Establishing a business in Pennsylvania is a multi-step process. If you follow these guidelines, you will avoid fines, penalties, and other legal and tax problems down the road.

Be sure to start with a business plan and formalize your ideas. Simple research and planning can go a long way toward a successful business. Although you do not technically need a business plan, it can help you plan and develop your business in the future. It can also help you secure financing as well.

  1. Choose and Reserve a Name for Your Company
    1. Search Pennsylvania's database of businesses that have already registered their names. Choose and register a name for your business with the Pennsylvania Department of State. The Department prohibits two companies from having similar names, so have a few names in mind in case one is already in use. The Department's staff can help you figure out how different your company's name needs to be from an existing entity's name if the names are similar.

    2. Some businesses use a “fictitious name” for their business in addition to the company’s formal name. You will also need to confirm the fictitious name’s availability and register it with the Department as well.

  2. Choose a Business Structure and Form Your Company
    1. Your lawyer and accountant can review with you the legal and tax implications of operating your Pennsylvania-based business as a sole proprietorship, corporation, general partnership, limited liability company, limited partnership, limited liability partnership or Pennsylvania S Corporation. Once you decide on a structure, you will file the necessary formation documents with the Department of State and pay the necessary filing fees. Keep in mind, however, that sole proprietorships and general partnerships do not require formation document filings.

  3. Obtain Required Permits and Licenses
    1. You must find the various permits you will need to operate your business in the Pennsylvania cities, townships, boroughs, and counties where your company will be physically located. Calling the business permit and licensing offices in those jurisdictions is a good place to start. You may also need to check local zoning laws before you decide on a business location.

    2. You should also review other categories of Pennsylvania business regulations that may be relevant to your company and comply with those requirements. For example, if your business plans to sell a product or perform a taxable service, then your business may need to obtain a sales tax license. If you have employees, you may also need to register with the Pennsylvania Department of Labor and Industry as well.

  4. Obtain an EIN and Complete State and Local Tax Registrations
    1. Obtain a federal Employer Identification Number (EIN) for your company from the Internal Revenue Service by phone or online. This is the business equivalent of a Social Security number to identify your company for all federal tax purposes.

    2. Additionally, register with the Pennsylvania Department of Revenue to establish accounts for the payment of income and employee-related taxes.

    3. Call the tax offices of the Pennsylvania cities, townships, boroughs, and counties where your business will be located to find out what local taxes may be levied on your business, and complete the required registrations. Local tax incentives may be available in certain areas of Pennsylvania.

  5. Open a Business Bank Account and Keep Good Records
    1. You may need to open a business bank account as well. A dedicated bank account for your company with a financial institution with branches location in Pennsylvania will likely be the most convenient option.

    2. You should also keep good records and retains supporting documents for tax purposes. This will help with potential financing options as well as completing required tax filings each year.

    3. Your business may also need to consider purchasing insurance or protecting its ideas through trademarks or patents as well.

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