How to register a Corporation in Pennsylvania?

Pennsylvania Corporation

If you’re planning to register a Corporation in Pennsylvania then you will find that this could be a good decision as the state has a healthy business climate. A corporation is a type of entity that offers many advantages and to top it, the state also offers several benefits in terms of resources, a supportive infrastructure, and business incentives. Employees are a primary requirement for every new business and the state provides a highly-educated and skilled employee pool. Pennsylvania is also quickly becoming a platform for recruiting STEM (science, technology, engineering, or mathematics) workers. One of the benefits of incorporating in Pennsylvania is its emergence as a startup ecosystem complete with accelerators and incubators.

What is a Pennsylvania Corporation?

A corporation also known as the traditional C Corporation is one of the most popular business structures in Pennsylvania. To form a Corporation in Pennsylvania, the first thing you will need to understand is the type of corporate structures available. It is a type of legal entity where owners and shareholders are taxed separately. This means that the assets and income of owners or shareholders are separate from that of the C Corporation. If you want to know how to form a Corporation in Pennsylvania then it is important to identify the type of corporations you can form in this state. They include:

• Business Corporations (C-Corp)
• Business Corporation (S-Corp)
• Foreign Corporations
• Nonprofit Corporations
• Professional Corporations
• Non-stock Corporations
• Benefit Corporations
• Statutory Close Corporations

What are the benefits of incorporating in Pennsylvania?

Entrepreneurs prefer to register a Corporation in Pennsylvania as this type of business structure has several advantages over other entity structures. Some of the advantages include:

• Limited liability – Limited Liability is one of the major benefits of incorporating in Pennsylvania. This simply means that a corporation limits the liability of the owners or shareholders and thus if such a company is sued, then the owners or shareholders will not be personally liable for any damages or debts. This type of entity protects the personal assets of the owners or shareholders.
• Access to capital – Easy access to capital is one of the important reasons why entrepreneurs prefer to incorporate in Pennsylvania. Incorporation helps raise money for the business through the issuance of stock, which can be sold to investors for raising capital. Apart from this, venture capitalists (VCs) find it easier to invest in C corporations in comparison to other kinds of entities.
• Increased credibility – One of the important benefits of incorporating in Pennsylvania is that it will help the company create a better professional image and establish higher credibility for potential partners, customers, suppliers, employees, and vendors.

Starting a Pennsylvania Corporation

Pennsylvania is famous for its strategic location and is well connected to New York City and Washington, DC. Entrepreneurs and corporations involved in manufacturing and anything related to transportation and logistics find the state’s strategic location and infrastructure critical for overall growth. If you’re also planning to form a Corporation in Pennsylvania then there are several important processes that you will need to focus on.

1. Name a Pennsylvania Corporation

If you’re planning to incorporate, one of the first steps to take is to identify a corporate name. The business name plays a key role when it comes to building a brand image. The corporate name will help to create a noteworthy first impression with your partners and customers. You can finalize a corporate name by following state naming guidelines and conducting a Pennsylvania Corporation search. The Pennsylvania naming guidelines state that a corporation must include words like “corporation”, “incorporated”, or abbreviations like “corp.”, or “inc.” The naming guidelines are governed by 15 PA Cons Stat § 5303 (2020).

2. Appoint a Pennsylvania registered agent

When it comes to the new business formation or incorporation process, there are certain state business requirements that an owner must fulfill. To incorporate in North Carolina, your first step will be to hire and maintain a registered agent in the state pursuant to the 15 PA Cons Stat § 1507 (2020). A registered agent could be an individual or a company that has agreed to accept all legal mail on behalf of your corporation. This is known as Service of Process.

3. Choose the Pennsylvania Corporation’s initial directors

Another important step when learning how to form a Corporation in Pennsylvania is choosing the entity’s initial directors. These are also known as the first directors of the corporation and will also be named in the articles of incorporation. They are normally elected through an organizational meeting or by those individuals who have been appointed by the initial owners or shareholders of the said entity. The initial directors will have to serve until the shareholders of the corporation hold their first meeting for electing their successors. The board of initial directors assists in making important decisions pertaining to several areas of the corporation like the adoption of bylaws and the issuance of shares among others.

4. File Articles of Incorporation with the PA Department of State

Once you’ve conducted a Pennsylvania Corporation search and reserved your business name, the next step is to incorporate. You will be required to prepare and submit the Articles of Incorporation pursuant to the 15 PA Cons Stat § 1306 (2020). You can form a Corporation in Pennsylvania by submitting the articles to the Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations along with a fee of $125. It is important to note that you will have to officially publish (advertisement) a notice of intention to file articles of incorporation pursuant to the 15 PA Cons Stat § 1307 (2020).

Are you thinking of starting a Pennsylvania Corporation?

5. Get an EIN

If you’re planning to register Corporation in Pennsylvania, you may be obligated to fulfill certain annual requirements. One such requirement is to file corporate and other business taxes. In order to file taxes, you will have to apply to obtain an Employer Identification Number (EIN). This is a 9-digit unique identifier assigned by the Internal Revenue Service (IRS). It is also known as the Federal Employer Identification Number (FEIN) and will allow corporations to open business bank accounts.

6. Prepare bylaws for your Pennsylvania Corporation

Another significant requirement for any new corporation is the corporate bylaws. Whether you register a Pennsylvania Corporation online or offline, this is a mandatory requirement that the entire company’s functions are dependent on. Hence, the bylaws are known as the governing rules and are the first act of the initial board of directors. These guiding principles direct the initial board of directors in their work of overseeing the day-to-day operations of the said corporation.

• Statement of Purpose
• Board of directors
• Titles of the officers of the corporation
• Shareholders owning stock in the company
• Committee and committee members
• Procedure and timeline for annual meetings
• Issuance of stock to shareholders
• Rights and responsibilities
• Conflicts of interest
• Amendment to the Bylaws

7. Hold an organizational meeting

Once you file the Articles of Incorporation to incorporate in Pennsylvania, the entity will be required to hold an organizational meeting. This is an initial meeting that is considered to be a basic organizational formality for a corporation that has been organized under the laws of the US state of Pennsylvania. This meeting is typically not held in person and is instead documented through the unanimous written consent of the initial board of directors of the company. Some of the key areas that the organizational meeting focuses on are:

• Approving corporate bylaws
• Drafting the articles of incorporation
• Distribution of initial shares
• Election of officers
• Voting to accept the stock certificates
• Approving the corporate seal

8. Open a bank account for your Pennsylvania Corporation

There are many benefits of incorporating in Pennsylvania but there are certain points to consider before or after incorporation. One major point of focus is conducting financial transactions with ease. This is only possible if you’ve opened a business bank account. This type of bank account is also known as a checking account and needs to be kept separate from your personal bank account. One of the reasons companies prefer a corporate banking account is because it helps to improve the entity’s overall credit score and keeps track of income and expenditures.

9. Issue stock

If you’ve decided to form a Corporation in Pennsylvania then your company will be required to issue stock as governed by Title 15, 2020 Pennsylvania Consolidated & Unconsolidated Statutes, § 1528 and § 7705. According to Pennsylvania statutes, you can issue capital stock designated as membership shares. The shares of such a corporation will be represented by certificates and in the absence of these; they will be known as un-certificated shares. A corporation issues stock for raising funds that will help the business operate. The holder of such stock will be known as a shareholder and will certainly have a claim to a part of the assets and earnings of the corporation.

10. Obtain necessary licenses and permits

Once you’ve incorporated in Pennsylvania, you will be required to obtain the necessary business licenses and permits. You will not be able to operate your business or conduct transactions in the state without it. You will need to conduct a Pennsylvania Corporation search for licenses applicable specifically to your company, which will be determined by:

• The industry your corporation specializes in
• The city or county your business is operating from

11. Comply with other tax and regulatory requirements

Once you register your Corporation in Pennsylvania, you will be required to comply with state annual maintenance requirements. One of these major requirements is filing Pennsylvania’s annual report currently known as a Decennial report. This is one of the few states where a Decennial Report has to be submitted once every 10 years pursuant to 54 PA Cons Stat § 503 (2020). The Decennial report will be replaced by an annual report from 2025 onwards.

Know more about starting a Pennsylvania Corporation

If you have decided to incorporate in Pennsylvania but are faced with several queries then this section will help you. This section deals with queries specific to various aspects of incorporation such as the corporate name, starting costs, dissolution, S Corporation, and foreign corporation among others.

Why register a Corporation in Pennsylvania?

The many benefits of incorporating in Pennsylvania make it a favored destination for entrepreneurs and startups. Some of the top advantages are:

• The state provides a lot of support and resources for small businesses
• It’s geographic location is of utmost importance and has a strong transportation infrastructure for B2B (business-to-business) and B2C (business-to-consumers)
• It is home to world-class universities and a highly skilled workforce
• Cities like Pittsburgh are home to high-impact industries like cyber-security, robotics, energy, artificial intelligence, health, and life sciences.
• When you form a Corporation in Pennsylvania, you will be able to leverage state grants programs, tax incentives, and other funding programs.

How do I know if my Pennsylvania Corporation name is available?

The incorporation process requires you to provide a company name. First, you will need to identify a name that is in compliance with state naming guidelines. The next step would be to conduct a Pennsylvania Corporation search. This is also known as a name availability search and will indicate if your chosen name is available for reservation or is already in use.

What will be the cost to form a corporation in Pennsylvania?

If you want to register a Corporation in Pennsylvania then you will be required to submit Articles of Incorporation for a domestic entity. The initial cost to register a Pennsylvania C-Corporation is $125. If you want to expedite the process then there will be an additional fee depending on the chosen expedited service, like the fee for same-day service is $100, while a one-hour service is $1,000. Apart from this initial incorporation cost, there will be other expenses such as the name reservation, ​Articles of Amendment, application for business licenses and permits, and filing of annual reports among others.

Can I register an S Corporation in Pennsylvania?

Yes, you can elect for the S-Corporation tax designation in Pennsylvania. S corporation is basically a tax designation and is often beneficial for those business owners who receive large distributions apart from their salary. In order to become an S Corporation, you will be required to submit a completed 2553 form (Election by a Small Business Corporation).

Do I need a business license for my Pennsylvania Corporation?

Yes. You may require single or multiple business licenses depending on the industry, the location of your company, and the business activity.

Can I register a foreign Corporation in Pennsylvania?

Yes. You will need to apply for the foreign qualification process to operate your business in this state. You will need to submit a Foreign Registration Statement to incorporate in Pennsylvania. This document is also known as a certificate of authority and you have to submit it pursuant to 15 PA Cons Stat § 412 (2020). You will also be required to officially publish a notice of intention to conduct business in this state pursuant to 15 PA Cons Stat § 4124 (2020).

How can I dissolve my Pennsylvania Corporation?

If you want to dissolve your corporation at any given point in time, then you will need to submit Articles of Dissolution-Domestic Corporation, along with a fee of $70. You will also be required to submit tax clearance certificates from the Department of Revenue as well as from the Bureau of Employment Security.

Ready to Start a Pennsylvania Corporation?

Pennsylvania offers several types of business structures for you to choose from. Although, there are many benefits of incorporating in Pennsylvania by comparison to other business structures. For domestic or foreign entities, if you want to incorporate in Pennsylvania, IncParadise can assist you with the process of incorporation.