An entrepreneur’s guide to forming a business in Alabama

Alabama is home to some high-performing businesses that have a strong global presence. The state is ranked in the top tier, not only for a favorable business climate, but also in several other aspects like manufacturing output, customized training, manufacturing employment, overall low tax burden, affordable utilities, and state industrial development grant programs. These are some of the reasons that attract entrepreneurs to start a business in Alabama. An Alabama registered agent like IncParadise can assist you with the process of establishing your startup in the state.

Why do companies prefer to incorporate and register in Alabama?

Alabama is home to 408,374 small businesses with some businesses listed in the Fortune 500. Some of the top companies based in this state include Regions Financial Corporation, Vulcan Materials Company, Encompass Health, American Cast Iron Pipe Company, Brasfield & Gorrie, Buffalo Rock, Delchamps, and Southern Natural Gas among others. As an entrepreneur, you can start a small business in Alabama as it is considered to be one of the best destinations for startups and small businesses. The state offers several advantages that you can leverage if you plan to incorporate in Alabama. Some of the top advantages are:

• Tax-Friendly – One of the most vital aspects for most businesses is the tax rate or the taxes they are required to file. Each state has a different tax structure and tax benefits. If you register a business in Alabama, taxes will be the least of your worries as it is one of the most tax-friendly states in the nation. The state has low-income tax, sales, and property taxes, and is lower than the tax rates in South Carolina and Nevada.
• Startup Ecosystem – Alabama is home to a vibrant and growing innovation ecosystem, that’s perfect for entrepreneurs who want to start a small business in Alabama. The state offers the right blend of an innovative environment, digital resources, networks for mentorship, and accelerator and incubator programs.
• Grants and Other Funds – An essential detail for any successful business is keeping the startup costs low. Oftentimes this is easier said than done, and that is why you may need grants and other forms of startup funding. This is also a key component of your starting a business in Alabama checklist.

Steps to start a business in Alabama

Forming a startup from scratch is never easy and there are several processes, documentation, and state requirements that you need to adhere to. If you’re planning to register a business in Alabama then you have to focus on several key areas from business planning to choosing the right business structure or location and obtaining the necessary Alabama business licenses. Let’s take a look at the key areas for starting a new business in this state.

1. Prepare an Alabama Business Plan

A business plan is the starting point for any new business and the most important aspect of your starting a business in Alabama checklist. It is an important and strategic tool especially if you’re planning to start a small business in Alabama. The need for a good business plan lies in the fact that it will help entrepreneurs focus on all key elements of a business from financing to marketing and licensing.

• Executive summary
• Company description
• Management and Organization
• Market analysis
• Revenue model
• Competitive analysis
• Products and services
• Marketing Plan
• Sales strategy

2. Attend Entrepreneurial Training or Development Programs in Alabama

One of the more important aspects to consider before you register a business in Alabama is the availability of small business resources. There are several types of business resources with the most favoured being entrepreneurial training or small business development programs. One of the more popular programs is the Alabama Innovation & Mentoring of Entrepreneurs (AIME) program; its objective is to nurture high-tech startups into profitable businesses. Some of the other similar programs include the Auburn Business Incubator (ABI), Bessemer Business Incubation System (BBIS), Enterprise Business Incubator, and Innovation PortAL entrepreneurial hub among others.

3. Choose a Business Structure for your Alabama Business

As a new or first-time business owner, one of the most important decisions to make regarding your company is choosing the right entity structure. Each entity structure has its own advantages and benefits. For example, if you register a business in Alabama as a Business Corporation then it will be easier to raise capital vis-à-vis a sole proprietorship or an LLC. The different types of entity structures you can choose from in Alabama are:

• Sole Proprietorship
• Limited Partnerships
• Registered Limited Liability Partnerships
• Limited Liability Company
• Limited Liability Limited Partnerships
• Business Corporations
• Non-profit Corporations
• Professional Corporations
• S Corporation

Whether you’re planning to incorporate in Alabama as a domestic entity or a foreign company, one of the most important requirements is selecting a good business name. The importance of a company name lies in the fact that it summarizes the brand identity of the entity. Hence, there are several aspects to consider when choosing a name for your business. These aspects include:

• Follow the Alabama state naming guidelines
• Choose a name that is not similar to any other company name in Alabama
• Ensure that there is no trademark infringement
• Keep your business name simple, easy, and memorable
• Ensure that the domain names are available

5. Choose the Location for your Alabama Business

The success of a business can often be credited to its location. Several characteristics of a good location can be determined by geography, demography, competition, the availability of business resources, and a skilled workforce. Some cities offer many advantages and are hence considered ideal for people who want to start a business in Alabama. Some of the top cities in the state include Millbrook, Prattville, Foley, Cullman, Daphne, Montgomery, Helena, Fairhope, Troy, and Pell City. According to a WalletHub report, 4 of the top cities in your starting a business in Alabama checklist should be Mobile, Montgomery, Huntsville, and Birmingham.

6. Register Your Alabama Business

If you want to register a business in Alabama then you’ll be required to follow the state-governed processes and requirements. You’ll need documentation consistent with the type of entity structure you’ve chosen. The governing laws, processes, forms, and fees will vary according to the entity structure. You have to file registration documents with the office of the Alabama Secretary of State. Let’s look at an example to understand this.

Do you want to start a new business in Alabama?

7. Get Your EIN

An Employer Identification Number or EIN is a unique identifier that is assigned to a business entity by the Internal Revenue Service (IRS). This unique ID is most commonly used by companies or entrepreneurs to file state business taxes. The EIN is a unique nine-digit number that has several benefits for business owners as it helps to prevent identity theft, adds credibility to a company, and is often required for starting a business bank account.

8. Open a Business Bank Account for your Alabama Business

One of the first things you will need when you start a small business in Alabama is a bank account. Most first-time business owners start by using their personal accounts for business transactions; but is that really a viable option? If you’re starting a new business then you’re thinking in the context of long-terms; hence you’ll require a banking account that can handle long-term business requirements. This is where a dedicated business bank account also known as a checking account or merchant account can offer you many benefits.

9. Obtain Necessary Alabama Business Licenses and Permits

Once you register a business in Alabama, the next step will be to make your business operational. This can be made possible by obtaining the necessary state business licenses and permits. It is important to note that the licensing regulations vary from one state to another. Hence, the Alabama business license requirements and laws would be different from the laws and regulations of any other state. You may also be required to apply for multiple licenses in the state depending on your company’s type of business activity. Permits and licenses in Alabama can be categorized as under:

• Business Privilege License – A business privilege license is a type of Alabama license requirement that is true for any person, company, firm, or corporation that is engaged in any form of business, profession, or occupation. This license requirement is for several categories of business activity and professions right from Automobile dealers to abstract companies, mining, and even warehouses. You’ll need to apply for this license with the Department of Revenue and the fee will vary depending on the business activity or profession.
• Municipal business licenses – Once you start a business in Alabama, you may need to apply for municipal licenses. This type of Alabama business license is applicable if you form a company in a municipality with its separate business license ordinance.
• City or County licenses – Apart from the privilege license and municipal license, you may be required to apply for city or county licenses and permits. This can vary according to the county your firm is located in and the business activity you are engaged in.

If you want to know more about what type of Alabama business license is required for your company then you can select our “Business License Research Report” service. This is a specialized service that will provide you with a detailed list of filing instructions, and the supporting document requirements for business licenses and permits in the state.

10. Get Business Insurance

One of the finer aspects that most small business owners are unaware of is that of company insurance. Insurance should be included in your starting a business in Alabama checklist as certain types of company insurance can help you cover the variable costs associated with property damage and liability claims. All startups and new companies face some form of risk at any given time when running company operations. This is where good business insurance can protect the owners and the business. If you register a business in Alabama then the most common forms of business insurance are:

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

11. Annual and Ongoing Requirements

Once you register a business in Alabama, there are certain annual requirements that you or your company must be compliant with to maintain a good standing with the state. The annual requirements will vary from one state to another and will also depend on the type of business structure you form. The various annual requirements for doing business in Alabama are:

• Annual Report – Most states in the USA require businesses to submit some form of report annually; they are most commonly known as the annual report. In Alabama, however, there are no annual report requirements for corporations or limited liability companies.
• Taxes – Once you incorporate in Alabama, one of the important annual filing requirements for an LLC or Corporation is that of business taxes. The taxes applicable to businesses are:
  • Business Privilege Tax (BPT)
  • Corporate Income Tax
  • Sales and Use Tax

Some Important Quick Resources for Alabama Businesses

It’s never an easy task to start a business and there are a variety of resources that can be quite helpful. Many state agencies and private institutions provide a wide variety of resources in the form of knowledge concerning Alabama state regulations, guides to starting a business in Alabama, and financial assistance among others. We’ve compiled a list of agencies where you can find any information and guidance for doing business in Alabama and making it operational.

Alabama Secretary of State

The office of the Alabama Secretary of State (SOS) is responsible for keeping state records and providing a variety of services. Whether you want to register a business in Alabama or require information concerning business laws in the state; the office of the Georgia SOS can assist you with the same. The website of the Alabama Secretary of State provides access to a variety of information and services for business entities; you can even download their Business Entities brochure, as well as other business-related forms.

• Alabama Secretary of State
  State Capitol Building – Suite S-105
  600 Dexter Avenue
  Montgomery, AL 36130
  Phone: 334-242-7200
  Email: [email protected]
  Website – https://www.sos.alabama.gov/

Alabama Department of Revenue

The Alabama Department of Revenue (ALDOR) is a resource of information related to taxes applicable in the state. If you register a business in Alabama you may be required to file certain business tax returns through the ALDOR. They provide detailed information about various taxes, their payment information, tax incentives in the state, the certificate of compliance, Alabama business licenses, and a list of taxpayer service centers across the state.

• Alabama Department of Labor
  649 Monroe St, Montgomery,
  AL 36131, United States
  Phone: (334) 954-4094
  Website – https://www.labor.alabama.gov/

Small Business Administration (SBA) Alabama

The Alabama Small Business Administration is an independent agency that was specifically created to provide resources and support to startups and small businesses. The services can vary from funding programs to counseling, credit risk management, disaster recovery, entrepreneurship education, and federal contracting certifications.

• Small Business Administration (SBA) Alabama
  2 N. 20th St., Suite 325
  Birmingham, AL 35203
  Phone: 205-290-7101
  Website – https://www.sba.gov/district/alabama

Economic Development Partnership of Alabama

Alabama takes pride in its vibrant culture and innovation; if you start a business in Alabama you should look into the Economic Development Partnership of Alabama (EDPA) because they provide important resources. It’s a private non-profit organization with several levels of objectives; like attracting and retaining world-class talent across industries. They also play an important role in supporting and inspiring both industry and emerging startups. EDPA also organizes an annual innovation and inspiration event that’s aimed at cultivating a dynamic business environment or culture within the country.

• Economic Development Partnership of Alabama
  1320 1st Ave S, Birmingham,
  AL 35233, United States
  Phone: (205) 943-4700
  Website – https://edpa.org/

The Chamber of Commerce Association of Alabama (CCAA)

The Chamber of Commerce Association of Alabama (CCAA) plays an important role in providing exceptional services in a wide spectrum of areas like professional development, advocacy, and the communication of various issues that have an impact on the local business community. One of their primary goals is to enhance the quality of life for the state’s residents by promoting the interests of the ever-expanding business community. If you incorporate in Alabama then you’ll find extremely valuable resources here including information on networking events throughout the state.

• The Chamber of Commerce Association of Alabama (CCAA)
  2 North Jackson Street,
  Suite 607
  Montgomery AL 36104
  Phone: 334-264-2112
  Website – www.alabamachambers.org

Alabama Department of Economic and Community Affairs

The Alabama Department of Economic and Community Affairs (ADECA) is responsible for providing several kinds of grant programs and services aimed at encouraging economic and community development. ADECA has strategic partnerships with different agencies like non-profit groups and local governments.

• Alabama Department of Economic and Community Affairs (ADECA)
  401 Adams Ave, Montgomery,
  AL 36104, United States
  Phone: 334-242-5100
  Email – [email protected]
  Website – https://adeca.alabama.gov/

Ready to start a business in Alabama?

Alabama has a favorable business climate for entrepreneurs and startups; this is one of the many advantages that the state offers. If you want to start a business in Alabama efficiently and quickly then IncParadise can help you. We provide professional guidance and have a team of incorporation experts to assist you with your new business formation.

Pennsylvania Registered Agent

A Pennsylvania LLC registered agent can be an individual or a company, and you can even be your own registered agent in certain states. This type of agent is also known as a resident agent, statutory agent, or simply an agent for service of process. A resident agent is also considered to be the primary official point of contact for a corporation, a limited liability company, or any other legal entity operating in this state. To identify a reliable or reputable agent, you may be required to conduct a Pennsylvania registered agent search because the services offered can vary from one agent to another.

What is a Registered Agent in Pennsylvania?

A designated registered agent in Pennsylvania must remain in compliance with the 2020 Pennsylvania Consolidated & Unconsolidated Statutes for receiving service of process (SOP) on behalf of an individual, firm, or multiple businesses. Similarly, each state in the USA has business laws and statutes relevant to maintaining a resident agent in the state. A Pennsylvania agent for service of process not only handles SOP but also provides a wide variety of services that could be categorized as general business services such as filing an EIN or customized services like filing an S-Corporation.

Why do Pennsylvania Businesses Need a Registered Agent?

When you form a new LLC or incorporate in the state of Pennsylvania, you will need to designate and maintain a registered agent in the state. It’s important to understand that the state has defined laws that identify and segregate the roles and responsibilities of RA services in the state. These laws apply to both new and existing entities that are currently active and operational in the state. Each business also has a different reason and requirement for hiring a Pennsylvania Corporation registered agent. Some of the reasons why a company may need such services include:

• Ensure service of process – This is normally the primary objective for all registered agents in Pennsylvania, as well as a basic business requirement. Service of process is usually required when a company is sued. If an entity is sued, then the court will obtain jurisdiction over the entity by delivering service of process to the designated registered agent. Generally speaking, service of process is considered to be the shorthand for any legal documents initiating a lawsuit like a complaint or summons.
• Avoiding the risk of non-compliance – Once you register a new company in the state, your business needs to be compliant with state requirements as specified in the 2020 Pennsylvania Consolidated & Unconsolidated Statutes. A Pennsylvania LLC registered agent who is well-versed in the state laws and requirements can ensure that your company is always compliant with the state and business requirements.
• Receiving business-related documents – If you incorporate in Pennsylvania then the state will send you legal and business documents concerning the formation and operation of your company. If you have to travel a lot or are unable to maintain business hours then a resident agent can ensure that you will receive all your important documents. You’ll need to conduct a Pennsylvania registered agent search to find services that fulfill this requirement.

Looking for a Professional Registered Agent Service?

Can I Be My Own Registered Agent in Pennsylvania?

Yes, you can be your own registered agent in Pennsylvania. Although, it’s important to ensure that you meet all state requirements as directed by the law. As an individual, there are certain criteria that you must to meet including:

• To be a Pennsylvania agent for service of process, you should have a physical street address in the state. A P.O. box will not be accepted.
• You should be over 18 years of age.
• You need to be available during working hours throughout the week.

Why Do Businesses Choose a Registered Agent Service in PA?

The 2020 Pennsylvania Consolidated & Unconsolidated Statutes have made it mandatory for specific business entities like corporations, S Corps, and limited liability companies (LLCs), to maintain a registered agent to receive legal communication and other documents on behalf of the business. Hence, you need to hire a highly professional and reputable service. For this reason, you will need to conduct a Pennsylvania registered agent search. It’s important to identify an RA service that will be available during the working hours of every business day. Although this may be a difficult proposition for business owners, IncParadise provides all this and more. Some of the top reasons for choosing a Pennsylvania Corporation Registered Agent service include:

• A Pennsylvania Agent for Service of Process will not only receive official and legal documents, but will also forward them to the business owners, members, or directors of the company.
• A PA resident agent service will maintain regular business hours to guarantee that you don’t miss any important and legal documents.
• A reputable PA registered agent will handle business related requirements and help you organize and maintain these documents properly.
• Some services provide offsite storage facilities for sensitive and legal documents.
• Top PA services include automated reminders that are sent promptly to help prevent you from missing any filing deadlines like filing the PA Annual Reports.
• When you conduct a Pennsylvania Registered Agent Search, try to look for a service provider who promises to protect your private information.

Want to hire us as your Pennsylvania Registered Agent?

How to Elect a Registered Agent in Pennsylvania?

If you’ve registered your startup in Pennsylvania, or are planning to incorporate, then appointing a registered agent is important and mandatory. This is because the 2020 Pennsylvania Consolidated & Unconsolidated Statutes, 15 PA Cons Stat § 8825 (2020) states that each domestic, foreign, and nonprofit entity will need to appoint and continuously maintain a registered agent in the state. You may need to conduct a Pennsylvania Registered Agent Search to find the right resident agent as the state has hundreds of qualified RAs offering their services. The type of services offered by a statutory agent can vary from one agent to another and so will their pros and cons. However, here are some tips that will help you to choose the right Pennsylvania LLC Registered Agent:

• You need to look for a professional service focused on ensuring that all filings and services are taken care of promptly.
• You should consider the overall value of the service rather than the price point because choosing a cheap service can involve risks or lead to expensive mistakes.
• When searching for a Pennsylvania Corporation Registered Agent, consider the option for customizable electronic notification services.
• Top resident agents in the state will provide you with additional compliance tools to help you meet annual state requirements.
• It’s important to choose an agent that specializes in handling sensitive documents and also provides a forwarding service.
• A nationwide registered agent service like IncParadise can offer long-term benefits, especially when it comes to helping to move your business to other states or with foreign qualification.
• RA services should provide you with a reliable software system that helps you manage renewal dates and keep up with your company’s operations like the Entity Management Software by IncParadise.

How to Change a Registered Agent in Pennsylvania?

If you’ve registered a C or S Corp, an LLC, or any other entity type and designated a registered agent initially, but need to change the agent now, what would be the process? It’s important to first understand that each business has its own requirements and reasons for wanting to change their existing Registered Agent in Pennsylvania. Some of the most common reasons include:

• If you’re looking for a professional service.
• Moving your business from another state to Pennsylvania.
• Your existing RA doesn’t provide services in Pennsylvania.
• Your designated resident agent has moved away from this state.
• The current registered agent is unable to meet the Pennsylvania RA state requirements.

Fill out a Change of Registered Office Form and Submit it to the Pennsylvania Department of State Along with the Necessary Filing Fee

If you’re thinking of changing your Pennsylvania Agent For Service of Process then the first step is to submit the Statement of Change of Registered Office by Agent (form DSCB:15-108). The form has to be submitted to the Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations. There is a filing fee of $5.00 for domestic entities and a fee of $250.00 for foreign businesses. You can submit the change of agent form online or send it through the mail.

• The name of the association
• The current name of the previous authorized person or agent
• The name of the new agent
• The address of the present registered office
• The new registered agent’s office address
• The termination of status
• The new registered agent’s name and signature

Hire us and we will complete the change of agent form for you

If you’re thinking of changing Registered Agents in Pennsylvania then IncParadise is one of the most reputable agents in the state. We offer a plethora of general business and customized services in addition to service of process (SOP). If you hire us, we’ll help you complete the change of agent form. We will also provide information concerning the entire process for changing your RA, from informing your previous resident agent, to submitting the change of agent form.

Want to change your Pennsylvania registered agent?

Why Choose IncParadise as Your Pennsylvania Registered Agent?

If you register or incorporate a new business in Pennsylvania then it is mandatory to maintain a registered agent in the state. It’s important to conduct a proper Pennsylvania Registered Agent Search to help you find a reputable and professional service. IncParadise is one of the most reputed and top registered agents in this state who adheres to the Pennsylvania RA requirements as established by PA statutes.

Why Pennsylvania?

Pennsylvania shares its borders with some of the top business and industrial states in the nation like West Virginia, Maryland, Delaware, New York, and even the Canadian province of Ontario. A strong transportation system infrastructure ensures a smooth flow of commerce between border states and is one of the key reasons that explains why entrepreneurs prefer to show interest in relocating a business to Pennsylvania. The state also provides necessary support in terms of the business climate, a wide variety of industries, access to different markets nationally and internationally, grants and loan programs, and business incentive programs. These business benefits in Pennsylvania are attractive to both domestic and foreign entities, especially those planning to move their company to this state. Let’s look at some of the top benefits that this state has to offer.

Excellent workforce

A strong and skilled workforce is a key element that drives business growth and expansion. A major reason why Pennsylvania can offer a skilled and dedicated labor force is because it also offers an excellent education system. The state is focused on creating a diverse STEM (science, technology, engineering, and math) workforce by connecting the under-represented high school students with high-demand research and development opportunities. One of the top programs dedicated to creating STEM professionals is Penn State’s EnvironMentors program. Apart from this, the Pennsylvania Department of Labor & Industry also administers several Workforce Development programs thus playing an important role in fulfilling the excellent workforce requirement for entrepreneurs who are interested in relocating a business to Pennsylvania.

Business climate

A favorable business climate is one of the leading business benefits in Pennsylvania. The state has several elements that affect the overall business environment and make it conducive for new and existing businesses. Some of the factors driving the pro-business climate in Pennsylvania are:

• The income tax rate is lower than in some of the other premier states such as North.
• Carolina, Massachusetts, and New York.
• The overall business set-up costs are quite low.
• The state has a robust transportation and logistics infrastructure.
• The legal climate and regulatory environment are quite favorable.
• There are several support programs offered by the state for small businesses.
• Pennsylvania enjoys a geographically strategic location with easy access to national and. international markets.

Infrastructure

If you’re planning on moving your business to Pennsylvania, then you can look forward to salient highlights such as the strong infrastructure that the state has to offer. The state is considered to be one of the leading destinations for new and existing businesses owing this to the transportation infrastructure. It has 65 operational railroads, three major ports in Philadelphia, Pittsburgh, and the Port of Erie, as well as six international airports. The port of Pittsburgh is considered to be the 4th busiest inland port in the nation while the port of Philadelphia is the leading port in the country for handling frozen cargo.

Quality of life

A report by WalletHub reveals that the state of Pennsylvania is ranked among the top 10 places to move to when it comes to lifestyle and living situations. This is one of the principal reasons why entrepreneurs prefer relocating an LLC or moving a corporation to Pennsylvania as the state is affordable, dynamic, and diverse. The median yearly income is more than the national average and a strong public transit system makes travel more inexpensive. Philadelphia is ranked as one of the top cities to live in due to how exceptionally accessible the internet is, and the state also boasts of a good healthcare system.

Steps to Move a Corporation to Pennsylvania

If you’re thinking of relocating a business to Pennsylvania, then you’ll want to take advantage of the several benefits that the state offers from tax incentives to research and development programs. The question: Does Pennsylvania allow domestication? may have already crossed your mind, and you may have wondered about the various processes necessary for moving a corporation. Let’s take a look at the various options available to you in detail.

Domesticate a company in Pennsylvania

There are many states in the USA that don’t allow foreign domestication for businesses, although it is one of the most common methods for moving a business. Entity domestication in Pennsylvania is the first option and it refers to changing a company domicile to Pennsylvania or changing the home state of your corporation. The procedure for domestication of a corporation in Pennsylvania involves the following steps:

• Step 1 – You need to file the Articles of Domestication accompanied by the Docketing Statement pursuant to 15 Pa.C.S. § 375.
• Step 2 – Submit the articles to the Pennsylvania Department of State – Bureau of Corporations and Charitable Organizations along with a fee of $70.
• Step 3 – You may also be required to file a Consent to Appropriation of Name.
• Step 4 – Your entity will then be dissolved in the home state (original state of incorporation).

Register as a Foreign Corporation

The second option for moving your business to Pennsylvania is favorable for entrepreneurs wanting to operate their corporation in their home state (state of incorporation), as well as Pennsylvania. This process for moving a corporation to Pennsylvania is called a foreign qualification. The process is governed by the Pennsylvania Consolidated & Unconsolidated Statutes. According to Chapter 4 – Foreign Associations. The process for foreign qualification is as follows:

• Designate a registered agent in Pennsylvania to handle the service of process.
• If your existing name is not available then you’ll be required to register a fictitious name pursuant to 54 PA Cons Stat § 311 (2020).
• File the Foreign Registration Statement pursuant to the provisions of 15 Pa.C.S. § 412 along with a Docketing Statement and a fee of $250.
• You will also be required to officially publish an advertisement or notice stating your intention to conduct business or to register in this state pursuant to 15 PA Cons Stat § 4124 (2020).

Do you want to start a foreign corporation in Pennsylvania?

Dissolve Your Home Corporation and Establish a New Corporation in Pennsylvania

The third and final option for moving a corporation to Pennsylvania is by dissolving the entity in the home state and starting a completely new one in this state. Once you’ve filed the articles of dissolution in the home state, you will have to apply for domestic incorporation in Pennsylvania. This process for relocating a business to Pennsylvania will require you to follow the laws and processes for dissolution in your original state of incorporation. The process of dissolution will also vary from one state to another and may involve voluntary, judicial, or administrative dissolution.

• You will need to file a Certificate of Dissolution or Articles of Dissolution.
• Depending on the state, you may be required to submit a certificate of cancellation.
• You will need to submit your final tax return or obtain necessary tax clearance.
• Address any or all pending claims.
• Terminate or surrender business licenses.

• Appointing a registered agent in Pennsylvania for service of process pursuant to 15 PA Cons Stat § 1507 (2020).
• Identify and reserve a business name using the Name Reservation/Transfer of Reservation application.
• File Articles of Incorporation along with the appropriate fee pursuant to 15 PA Cons Stat § 1306 (2020).
• Officially publish a notice or advertisement of intention to file articles of incorporation.
• Prepare bylaws for the Pennsylvania Corporation.
• Apply for business licenses and permits.

Incorporate in Pennsylvania with ease!

Steps to Move an LLC to Pennsylvania

Moving an LLC to Pennsylvania is becoming a popular trend amongst entrepreneurs, and small and medium-sized enterprises due to the strategic geographical location that the state enjoys. The state also offers a variety of other advantages to support all types of businesses, including limited liability companies. This state offers several options to assist you with moving your business to Pennsylvania; we’ll examine these processes in detail throughout this article.

Domesticate a company in Pennsylvania

Relocating a business to Pennsylvania can prove to be a good decision because the state has a pro-business climate and infrastructure. But does Pennsylvania allow the domestication of an LLC? Yes. It does. In fact, Pennsylvania is one of the few states offering the opportunity to move your business through the process of domestication. Applying for Pennsylvania business domestication involves the following:

• Step 1 – You’ll be required to file the Articles of Domestication accompanied by a Docketing Statement pursuant to 15 Pa.C.S. § 375.
• Step 2 – The articles for entity domestication in Pennsylvania must be submitted to the Pennsylvania Department of State – Bureau of Corporations and Charitable Organizations along with a fee of $70.
• Step 3 – You may also be required to file a Consent to Appropriation of Name.
• Step 4 – The domestication of your Pennsylvania LLC will lead to the dissolution of your LLC in your home state (original state of formation).

Register as a foreign LLC

The second option for moving your business to Pennsylvania is to register the LLC as a foreign entity. This process is also known as foreign qualification and it works best for business owners who want to operate their company in the home state as well as in the new state (Pennsylvania). This type of entity relocation is governed by the 2020 Pennsylvania Consolidated & Unconsolidated Statutes, Title 15 – Corporations and Unincorporated Associations, Chapter 4 – Foreign Associations. The process to transfer an LLC to Pennsylvania using foreign qualification encompasses:

• You’ll need to hire and maintain a registered agent in Pennsylvania to handle service of process and manage the LLC state annual requirements.
• You’ll need to choose a business name. You can keep the existing name or choose a new name. If the chosen name or existing name is unavailable then filing a DBA (fictitious name) may be necessary for moving an LLC to Pennsylvania.
• You’ll need to file the Foreign Registration Statement pursuant to the provisions of 15 Pa.C.S. § 412. This will provide you with the authority to conduct business in this state.
• You’ll also be required to apply for the relevant business licenses and permits in the state.

Apply for LLC foreign qualification in Pennsylvania

Dissolve the home LLC and form a new LLC in Pennsylvania

Moving an LLC to Pennsylvania is also possible by dissolving your entity in the home state, and then forming a new domestic entity in the new state. This process will require you to follow the laws of dissolution for your home state, and the laws of new business registration for Pennsylvania. Certain aspects of dissolution will remain the same in all states like filing certificates or articles of dissolution; although the fee may vary. A limited liability company can be dissolved voluntarily or through judicial, or administrative dissolution.

• Depending on the state, you will need to file a Certificate of Dissolution or Articles of Dissolution.
• You may also be required to submit a certificate of cancellation.
• You will need to obtain necessary tax clearances by filing pending state or local taxes.
• Clear all your pending claims with customers, vendors, etc.
• Surrender your business licenses and permits.

• Appoint a registered agent in Pennsylvania for service of process pursuant to 15 PA Cons Stat § 8825 (2016).
• Identify and reserve a business name using the Name Reservation/Transfer of Reservation application.
• File the Certificate of Organization pursuant to 15 PA Cons Stat § 8821 (2022) along with a fee of $125.
• Prepare a Pennsylvania LLC operating agreement.
• Open a business bank account.
• Apply for and obtain necessary business licenses and permits in the state.

Register your LLC in Pennsylvania Today!

Move Your Business to Pennsylvania with IncParadise

Relocating a business to Pennsylvania involves different processes by which this type of transfer can be made possible. We at IncParadise, one of the top registered agent service providers in Pennsylvania can provide you with information concerning entity domestication in Pennsylvania and foreign qualification. We can also help you by facilitating the paperwork necessary to dissolve your entity in the home state and start the new business formation in PA.

Pennsylvania Foreign Qualification

Whether you’re planning a Pennsylvania LLC foreign registration or a foreign incorporation, it’s always essential to identify the various advantages offered by the state. The state of Pennsylvania has always attracted small and medium-sized enterprises primarily due to its excellent geographic location and strong transportation infrastructure. The state is also home to a growing STEM workforce that includes engineers, software specialists, statisticians, mathematicians, physical scientists, and life and social scientists. This not only helps to improve the overall business climate but also plays a key role in industry innovation. The process for a Pennsylvania foreign business registration also ensures that you or your company has access to state business incentives and tax credit programs that offer several long-term benefits.

What is a Pennsylvania foreign qualification?

The terminology, foreign qualification in Pennsylvania can sound overwhelming and you may think that this refers to the registration of international companies; however that is not the case. When it comes to Pennsylvania state laws like the Pennsylvania Consolidated & Unconsolidated Statutes and the governing authorities, foreign qualification simply refers to the operations of a company in a state or jurisdiction that is different from the entity’s state of formation. This applies to different entity structures such as limited liability companies (LLCs), corporations, limited liability partnerships (LLPs), and limited partnerships (LPs). The process and requirements may vary from one state to another and you’ll also need to conduct a Pennsylvania foreign entity search before registering in the foreign state. Let’s look at an example to understand this:

Doing business in Pennsylvania?

Generally speaking, corporations, limited liability companies, and any other business entities can’t just transact business in any state that they want to, other than their initial state of registration. All business entities require permission from the state that they want to transact business in that is outside of their home state. Hence, Pennsylvania foreign business registration becomes necessary. Permission to do business in Pennsylvania is governed by the process of a foreign qualification. Each state in the USA has separate laws for defining business transactions, making it important to understand the concept of doing business in this particular state.

• Mediating, maintaining, arbitrating, defending, or settling a proceeding or an action
• Carrying out any activity related to the entity’s internal affairs like holding meetings
• Maintaining business bank accounts in financial institutions in Pennsylvania
• Selling products or services through independent contractors in this state
• Maintaining an office or agency for the exchange, transfer, and registration of securities
• Acquiring or creating indebtedness or security interests in Pennsylvania property
• Transacting business in foreign or interstate commerce
• Conducting an isolated transaction

Pennsylvania Foreign Qualification Process

If you have an existing business like a corporation or an LLC in any other state and want to expand to the state of Pennsylvania, then it will be considered a foreign entity in this state. In this case, you’ll be required to apply for a foreign qualification in Pennsylvania and the process is governed by the Pennsylvania Consolidated & Unconsolidated Statutes. According to Chapter 4 – Foreign Associations, each entity based in any other state but wanting to conduct business in Pennsylvania will need to apply for proper authority to do business. There can be serious consequences for transacting business without the state-mandated authority which may include severe penalties. Let’s look at the process of a Pennsylvania foreign business registration for LLCs and corporations.

Pennsylvania Foreign Corporation Registration

If you’re already operating a corporation in another state and want to expand your operations to Pennsylvania then you’ll need to apply for a foreign qualification. This involves applying for a Pennsylvania foreign corporation registration to get the necessary authority to transact business in this state. Let’s understand in detail what this process requires.

What is a Pennsylvania Foreign Corporation?

A Pennsylvania foreign corporation is an entity that’s registered in any state other than Pennsylvania and is interested in transacting business in this state.

How to register a foreign Corporation in Pennsylvania?

The process of a foreign qualification involves registering a corporation in the state of Pennsylvania, although the process and fees will be different from the registration of a domestic company. The process of a Pennsylvania foreign corporation registration involves various steps including:

• Corporation Name – The first step towards a Pennsylvania foreign corporation registration is identifying and registering a business name. The corporate name should comply with state laws and should contain words like “corporation,” “incorporated,” or abbreviations like “Inc.,” “corp.,” and “co.” Once you’ve identified a name, it’s important to conduct a Pennsylvania foreign entity search also known as a name availability search. If the chosen name is unavailable or doesn’t comply with Pennsylvania laws then you will need to file a DBA.
• Registered Agent – Whether you’re forming a domestic entity or applying for a Pennsylvania foreign corporation registration, there are certain state guidelines you’re required to follow. One mandatory law is to continuously maintain a registered agent in the state. IncParadise is one of the top Pennsylvania registered agents that has helped several domestic and foreign entities incorporate in this state.
• Foreign Registration Statement – The most important step to apply for a Pennsylvania foreign business registration is to get the necessary authorization to transact business in the state. You’ll need to file the Foreign Registration Statement pursuant to the provisions of 15 Pa.C.S. § 412. This application must be submitted to the Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations along with a fee of $250. You’ll also be required to submit a Docketing Statement along with the Foreign Registration Statement. The docketing statement includes information concerning the foreign entity like the Employer Identification Number, the Description of Business Activity, and the name of the entity. You also have the option to apply for expedited service by paying an additional fee that depends on the service selected. In some cases, the fee for same-day delivery is $100
• Advertisement – Once you apply for a Pennsylvania foreign corporation registration it’s important to officially publish a notice or advertisement stating your intention to register or conduct business in this state, pursuant to 15 PA Cons Stat § 4124 (2020).

Do you want to register a foreign Corporation in Pennsylvania?

Pennsylvania Foreign LLC Registration

If you’re already operating a limited liability company in another state and want to expand your business to the state of Pennsylvania, then you have to undergo the process of a foreign qualification. This process is also known as Pennsylvania LLC foreign registration and will help you transact business in the state without the need to register a new or domestic LLC. 2020 Pennsylvania Consolidated & Unconsolidated Statutes, Title 15 – Corporations and Unincorporated Associations, Chapter 4 – Foreign Associations.

What is a Pennsylvania Foreign LLC?

A Pennsylvania foreign limited liability company is an LLC that’s registered in any state other than Pennsylvania, that also wants to conduct business in this state, while remaining operational in their home state. The home state is the state of the LLC formation and initial registration.

How to register a Foreign LLC in Pennsylvania?

If you’re already operating a limited liability company in another state and you want to expand your business to the state of Pennsylvania, then you’ll need to obtain authority from the state to conduct your business. This process is known as a Pennsylvania LLC foreign registration and there are several other aspects to this process that you need to consider. The various aspects involved in a Pennsylvania foreign qualification include:

• LLC Name – One of the foremost requirements of a foreign qualification is identifying a business name. You have to select a name in compliance with the state’s naming guidelines. You’ll also need to conduct a Pennsylvania foreign entity search to verify the LLC name availability. Ideally, an LLC name should contain words like “limited liability Company” and “limited company” or abbreviations like L.L.C or LLC. If the chosen LLC name is not available or doesn’t comply with Pennsylvania naming guidelines then you may be required to file a DBA.
• Registered Agent – One of the important aspects of any new business formation including Pennsylvania foreign business registration, is the service of process executed by a registered agent. A foreign limited liability company in Pennsylvania will need to continuously maintain a registered agent in the state. Pennsylvania registered agent services offered by IncParadise will not only help fulfill state requirements like service of process, but can also assist with other annual compliances like filing annual reports.
• Foreign Registration Statement – A foreign limited liability company that wishes to transact business in this state will need to go through the process of a foreign qualification. A Pennsylvania LLC foreign registration requires you to file the Foreign Registration Statement pursuant to the provisions of 15 Pa.C.S. § 412. This form has to be submitted to the Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations along with a filing fee of $250. It’s important to note that every foreign LLC registered in this state also has to submit a Docketing Statement along with the Registration Statement.

Want to form a foreign LLC in Pennsylvania?

Need Any Assistance in Applying for Pennsylvania Foreign Qualification?

Pennsylvania is a favorable state for entrepreneurs because it offers a good business climate, a skilled workforce, a strong transportation infrastructure, and a wide variety of business incentives. If you’re planning to expand or move your existing business to the state through the process of a foreign qualification in Pennsylvania, then you can take advantage of the numerous state benefits. As one of the leading registered agents in Pennsylvania, IncParadise can assist you with the process of a foreign LLC registration or incorporation.

Doing Business in Pennsylvania

Doing business in Pennsylvania can be quite favorable for startups and first-time entrepreneurs because the state provides the right platform for achieving stable growth and business expansion. The state of Pennsylvania boasts a strong economy with the Real Gross Domestic Product (GDP) of over $700 billion. The state has a pro-business climate driven by a wide variety of Pennsylvania state small business incentives and grants programs. The state is also home to several Fortune 500 and 1000 companies like Amerisource Bergen, PNC Financial Services Group, Lincoln National, Universal Health Services, Dick’s Sporting Goods, Hershey’s, and Comcast among others. Some of the cities in Pennsylvania have just the right infrastructure to enable startup growth and promote small businesses including Philadelphia, Allentown, Pittsburgh, Lancaster, and Scranton.

Why is Pennsylvania a good place to do business?

If you plan on doing business in Pennsylvania, you’ll find it to be a good decision because the state provides a strong business support infrastructure and robust supply chain management. As a new business, you can utilize the availability of Pennsylvania small business grants, which can help you fund your business during the initial formation and operational stages. Let’s take a look at some of the advantages of conducting business in this state.

• Strategic location – Location is the first and foremost advantage when it comes to establishing your business in this state. As the 5th most popular state in the nation, it shares borders with Delaware, Maryland, West Virginia, New Jersey, Ohio, New York, Lake Erie, and the Canadian province of Ontario. This means that a business can have immediate access to resources from the neighboring states and reach these markets with ease. The state also has six international airports and port access to the Atlantic Ocean, the Great Lakes, and the Gulf of Mexico, thus ensuring that doing business in Pennsylvania is simplified when it comes to transportation and logistics.
• Business Climate – The state of Pennsylvania has a pro-business climate. Several factors play a key role in keeping the business climate-friendly for budding entrepreneurs. Some of the key factors include:
  • Pennsylvania state small business incentives and grants
  • A skilled and committed workforce of 6.3 million that includes STEM
  • It’s known as one of America’s top 15 states for innovation and technology
  • Quick access to funds including the availability of venture capital
  • The state is home to eight foreign trade zones
  • The state has 120,000 miles of highway and well-connected transit systems
• Diverse Industries – Entrepreneurs prefer to start their businesses in Pennsylvania because the state offers a diverse spectrum of industries that they want to be part of. Not only does each industry attract venture capital, but some specific industries offer Pennsylvania grants for small businesses as well. Technology and innovation drive most industries including the distinctly promising Robotics and AI sector. World-class R&D institutions like Carnegie Mellon University provide the essential knowledge and support that help to cultivate the development of the future of technology. Some of the other top industries include the semiconductor sector, the aerospace ecosystem, space exploration, defense research, medical device manufacturing, the pharmaceutical sector, medical research and laboratory testing, advanced manufacturing, and food and beverages among others. The state also has a diverse and abundant energy portfolio and is ranked second in the country in terms of natural gas reserves.

Enjoy Pennsylvania advantages by registering your company today!

Small Business Incentive Programs and Grants in Pennsylvania

Choosing to form your start-up in Pennsylvania will enable you to utilize the many benefits that the state has to offer including a wide variety of Pennsylvania small business grants and incentives programs. These programs were specifically created to help small and medium-sized enterprises (SMEs) by allowing them to direct more focus toward business operations. Here’s a list of some of the most popular incentive programs in the state.

Small Business Advantage Grant

The Small Business Advantage Grant Program (SBAG) is available to small businesses that fulfill certain grant criteria such as upgrading their lighting, investing in equipment that helps to eliminate pollution or waste caused by business operations, and installing efficient HVAC systems. The program offers a grant maximum amount of $9,500 for purchasing pollution prevention equipment or energy-efficient systems. This grant is offered once each year and you will need to submit a Pennsylvania grant application for SBAG to apply. Information concerning this grant is available through the Small Business Ombudsman Office.

State Small Business Credit Initiative (SSBCI) in Pennsylvania

The Pennsylvania State Small Business Credit Initiative (PA-SSBCI) is a Pennsylvania state small business incentives This program facilitates funding to economic development partners and allows them to implement and administer capital programs for supporting small entities through loans and equity investments. This initiative is overseen by the PA Department of Community & Economic Development (DCED) and consists of three different programs, which include:

• Loans for small businesses in the state
• Equity investments in emerging and existing technology companies
• Loans for venture capital and general partners

Small Diverse Business Capital Access Program (SDBCA)

If you’re planning to start a small business (SB) or a small diverse business (SDB), then the Small Diverse Business Capital Access Program (SDBCA) can be quite helpful for you. The primary objective of this program is to provide low-interest loans and lines of credit to small businesses (SB) or small diverse businesses (SDB) that commit to the creation and retention of full-time jobs within this state.

Pennsylvania Minority Business Development Authority (PMBDA)

Pennsylvania has several small business grants and loan programs that they offer to provide critical financial support to small businesses. One program worth mentioning is the Pennsylvania Minority Business Development Authority (PMBDA) Program. The primary objective of this funding program is to provide incentives for the creation, retention, and expansion of minority-owned businesses, thus enabling the creation of jobs in Pennsylvania.

Business Opportunities Fund (BOF)

The Business Opportunities Fund (BOF) is a Pennsylvania small business grants and loans program that provides financial assistance to woman-owned small businesses, minority-owned contractors, and other small business owners. You can take advantage of this program if you lack access to small business loans or lines of credit from traditional financial institutions like banks. The funds from this program can be used for:

• Cash flow (working capital)
• New and used Equipment
• Leasehold improvements
• Acquisition of owner-occupied commercial real estate

Neighborhood Assistance Program, Enterprise Zone Tax Credit (NAP/EZP)

The Neighborhood Assistance Program, Enterprise Zone Tax Credit (NAP/EZP) is a Pennsylvania state small business incentives program that provides tax credits to private companies or businesses in the state. This program is administered by the Pennsylvania Department of Community and Economic Development (DCED). The EZP program’s main target is private for-profit companies that are operational or doing business in distressed areas, within a designated zone like an Enterprise Zone, or Keystone Communities Enterprise Zone. Once you submit the Pennsylvania grant application for this program, you can be eligible for a maximum of 25 percent tax credit with a maximum of $500,000 in tax credits for your EZP project.

Tax Incentives

Apart from the Pennsylvania grants for small businesses, there are several tax incentive programs that you can apply for. The objective of these programs is to reduce the overall tax burden for small companies through exemptions and tax credits. Some of the top programs that you can apply for include:

• Manufacturing Tax Credit (MTC)
• Research and Development Tax Credit
• PA EDGE Tax Credit
• Resource Manufacturing Tax Credit
• Local Resource Manufacturing (LRM) Tax Credit Program
• Qualified Manufacturing Innovation & Reinvestment Deduction
• Local Economic Revitalization Tax Assistance (LERTA)
• Blighted Property Tax Incentive
• Mixed-Use Development Tax Credit program
• Pennsylvania Resource Manufacturing Tax Credit (PRM)
• Innovate in PA program Tax Credit program

Ready to Start a Business in Pennsylvania?

All new small or medium-sized businesses require some form of financial assistance during their formation and operational stages. Financial assistance in the form of Pennsylvania small business grants or tax credit programs can help businesses to execute their professional objectives efficiently. The state offers several types of assistance through the Pennsylvania grants for small businesses and tax incentive programs across diverse industries. If you’re considering starting a new business, then you can take advantage of these incentive and financial assistance programs after you’ve registered or incorporated in this state.

Pennsylvania Business Tax

When you start a new business in Pennsylvania, you may be required to file taxes at the state, local, and federal level. The type of taxes you file will predominantly depend on the type of entity structure you’ve chosen to form, as well as the business activity and the location of the company. The Pennsylvania business tax rate, especially the state tax rate will be different from the rate in other states. Therefore, you will need to check the Pennsylvania rates before filing your taxes. A PA business tax calculator can also be quite useful in determining the exact tax amount that needs to be filed. It’s also important to note that a foreign company will be required to file state business taxes in their state of formation or incorporation (home state), as well as in Pennsylvania or any other state where it’s registered.

What taxes do businesses pay in Pennsylvania?

The state of Pennsylvania is considered to be one of the best states for starting a new business and expanding existing businesses. The state is home to some of the biggest companies in the world including T-Mobile, Comcast, and Aramark. It’s the sixth largest economy in the US at more than $800 billion. The Keystone State has several key and evolving industries that vary from modern advanced manufacturing to distribution and logistics. The Pennsylvania business tax climate is also considered to be fairly good and pro-business.

• Corporate Income Tax (CIT) – The Corporate Net Income Tax (CNIT) is applicable for domestic and foreign entities. This tax applies to companies that have the privilege of doing business in the state of Pennsylvania. You can levy this form of Pennsylvania corporate income tax if you have capital or property employed or used in connection to your company in this state. The tax is levied on federal taxable income, and the tax rate from January 1, 2023 through December 31, 2023 is 8.99 percent. Certain business structures like business trusts and not-for-profit organizations are exempt from this tax. It’s also important to note that if your company is subject to these types of Pennsylvania corporation taxes, then your company may also be subject to other taxes such as the corporate loans tax, gross receipts tax, gross premiums tax, and surplus lines agent tax.
• Sales, Use and Hotel Occupancy Tax – The sales and use tax is an important Pennsylvania business tax. The sales and use tax is imposed on various business activities, products, and services. The most common areas for this tax application are retail sales, rentals, consumption, and the use of tangible personal property. The tax is also levied on digital products in the state of Pennsylvania. The list of items and activities where the sale and use tax is applied includes medical and surgical supplies and mushroom farming. Some of the items that are exempt from these types of Pennsylvania LLC taxes are candy and gum, most types of clothing, food (not ready-to-eat), textbooks, computer services, sales for resale, pharmaceutical drugs, and fuels for residential heating like electricity, oil, gas, firewood, and coal. The Pennsylvania state sales tax rate is 6 percent with a maximum local sales tax rate of 2 percent, while the average combined state and local sales tax rate is 6.34 percent. The use tax in Pennsylvania is also an important Pennsylvania business tax and the rate is the same as sales tax at 6 percent. Last but not least; this state also has a hotel occupancy tax that’s similar to the state sales tax. When calculating these taxes, it’s recommended to use a PA business tax calculator.

  Note: If you’re filing a sales tax then you will need to apply for and obtain the necessary sales tax licenses and certificates.

• Employer Withholding Taxes – The employer withholding tax is mandatory by law. This tax is for any entity employing individuals in the state where the entity could be an individual, corporation, association, limited liability Company, partnership, or any other entity as specified by the Internal Revenue Code. This is considered to be a component of the Pennsylvania corporate income tax or business tax and requires the withholding of personal income tax from the remuneration paid to resident employees for services performed within or outside the state. Currently, you can withhold and remit employees’ taxes on salary or wages quarterly, monthly, semi-monthly, and semi-weekly. The due date for the taxes will vary depending on the taxable amount and filing schedule. You will need to register for an Employer Withholding online using the Official Pennsylvania Government Website.

  Example: If the PA business tax calculator shows the total withholding per quarter as $300 then this tax will be due on the last day of January, April, July, and October. Similarly, if the total withholding is between $300 and $999 per quarter then the taxes will be due on the 15th day of the following month. If the total withholding is $750 in July-September quarter then your file date would be October 15.

• City Business Taxes – The city business tax is another important Pennsylvania business tax. This tax is applicable in specific cities like Philadelphia. The applicable taxes in Philadelphia are the Business Income & Receipts Tax (BIRT) and the Net Profits Tax (NPT). According to the city code, if your Philadelphia taxable gross receipts are equal to or less than $100,000 then you will not be required to file the BIRT return. The Net Profits Tax (NPT) is applicable to anyone residing in the city of Philadelphia and operating a business within the city or outside of it. This is also levied on non-residents engaged in business activities within Philadelphia. The due date for filing these types of Pennsylvania LLC taxes is April 18.

Are you thinking of forming a new company in Pennsylvania?

How are Pennsylvania Businesses taxed?

If you’ve decided to start a new business in Pennsylvania then you’ll want to be aware of the important annual requirements, especially filing your business tax returns. The state has a privilege tax also known as a corporate net income tax along with several other types of small business taxes. The type of Pennsylvania business tax and the tax rates will vary according to the type of entity structure you’ve formed, and the business activity. You may also be required to file more than one type of tax. Let’s look at the various entities and their tax obligations in Pennsylvania.

Taxes for an LLC

If you’ve chosen to form a limited liability company in Pennsylvania then for taxation purposes, it will be considered a pass-through entity. A pass-through entity is not required to file any federal or corporate taxes. Since an LLC is a flow-through entity, the income will pass through to the owners and members. In such a situation, the members will have to file a personal income tax at the rate of 3.07 percent instead of filing a Pennsylvania corporate income tax.

Taxes for a C Corporation

If you choose to incorporate a Pennsylvania C corporation, your company will be subjected to the Corporate Net Income Tax (CNIT). This tax rate is a flat 8.99 percent. It’s also one of the most important Pennsylvania corporation taxes that’s applicable for both domestic and foreign corporations. As a CNIT taxpayer, your company may also be subjected to the gross receipts tax, corporate loans taxes, gross premiums taxes, and the surplus lines agent tax.

Taxes for an S Corporation

Whether you form a limited liability company or a C Corporation, you can always apply for S Corporation tax status in Pennsylvania. When a company has an S Corporation status, the tax liabilities also change. The most important Pennsylvania corporate income tax for an S-Corp is the Corporate Net Income Tax (CNIT). Pennsylvania S corporations are subject to the CNIT rate of 9.99 percent on their built-in gains. Since an S Corp is a flow-through entity, the shareholders will be subjected to a personal income tax at the rate of 3.07 percent.

Taxes for a Sole Proprietorship

A sole proprietorship is one of the easiest businesses to form in the state of Pennsylvania. A sole proprietorship entity is owned and operated by a single owner, therefore the most important Pennsylvania business tax is the individual income tax return (Form PA-40). The tax rate for the Pennsylvania Personal Income Tax (PIT) is 3.07 percent against the taxable income of the sole proprietor. You can use a PA business tax calculator to determine the tax amount due. Apart from this, depending on the business activity, sole proprietors may also be required to file sales and use tax returns. If a sole proprietor is operating from Philadelphia or Allegheny County, certain city or local taxes like local use tax and Net Profits Tax (NPT) may also be applicable.

Taxes for Partnerships

Various forms of taxes are applicable in Pennsylvania when you form a partnership company. The foremost Pennsylvania business tax for a partnership firm is the corporate net income tax (CNIT). The tax rate is 3.07 percent and the process to file is the same as the process for an LLC or S Corporation. Each partner will also be required to file a Pennsylvania Personal Income Tax (PIT) at 3.07 percent. Apart from this, some of the taxes applicable would be similar to a sole proprietorship or LLC, like the Sales & Use Tax, Employer Withholding tax, and certain city or local taxes.

Ready to Incorporate Your Pennsylvania Company?

You can choose from a wide variety of entity structures in Pennsylvania like a Sole Proprietorship, Partnership, Corporation, or LLC. You can also apply for S Corporation status to enjoy certain tax privileges. The process for a new business formation and the type of relevant taxes will vary according to the entity structure. IncParadise, one of the top incorporation service providers in the state can provide you with information concerning the Pennsylvania LLC taxes corporate income tax. We can also help register your LLC or corporation in the state of Pennsylvania.