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How to Start a Business in Pennsylvania Checklist

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How to Start a Business in Pennsylvania:

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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.

1. 

Form your business.

1.1 

Review Pennsylvania formation options.

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.

1.2 

Name your business.

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 shows 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.

1.3 

Get an Employer Identification Number (EIN).

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

1.4 

Register your business in Pennsylvania.

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. 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.

If you need help finding a business name, be sure to check out NameSnack's free business name generator.

1.5 

Obtain necessary permits and licenses.

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.

2. 

Register your business for taxes.

2.1 

Register for Unemployment Tax.

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."

2.2 

Register for Pennsylvania Sales and Use Tax.

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.

2.3 

Register agricultural vehicles for sales tax.

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.

3. 

Hire employees and report them to the state.

3.1 

Register with the Pennsylvania Department of Labor & Industry.

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).

3.2 

Check your business employer requirements.

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.

Fees to Register a Business in Pennsylvania:

Fee Type

Cost

Domestic LLC

$125.00

Domestic corporation for profit

$125.00

Limited partnership

$125.00

Registration of Fictitious Name

$70.00

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.

2. Partnership.

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.

3. Corporation.

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 dip into a wider capital pool and affords you 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:

  • Incorporated.
  • Corporation.
  • Limited.
  • Company (or an abbreviation).
  • Association.
  • Fund.
  • Syndicate.

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.

A Limited Liability Company (LLC) is the most popular type because of minimal paperwork, flexibility, tax benefits, and simple implementation process. LLC business owners in Pennsylvania are not obligated to file a corporate tax return.

FAQs:

How do I get a business license in Pennsylvania?

You can apply for business licenses and permits from the Pennsylvania Business One-Stop Shop which is managed by the Pennsylvania Department of State.

How much does it cost to get a business license in Pennsylvania?

It cost between $70.00 and $300.00 to register a business in Pennsylvania, but formation and registration fees depend on what type of business you have.

How much does it cost to start an LLC in PA?

It cost $125.00 to start an LLC business in Pennsylvania.

Do I need to register my business in Pennsylvania?

While Pennsylvania does not require a statewide business license, you may need to obtain special licenses and permits, depending on your type of business. You can check out the Pennsylvania Department of State website to see if your business requires a license or permit.

Do you need a business license to sell online in Pennsylvania?

It depends on your business. While not all businesses are required to obtain a sales license, it's best to check with the Pennsylvania Business One-Stop Shop to confirm if you require one.

How do you get a PA sellers license?

You can register for a sales tax permit with the Pennsylvania Department of Revenue.

Do you need a business license to sell on Etsy in Pennsylvania?

Pennsylvania does not require a statewide business license. However, you are required to obtain a sales license to sell on Etsy.

How do I start a sole proprietorship in PA?

  1. Select a business name.
  2. File a fictitious business name with the Pennsylvania Department of State.
  3. Obtain necessary licenses, permits, and zoning clearance.
  4. Acquire an Employer Identification Number.

What posters should be on a Pennsylvania business premises?

  • 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.

How much does it cost to start a business in Pennsylvania?

Pennsylvania articles of incorporation for LLCs and for Corporations cost $125.00.

How do I start a business in Pennsylvania with no money?

  • Use services to generate cash flow and fund a product-based business.
  • Get creative to discover funding sources.
  • Grind it out and look for business, even if you don't get paid for it.
  • Use your current resources in different ways to generate income.
  • Get a credit line to help with the early stages of your business.
  • Locate an accelerator if you can hit the market swiftly.

How can I protect the name and logo of my Pennsylvania business?

The easiest way is to register your business name on the U.S. Patent and Trademark Office website. Prior to registration, remember to check on the Trademark Electronic Search System and the Pennsylvania Department of State website to ensure that your business name is not already registered by another company.

Do I need workers' compensation for my business in Pennsylvania?

All employers in Pennsylvania are compelled to provide workers’ compensation coverage to their employees.

Does my business in Pennsylvania need to grant health insurance?

Health insurance isn’t a requirement for small businesses in Pennsylvania.

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