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).
Once you’ve identified a name, you need to conduct a name availability search also known as Pennsylvania Corporation search. This will ensure that your chosen name is available for reservation. It is important to note that you cannot register Corporation in Pennsylvania without a business name. You will have to submit the Name Reservation/Transfer of Reservation application (Form DSCB:15-208) with the Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations. It should be submitted along with a fee of $70. The corporate name will be reserved for a period of 120 days.
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.
Whether you plan to register a Pennsylvania Corporation online or offline, a top registered agent service like IncParadise can provide meaningful assistance. IncParadise has a keen understanding of state business laws and is committed to providing service of process. We also provide other important services like incorporation and annual maintenance requirements.
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).
Alternatively, IncParadise can assist with filing your Articles of Incorporation. We are incorporation specialists and with our help, you can guarantee compliance with all necessary Pennsylvania state regulations and save valuable time.
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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.
Bylaws provide particular information. The minimum information provided includes the corporation’s name, principal place of business, address, the fiscal year of the corporation, and the designation of the corporation as public or private. Some of the other information included in the bylaws is:
- 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.
You can start business banking anywhere and with the introduction of Cheqly, you can open an account online and operate it from anywhere. This is a modern-day neo-bank for startups. Whether you are operating your company from the USA or elsewhere, it will help with facilitating transactions in the USA and internationally. You can receive and make payments quickly through wire transfers.
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.
You can now take advantage of the Eqvista platform for issuing electronic shares to founders, investors, and employees. Eqvista is equity management software, which enables investors, corporations, and company shareholders in tracking, managing, and making intelligent decisions regarding their companies’ equity.
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
You may also require professional or occupational licenses depending on the area of activity. The Pennsylvania business licensing requirements and application process may be complex; this is where IncParadise can provide meaningful assistance through the “Business License Research Report” service. This is a detailed report that contains a list of filing instructions, supporting document requirements, and fees for all business licenses and permits in this state.
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.
If you register a Pennsylvania Corporation online, the second most important annual requirement will be to file corporate and other state taxes. The state has a flat 8.99 percent corporate income tax, although tax credits and incentives can help lower the overall tax burden. Apart from this, depending on the business activity, you may be required to file local sales taxes or a combination of state and local sales tax, employer withholding tax, and a wholesaler certificate among others.