PC)

Certain professions, such as lawyers, doctors, and accountants, must form a professional corporation in Pennsylvania to comply with state regulations.

Tip: Consult an attorney to evaluate which structure best aligns with your business goals and liability concerns.

Step 2: Register Your Business

Once you’ve chosen a business structure, you’ll need to register your business with the appropriate authorities.

Registering a Name

• Conduct a name availability search through the Pennsylvania Department of State to ensure your desired business name is unique.

• File a Fictitious Name Registration (DBA) if operating under a name other than your legal business name.

Filing Formation Documents

• LLC: File a Certificate of Organization (Form DSCB:15-8821).

• Corporation: File Articles of Incorporation (Form DSCB:15-1306/2102A).

Obtain an Employer Identification Number (EIN)

Apply for an EIN from the IRS. This number is required for tax filings, hiring employees, and opening a business bank account.

Step 3: Fulfill Licensing and Permit Requirements

Depending on your industry, you may need state or local licenses and permits to operate legally in Pennsylvania. Examples include:

• Health department permits for food establishments.

• Professional licenses for accountants, contractors, or real estate agents.

• Zoning permits for physical locations.

Research your industry’s specific requirements and ensure compliance with all regulations.

Step 4: Register for Taxes

Pennsylvania requires businesses to register for various state taxes, including:

• Sales Tax: If you sell taxable goods or services.

• Employer Taxes: If you hire employees, register for withholding tax and unemployment compensation tax.

• Corporate Taxes: Depending on your business entity.

Register for taxes through the Pennsylvania Department of Revenue’s e-TIDES system.

Step 5: Draft Key Legal Documents

To protect your business and clarify operational responsibilities, draft the following legal documents:

• Operating Agreement: Outlines management and ownership structure for LLCs.

• Partnership Agreement: Defines roles, contributions, and profit-sharing among partners.

• Corporate Bylaws: Governs the internal operations of a corporation.

• Employment Agreements: Establish terms and conditions for employees.

• Non-Disclosure Agreements (NDAs): Protect sensitive business information.

Step 6: Open a Business Bank Account

Separating personal and business finances is crucial for legal and tax purposes. To open a business bank account, you’ll typically need:

• Your EIN.

• Formation documents.

• Business licenses or permits.

Step 7: Secure Business Insurance

Insurance helps mitigate risks and protects your business from unforeseen events. Common policies include:

• General Liability Insurance: Covers accidents and injuries.

• Professional Liability Insurance: Protects against claims of negligence.

• Workers’ Compensation Insurance: Required for businesses with employees.

Step 8: Maintain Ongoing Compliance

Starting your business is just the beginning. Staying compliant with Pennsylvania laws ensures your business remains in good standing.

Annual Reporting

• LLCs and corporations must file annual or decennial reports with the Pennsylvania Department of State.

Tax Filings

• File state and federal tax returns annually. Pay estimated taxes if required.

Recordkeeping

• Maintain accurate records of finances, contracts, and employee information.

Benefits of Working with an Attorney

Starting a business involves navigating a complex legal landscape. An experienced attorney can:

• Help you choose the right business structure.

• Draft and review legal documents.

• Ensure compliance with state and federal regulations.

• Protect your intellectual property and trade secrets.

• Provide ongoing legal support as your business grows.

Starting a business in Pennsylvania requires careful planning and legal expertise. At Ament Law Group, our attorneys specialize in helping entrepreneurs navigate the complexities of business formation and compliance. Contact us today at to schedule a consultation and take the first step toward building your business’s future.