Start a Business in Pennsylvania

Entrepreneur’s guide to forming a business in Pennsylvania

Choosing a location for your business is a major focal point for first-time business owners and entrepreneurs. Because Pennsylvania is an economically diverse state, it offers just the right infrastructure, top industries, and small business incentives and grants. If you want to register a corporation or start a small business in Pennsylvania, you will find that the availability of an educated workforce becomes advantageous for all forms of new entities.

Why do companies prefer to incorporate and register in Pennsylvania?

Many factors have driven entrepreneurs to register a business in Pennsylvania including its thriving economy with a Real Gross Domestic Product (GDP) of $726.04 billion. Today, the state is home to over one million small businesses in a variety of industries including advanced manufacturing, life sciences, medical technology, logistics, food processing, and manufacturing among others. This is mostly due to the many advantages and benefits that the state has to offer. Some of the top benefits of doing business in Pennsylvania are:

• Tax Incentives – Taxes play a decisive role when it comes to forming a new business in any state. When you decide to start a business in Pennsylvania, you can leverage the various business tax incentive programs offered by the state. These tax credit programs can help offset your overall tax liability.
• Competitive labor market – Skilled employees are crucial to the overall success of any business, and the state has a competitive labor market for skilled talent. The state is home to a rapidly growing tech community. There are also several top educational institutions and it’s supported by state-sponsored workforce training programs.

Wondering how to start a business in Pennsylvania?

Steps to start a business in Pennsylvania

If you’re planning to register a business in Pennsylvania, there are several details to consider and different processes to follow. Figuring out how to establish and maintain a new business can seem difficult when you’re just starting out. Each facet of your business like finances and licensing will have an impact on certain other components in your company. The Starting a business in Pennsylvania checklist will help strengthen your core business objectives.

1. Prepare a Pennsylvania Business Plan

The initial stages are a crucial period for setting your new company on the right course. If a business is a boat, then a business plan is like the sails that will help it move in the right direction. This is also known as a strategic plan. It not only helps entrepreneurs start a small business in Pennsylvania, but it also focuses on the necessary steps for achieving short-term and long-term objectives. This is one of many important points in the starting a business in Pennsylvania checklist. Some of the most important components of a good business plan include:

• Executive summary
• Business Overview
• Organization, ownership, & management
• Industry & market analysis
• Products and services
• Competitive analysis
• Branding and marketing
• Logistics and operations
• Financial statements and projection

2. Attend Entrepreneurial Training or Development Programs in Pennsylvania

Once you’ve decided to register a business in Pennsylvania, you should focus on entrepreneurial training or development programs. Such business development or entrepreneurial training programs are essential to helping the business achieve steady growth and future success. When doing business in Pennsylvania, you will need knowledge, valuable resources, connections, PA training, and development programs for small business owners. Some of the top programs include the Business Workshops & One-on-One Counseling programs by the Pennsylvania SBDC and Partnerships for Regional Economic Performance (PREP) program by DCED, PA.

3. Choose a Business Structure for your Pennsylvania Business

Choosing the right entity structure for your new business is one of the most important decisions you will need to make before you register your company with the state. The entity structure you select will play a key role in your tax and legal considerations. For this reason, you need to determine which type of entity will be the most suitable for your business. The structure you decide on will also determine the process and fee to register a business in Pennsylvania. It is important to note that each type of entity structure has its own characteristics, advantages, and even disadvantages. The type of business structures you can choose for doing business in Pennsylvania are:

• Sole Proprietorship
• Domestic and foreign LLC
• Domestic and foreign corporations
• General partnership
• Limited partnership
• Limited liability partnership (LLP)
• Limited liability limited partnership (LLLP)
• Nonprofit corporations
• Professional associations

4. Naming Your Pennsylvania Business

An important requirement to register or incorporate in Pennsylvania is confirming a business name. The company name is responsible for creating the very first impression with the client or customer of the said company. The name is not only used for the registration process but also for other business processes like licensing, applying for loans, filing taxes, and marketing. Hence, when choosing a name, you need to consider several aspects like:

• It is important to follow the state naming requirements and guidelines. These are governed by the 2022 Pennsylvania Consolidated & Unconsolidated Statutes, Title 54 – Names.
• The business name should be distinguishable from any other company in Pennsylvania. You need to also adhere to not using restricted words like the word bank. You cannot use words that have similarities with government agencies.
• Once you have chosen a name, it is time to conduct a Business Entity Search also known as name availability search.
• Pennsylvania requires you to reserve a business name by filing the name reservation form pursuant to 15 PA Cons Stat § 202 (2022).
• If you don’t want to use your legal name then you will need to register a fictitious name. This name also known as DBA (Doing Business As) will be registered pursuant to 54 PA Cons Stat § 311 (2022).
• You will have to officially publish a notice post filing an application for registration of the fictitious name.

5. Choose Your Location for Pennsylvania Business

If you’ve made the decision to start a business in Pennsylvania then the location of your company is an important focus area. The location of your company influences several aspects related to your business like operations, scalability, profitability, competition, risk, and expenses among others. There are some key factors that a company needs to consider when choosing a location and they are:

• Accessibility – One of the foremost factors is accessibility. If your business activity relies on clients, vendors, transportation and logistics then an accessible office will ensure doing business in Pennsylvania is easy. This means that your chosen location should be accessible to clients or customers. If you are in the manufacturing industry then your office should be close to transportation hubs, opportunity zones, and foreign trade zones.
• Competitors – Competition is necessary but too much competition can kill a business. Being closer to your competition can be a good strategy but may also hurt your business. Healthy competition can fuel innovation and you can even leverage their marketing strategies for your company’s profit.
• Operating and related costs – When you start a small business in Pennsylvania, one of the areas that will impact the company’s ability to run smoothly is operational costs. This cost will vary from one company to another depending on the primary business activity. Some of the elements that influence the operational cost include the coast of inventory, electricity and water, transportation and logistics, rent of commercial space, marketing, employee salary, and other miscellaneous expenses.
• Local zoning ordinances – Last but not least; it’s always important to check local zoning ordinances. These rules and regulations vary according to the city or county that your business is located in e.g., the local ordinance of Philadelphia County will be different from that of Allegheny County or Pittsburgh city. Local zoning ordinances also define the need for local Pennsylvania business licenses and permits for specific business activities.

• Philadelphia
• Pittsburgh
• Erie
• Allentown
• Reading
• Lancaster
• Scranton
• York

6. Register Your Business with the Pennsylvania Department of State

Whether you want to incorporate in Pennsylvania or start a home-based company, most kinds of businesses will need to undergo the process of a new business registration with the state. You will be required to fill out and submit documentation in accordance to the type of entity structure chosen. The documents have to be filed with the Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations. Let’s look at an example to understand this.

Do you want to form a new business in Pennsylvania?

7. Get Your EIN

An Employer Identification Number (EIN) is an important point on the starting a business in Pennsylvania checklist. It is mandatory for certain business structures and optional for others like a sole proprietorship without employees. In general, an EIN will provide your business with certain advantages. It is mostly used for filing your taxes but can be required for opening a business bank account or for taking out a loan. One of the most important benefits of having an EIN is that it will boost the overall credibility of your company. The Employer Identification Number is issued by the Internal Revenue Service (IRS).

8. Open a Business Bank Account for Pennsylvania Business

Whether you’re just starting as a sole proprietor or want to register a business in Pennsylvania as a corporation, one of the important business requirements is opening a bank account. You may think that your personal savings account would suffice, but realistically, it will make accounting difficult and lead to confusion when filing your tax return. Some of the reasons a company may require a separate account also known as a business bank account are:

• It is a legal requirement for certain types of businesses like corporations
• It will help in separating your personal income and expenses from that of the company
• The checking account will make expense tracking easier and help streamline the financial records as well as the tax information of the company.
• It will help provide clear records for audits
• A business banking account will help establish business credit by maintaining good financial habits

9. Obtain the Necessary Pennsylvania Business Licenses and Permits

If you’ve decided to start a small business in Pennsylvania, it would benefit you to know that one of the most important requirements in the state is obtaining the proper business licenses. Unlike many other states, Pennsylvania does not have a state license or general business license, although local licensing is required. The Pennsylvania business license requirements will vary according to different factors like the primary business activity and location of the company. Business licensing can be divided into three categories that include:

• Business licenses by Industry – If your business activity falls under a specific industry then the type of license needed will be determined by that industry. These licenses will be issued by different government agencies or bodies. If you decide to start a small business in Pennsylvania as a restaurant then you will need to apply for the Retail Food Facility Licenses issued by the Pennsylvania Department of Agriculture.
• County or City Licenses – You may need to apply for and obtain a Pennsylvania business license in the city or county where your company is located. Different counties or cities have different licensing rules, regulations, fees etc., and the type of license or permit will depend on business activity. In the city of Pittsburgh, the Department of Permits, Licenses, and Inspections issues local licenses for different types of activities like bed and breakfast and stationary Vendors.

10. Get Business Insurances

All forms of businesses typically require some type of business insurance, as it helps them to cover any costs associated with liability claims and property damage. If you start a business in Pennsylvania and have not invested in proper business insurance then as an owner, you may be at a risk of having to pay out costly damages or even for legal claims against the company. Every new or established company at some point in time faces some form of risk. Good business insurance can protect owners and the business. If you incorporate in Pennsylvania then the most common forms of business insurance that you can choose from are:

• General liability insurance
• Product liability insurance
• Professional liability insurance
• Employment practices liability insurance
• Business interruption insurance
• Workers’ compensation insurance
• Business Owner’s Policy (BOP)
• Home-based business insurance

11. Annual and Ongoing Requirements

Once you register a business in Pennsylvania, you will need to ensure complete compliance with state annual requirements. Different states in the USA have different annual requirements and fulfilling them will guarantee that your status will remain in good standing in the state. When you incorporate in Pennsylvania, one of the requirements is to file your annual report. Pennsylvania requires you to file a Decennial Report (once every ten years). The submission period of 10 years is expected to change to a one year period from 2024. The filing fee for the annual report depends on the type of business structure.

Some Important Quick Resources for Pennsylvania Businesses

When you are creating a business plan, you will need all possible resources and information concerning the operations of the new company. The information will not only help you to register and start a business in Pennsylvania but it will also provide information concerning others like the Pennsylvania business license, taxes, annual reports, small business development programs, and state business incentives among others. Let’s look at some of the important resources.

Pennsylvania Secretary of State

The office of the Pennsylvania Secretary of State has a website where you will find different types of information related to general and specific business requirements like forms, fees, business record searches, online licensing services, and much more. It is also known as the Pennsylvania Department of State.

• Pennsylvania Department of State
  302 North Office Building,
  401 North Street
  Harrisburg, PA 17120
  Phone – (717) 787-1057
  Email: RA-CORPS@pa.gov
  Website – https://www.dos.pa.gov/Pages/default.aspx

Pennsylvania Department of Revenue

This is an important department if you plan on doing business in Pennsylvania. You’ll get information and resources related to Personal Income Taxes and state business taxes. They provide information related to tax rates and the types of taxes applicable to your company. They also have a dedicated customer service team.

• Pennsylvania Department of Revenue
  11th Floor, Strawberry Square,
  Harrisburg, PA 17128-0431
  Phone – 717-787-1064
  Website – https://www.revenue.pa.gov/Pages/default.aspx

Pennsylvania Department of Labor & Industry

After you register a business in Pennsylvania, you may need to hire employees or a skilled workforce. This is where the Pennsylvania Department of Labor and Industry comes into the picture as it provides information and resources related to the various facets of employment. You will get information on workers’ compensation services, occupational and industrial safety standards, labor law, workforce protection, career training & development resources, and grants among others.

• Pennsylvania Department of Labor & Industry
  1700 Labor & Industry Building
  Harrisburg, PA 17120
  Phone – 717-787-5279
  Website – https://www.dli.pa.gov/Pages/default.aspx

Small Business Administration (SBA) Pennsylvania

The U.S.Small Business Administration is an independent agency created to provide the necessary support for small businesses and entrepreneurs. They provide valuable resources related to starting a business, Pennsylvania business license, funding opportunities in the state, grants programs, loan assistance, business development, entrepreneurship education, and credit risk management among others. They have several branch offices in Pennsylvania with the largest being in the Philadelphia District.

• SBA Pennsylvania
  2601 N. Third St.
  Suite 503
  Harrisburg, PA 17110
  Phone – 717-782-3840
  Website – https://www.sba.gov/district/philadelphia

Pennsylvania Business One-Stop Shop

The primary objective of a Pennsylvania Business One-Stop Shop is to help you start a business in Pennsylvania. They provide a team of business experts from various industries in PA who can provide you with the tools, resources, and experience that will assist you with future planning. They have a small blog targeted at small businesses and also provide information on small business funding. They provide information on various entrepreneurship and business events like the 9-Week Financial Boot Camp starting in June 2023. You can also find various business forms in their library section.

• Pennsylvania Business One-Stop Shop
  410 Northeast St
  Williamstown, PA 17098
  Phone – 1.833.722.6778
  Website – https://business.pa.gov/

Partnerships for Regional Economic Performance

The Partnerships for Regional Economic Performance (PREP) is a program that has been designed by the PA Department of Community & Economic Development (DCED). This partnership involves a network of partners throughout the state who work in sync to deliver vital business assistance. The local and regional partners can assist entrepreneurs with all aspects of business development and growth, and help them to create a starting a business in Pennsylvania checklist around these aspects. Some of the areas of focus for PREP include: specialized workshops, financial incentives, one-on-one counseling, and expansion into new markets among others

• Partnerships for Regional Economic Performance
  Harrisburg Regional Chamber & CREDC
  3211 North Front Street, Suite 201
  Harrisburg, PA 17110
  Phone – 717.213.5042
  Email – melissa@hbgrc.org
  Website – https://dced.pa.gov/programs/prep/

Pennsylvania Small Business Development Center

The primary objective of the Pennsylvania Small Business Development Centers (SBDC) is to help entrepreneurs start a small business in Pennsylvania, achieve growth, and prosper. They provide no-cost confidential consulting services and a variety of educational programs to first-time business owners. There are 15 centers in the state that provide assistance with various business issues like creating a business plan, marketing analysis, commercialization of technology, investigating funding opportunities, competitive research, and SBIR/STTR Proposal Preparation Assistance among others.

• Pennsylvania Small Business Development Center
  155 Technology Center
  200 Innovation Boulevard
  University Park, PA 16802
  Phone – (814) 863-4293
  Website – https://www.pasbdc.org/

PA Chamber of Business and Industry

The Pennsylvania Chamber of Business and Industry is a type of business advocacy association whose objective is to assist businesses of all different types and sizes in all industry sectors. They also advocate key policies that affect industries and businesses and provide resources and information on human resources, OSHA, workplace safety, information technology, and employee benefits among others.

• PA Chamber of Business and Industry
  417 Walnut Street
  Harrisburg, PA 17101, US
  Phone – 717.255.3252
  Website – https://www.pachamber.org/

Ready to start a business in Pennsylvania?

Pennsylvania’s proximity to major ports on the East Coast gives businesses and entrepreneurs the strategic advantage they need to successfully operate. When you register a business in Pennsylvania, you will be able to leverage different state programs including financial incentives and grants. Although the startup registration process may seem a little complex, a reputable Pennsylvania registered agent like IncParadise can provide valuable assistance with business formation or incorporation.