How to Start a Business in Pennsylvania Checklist
Download our free checklist in PDF format to keep you on track when starting your business in Pennsylvania.Download Now
How to Start a Business in Pennsylvania:
A 2017 WalletHub study ranked Pennsylvania in 45th place on its list of best states to start a business. A low startups per capita rate and high business tax rates were noted as creating challenging conditions for businesses to thrive.
However, Pennsylvania does offer plenty of potential. It has the sixth-largest economy in the country, has proximity to large markets and skilled workers on the east coast, and has a low pass-through tax rate, making it ideal for sole proprietors and general partnerships who don't pay business tax.
Form your business.
Review Pennsylvania formation options.
Pennsylvania offers four ways of forming your business. Review these closely and pick the one that fits your business best.
Choosing the right legal structure for your company is important. Your choice will have an impact on taxes, paperwork, personal liability, and your ability to raise funds.
Businesses are regulated by Pennsylvania state laws and must be registered through the Pennsylvania Business One-Stop Shop.
Name your business.
In Pennsylvania, a DBA is referred to as a fictitious business name and must be registered with the Department of State. A business is required to register a fictitious name if it intends to operate under a name that differs from its legal name.
Before you register your business under a chosen name, you need to check whether the name is available for use.
Find out if your intended business name is available. Search the Pennsylvania Department of State's website and search their database of registered business entity names.
Click on the search icon on the right of the page.
Select 'File Business Forms.'
Click on 'Search business entities.'
Enter your proposed name in the search box.
Read through the search results which show you businesses that match your search or closely related names. Click on the filing number to read more about each registered business. If there are no results, the business name that you want is still available.
Get an Employer Identification Number (EIN).
Nearly all businesses will need to register for federal taxes by applying for an employer identification number.
Registering for an EIN is very easy—all you need to do is go to the IRS website. You can complete the application online, and save your EIN confirmation notice once you receive a number from the IRS.
If your business is taxed separately from you or requires employees, you will need to obtain a federal Employer Identification Number (EIN). You can complete an online application on the IRS website. There is no filing fee and you'll receive your EIN via email within 24 hours
Register your business in Pennsylvania.
After confirming the availability of your proposed name, you'll need to register it with the Pennsylvania Department of State.
Download the Registration of Fictitious Name form. Visit the Pennsylvania Department of State website and download the Registration of Fictitious Name form (DSCB:54-311).
Complete the application form and submit it. The filing fee is $70.00. The application can be submitted by mail or using the online business document filing system PENN File.
Once the Pennsylvania Department of State's Bureau of Corporations and Charitable Organizations has reviewed and processed your application, you will receive a mail or email informing you of the approval or rejection of your application.
You may register your business in person, by mail, or electronically via the Department of State website. Depending on your business structure, you may need to file Articles of Incorporation or a Fictitious Name Registration.
The cost to register a business in Pennsylvania ranges from $125.00 to $250.00.
If you need help finding a business name, be sure to check out NameSnack's free business name generator.
Obtain necessary permits and licenses.
The state of Pennsylvania does not require businesses to have a statewide business license.
You may, however, need specific business licenses and permits depending on the type of business you start in Pennsylvania. You can refer to the Pennsylvania Department of State website to check if you require a business license or permit.
You may also require a municipal license or permit, depending on your location. You can refer to the Pennsylvania Business One-Stop Shop to check if you require one.
Register your business for taxes.
Register for Unemployment Tax.
In Pennsylvania, your small business is required to establish an unemployment insurance tax account with the Pennsylvania Department of Labor & Industry. If your business is required to contribute towards unemployment insurance, you will need to file quarterly reports.
Go to the Pennsylvania Online Business Entity Registration website
Scroll to the bottom of the page and click 'Enter.'
Select the "Register" button.
Click on "I Agree" after reading the e-Signature Agreement.
Create your own ID and password and click "submit."
Register for Pennsylvania Sales and Use Tax.
Every individual or entity selling taxable tangible personal property in the state of Pennsylvania is required to pay a sales and use tax. Services rendered are not taxable. You will need to register for a sales tax permit with the Pennsylvania Department of Revenue.
You can register for Sales and Use Tax by visiting the Pennsylvania Online Business Entity Registration website and following the same steps as you would for Unemployment Tax registration.
Register agricultural vehicles for sales tax.
Agriculture accounts for a significant part of Pennsylvania's economy, boasting 59,309 farms and employing 66,800 people. In 2011, Pennsylvania's agricultural sector exported goods worth $1.7 billion.
Businesses in the agricultural industry need to note the following:
- Agricultural vehicles need to be registered under the Vehicle Code for highway use, and are subject to sales tax.
- Trucks bearing farm registration must pay sales tax.
- All-Terrain Vehicles registered with the Department of Conservation and Natural Resources must pay sales tax.
A sales tax exemption exists for all-terrain vehicles that are put to use on farms (more than 50% of the time).
For more information visit the Pennsylvania Farm Bureau.
Hire employees and report them to the state.
Register with the Pennsylvania Department of Labor & Industry.
To start hiring you will need to register at the Pennsylvania Department of Labor & Industry. Each employee will need to be registered within 30 days of starting work. This does not apply to independent contractors.
The Pennsylvania Human Relations Act protects job applicants against discrimination on the basis of age, race, creed, color, sex, sexual orientation, gender identity, national origin, religion, or disability.
With reference to the pre-employment screening process in Pennsylvania, an employer is entitled to view a job applicant’s criminal history and obtain the relevant records from the criminal justice system.
Go to the Pennsylvania Department of Labor & Industry website.
Under the "Businesses" tab, select "Finding Skilled Workers."
Follow the link to the PA CareerLink portal.
Scroll down to the "Employers" section and click on "Report New Hires."
Choose between reporting manually (ideal for fewer than ten hires) and uploading a file (ideal for more than ten hires).
Check your business employer requirements.
Business employer requirements are specific to the type of business that you are starting and include various labor, safety and tax obligations that need to be met. You should consider hiring a tax or business attorney to ensure your business is fully compliant with the laws in Pennsylvania.
If you are starting a business in Pennsylvania, you will need to have business insurance. Pennsylvania’s law requires all employers to provide workers’ compensation coverage to their employees. You can obtain more information at the Pennsylvania Department of Labor & Industry website.
Health insurance isn’t a requirement for small businesses in Pennsylvania.
Display mandatory posters in your place of business.
The Pennsylvania Department of Labor & Industry mandates that employers display certain notices in their worksites for the benefit of employees and customers.
These posters include:
- Safety and Health Protection.
- Minimum Wage Law.
- Unemployment Compensation.
- Equal Opportunity & Fair Practices.
- Pennsylvania Right to Know Law.
- PA Clean Indoor Air Act.
- Pennsylvania Child Labor Act.
See the full list of required posters.
Fees to Register a Business in Pennsylvania:
Domestic corporation for profit
Registration of Fictitious Name
Pennsylvania Business Types:
1. Sole proprietor.
Sole proprietorships are the easiest way to start a business in Pennsylvania. Sole proprietorships offer ease of formation and complete ownership. Only form a sole proprietorship when you know all the risks associated with your business, as you are personally liable for business losses.
A sole proprietorship is the simplest structure and usually involves one individual who is solely responsible for the enterprise. You only need to file paperwork if you are operating under a fictitious name and you only pay income tax.
Forming a general partnership in Pennsylvania is pretty simple. Partnerships are a good idea if your business partner can bring capital and expertise to the table that you cannot. The profits and risks are shared equally among partners and you don't pay business tax.
Pennsylvania requires partnerships to register with the state if they are operating under a business name other than the surnames of the individual partners. Partnerships follow the same taxation laws as sole proprietors.
Registering as a corporation in Pennsylvania is more takes more time and money, but the benefits are clear. A corporation is a standalone entity with shareholders. Corporations allow you to dip into a wider capital pool and afford you the protection of personal assets in the event of a business failure. Corporations need to pay business tax.
Corporations in Pennsylvania need to include one of the following words in their legal names:
- Company (or an abbreviation).
4. Limited Liability Company.
Incorporate as an LLC in Pennsylvania if you operate in a high-risk industry and you want more power over the operational activity of your company. LLCs afford you better profit distribution among members as well as limited ownership restrictions. It can take up to 14 working days to register an LLC in Pennsylvania.
A Limited Liability Company (LLC) is the most popular type because of minimal paperwork, flexibility, tax benefits, and a simple implementation process. LLC business owners in Pennsylvania are not obligated to file a corporate tax return. Professional Limited Liability Companies (PLLCs) and foreign LLCs, however, must file a Certificate of Annual Registration by mid-April every year. This can be done online and a fee of $520.00 per member of the LLC must be paid.