Congratulations! You are now in business and want to start a limited liability company (an “LLC”). What are the steps?
- LLC Registration/Business License
- Employer Identification Number
- Business Bank Account
- Bookkeeping and Taxes
- Business Insurance
- Operating Agreement
Let's get started!
Registering with the Department of State
Pennsylvania, like every state, requires that you register your business with the Department of State. This gives you exclusive ownership of your business name in Pennsylvania. No one else can use that name.
So first, let’s make sure the business name you want is available. Go to the “Search Business Entity” page on the PA Department of State website, enter the name you want, and click search.
If the name is not taken, the search will say “no results,” which means the name is available to you. If it is taken, you will need to pick a different business name.
Certificate of Organization
Now you are ready to register your new LLC. To do this, you will use Pennsylvania’s online business document filing system. It’s called PENN File. So to begin, visit the PENN File website
and create a free account.
Click on “log in” and then click on register a new account. Through PENN File you will create and register your new LLC.
Next, you will complete the form to register a new LLC: Certificate of Organization, Domestic Limited Liability Company, Form DSCB: 15-8821
. The form has only seven sections. And most new businesses only have to complete five of them. Easy as pie!
There is a cost of $125. You will have to be prepared with a payment method. (This fee is waived if you qualify for the veteran/reservist-owned small business fee exemption.)
I’m going to stop here. Because it is too cumbersome to go through the LLC registration process in greater detail in a blog. Instead, I advise you to contact us to navigate through the next steps. We can get online with you and go through the process. Within an hour, you will have registered your new LLC!
Often our clients are confused about their business address, especially if it's a home-based or an online business. In those cases, you have two options: using a registered agent or a post office box. If you don't want to list your home address on your business communications/documents, consider these two options mentioned above. Check out our blog posts to learn more about a registered agent
and post office box
Obtaining an Employer Identification Number
Finally, now is a good time to obtain an Employer Identification Number (EIN) from the IRS. It’s free. You will need it before you hire employees and, oftentimes, a bank will want to see your EIN along with your business registration before opening a business bank account. So these are your next two steps: EIN and business bank account.
Business Bank Account
Assuming that you don't want to get into trouble with IRS, you need to have a business account separate from your personal account. Typically, you would need your articles of incorporation, EIN, and personal identification documents. Creating a business account will not only help you to get along with IRS but also you could build business credit and manage your payroll.
Bookkeeping & Taxes
LLCs are pass-through entities meaning that they don't pay income tax but the members of an LLC pay income tax. The members of an LLC are required to pay all/some of the taxes below to the IRS:
- Federal income tax (paid quarterly - typically, the deadlines are April 15, June 15, September 15, and January 15)
- FICA (Social Security and Medicare)
- FUTA (Federal Unemployment Tax)
- Self-employment tax
In addition to the Federal taxes, businesses in Pennsylvania are required to pay sales tax and use tax (if the products or services are subject to Pennsylvania sales and/or use tax) to the PA Department of Revenue.
As a smart business owner, you should hire an accountant to outsource your taxes. if you want to learn more about taxes, check out our detailed guide
Another important item on our list is business insurance. In Pennsylvania, every business must have workers' comp insurance if they have employees. This type of insurance would cover expenses related to employee injuries. Another type of insurance to consider is General Liability Insurance that typically, covers you and your company for claims involving bodily injuries and property damage resulting from your products, services, or operations.
Depending on your industry there may be other necessary insurances. Check out
our complete guide to learn more.
You may have heard of an operating agreement. It's a short document that lays out how your internal operations are governed, such as the ownership structure, capital contributions, and when/how it would dissolve. Typically, you are not required to have an operating agreement. But when you open a business bank account, your bank might ask for one. Our consultants here at the SBDC can help you create one. Learn more about operating agreements here
So, please contact us and schedule an appointment. We can get online together and walk you through the process of creating your new LLC. Remember our services are free of charge! Request consulting here.