Incorporating A Business In Pa: Everything You Need to Know
Incorporating a business in PA is both easy and popular; having the sixth largest population in the United States, the Commonwealth of Pennsylvania is home to a booming business community.4 min read
2. Incorporators and Directors
3. Registered Office
4. Corporate Purpose
5. More Information
Incorporating a business in PA is both easy and popular; having the sixth largest population in the United States, the Commonwealth of Pennsylvania is home to a booming business community. As evidence, some large, well-known corporations have chosen the Keystone State as the home for their headquarters, including:
- Hershey Foods
- Rite Aid
- Dick’s Sporting Goods
What Is a Corporation?
Before deciding if basing your corporation in Pennsylvania is the best move for you and your business venture, it is important to be clear on what defines a corporation compared to that of other business structures.
Unlike a sole proprietorship, partnership, or limited liability corporation (which is also known as an LLC), a corporation is a separate entity from its owners or shareholders. Therefore, the owners or shareholders are not responsible for assets and liabilities. By being the owner of a corporation, you essentially will be:
- Decreasing your liability
- Lowering your tax rates
- Gaining access to capital
While that may all sound great, there are then additional factors to consider. For example, the corporation files its own tax return, which means more paperwork, and it is generally more expensive to register a corporation than other business structures.
Incorporators and Directors
Corporations are expected to have directors (also commonly referred to as a Board of Directors) and incorporators. While there is not a maximum as to the number of directors a corporation may have, in Pennsylvania, there must be a minimum of three: President, Treasurer, and Secretary. Additionally, they must be over the age of 18; they are not required to be Pennsylvania residents.
In the bylaws or the articles of the corporation, the number of directors the corporation intends to have should be spelled out. Additionally, these bylaws can also identify any requirements, expectations, or eligibility criteria the directors must meet. It is crucial to ensure that your corporation appoints strong leaders with good judgment to the board of directors, as these are the men and women who will be responsible for determining new policies or strategies, and managing the overall affairs of the business.
Meanwhile, the incorporators are the individuals who are responsible for drafting (ideally, in consult with an attorney who specializes in business law) the articles of incorporation, and filing them (signed) with Pennsylvania’s Secretary of State. While there can be more than one incorporator, they must all be over the age of 18, and the names and addresses of all incorporators must be included in the filed articles of incorporation. Additionally, the incorporators are the ones responsible for naming the initial directors, after which time the board will hold a board (or, shareholders) meeting to then vote in the next round of directors.
After the filing of all of the necessary paperwork to establish the corporation and put in place the initial board, the job of the incorporator(s) is essentially done, unless they are then taking on responsibilities as an employee or board member.
To ensure that your corporation is receiving all of it’s correspondence, particularly legal correspondence, you will want to have a reliable registered office. This does not have to be the same physical location as where the day-to-day activities of the business are conducted, necessarily, but it cannot be a post office box; it must be an actual street address that is located in Pennsylvania.
In some states, it is required that within your articles of incorporation, there be included what is called a statement of purpose, or corporate purpose. This is not, however, required in Pennsylvania, as all corporations in the state are formed for legal or lawful purposes. (For example, activities such as prostitution or gambling are not permitted in Pennsylvania.)
While ensuring that you properly file all of the necessary paperwork with Pennsylvania’s Secretary of State, such as the articles of incorporation, are obviously necessary to incorporate, everything you file is going to need to reflect your corporation’s name. So, before you do anything at all, you will need to pick the perfect name for your new corporation.
In choosing a corporate name, there are various things to consider. For example, you will want to ensure that it is a name that is easy to remember, something that will really stick in people’s minds. Additionally, it should somehow speak to what the corporation is or does; for example, if you are starting a dog-grooming business, something like The Diva Dog may be good… provided, of course, that the name has not already been registered by someone else.
If you need help with incorporating a business in Pennsylvania, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and