How to Start an LLC in Pennsylvania: Steps, Annual Report, Tax

How do you start an LLC in Pennsylvania?

File a Certificate of Organization (form DSCB:15-8821) with a docketing statement (DSCB:15-134A) at the Department of State's Bureau of Corporations and Charitable Organizations. The filing fee is $125 and is nonrefundable, even if the filing is rejected (Department of State; fees; form and instructions). The department calls filing online through its Business Filing Services portal the most efficient route (filing guidelines).

The general steps that follow, such as the operating agreement and the first 90 days, are in how to form an LLC; an EIN and the W-9 are in EIN for a single-member LLC.

The certificate is one form and one fee. A case needs professional judgment when the LLC has two or more members (a state partnership return and owner schedules) or is owned by a married couple (state and federal filings can differ), operates in Philadelphia (city business taxes from the first year), plans an S election, has a member living outside Pennsylvania or outside the US, will hold a property you already own, or practices a licensed profession such as law, medicine or public accounting, which must form as a restricted professional company.

Gather before filing: the name and a backup, the registered office address or provider contract, each organizer's name, the members and their shares, the municipality and school district where each member lives and where the business operates, any property moving into the LLC, and a rough estimate of first-year profit.

How much does it cost to form an LLC in Pennsylvania?

The state charges $125 to form the LLC and $7 a year for the annual report. Other state charges apply only in the cases below, and a restricted professional company also pays an annual registration fee (fee schedule; 15 Pa.C.S. § 153).

Veterans and reservists: the certificate fee and the fictitious name registration fee are waived for a small business (100 or fewer employees) owned and controlled by veterans or reservists, when they sign the filing and attach proof such as a DD-214, NGB-22, VA card or military ID (Department of State). The annual report fee is not waived.

A registered office provider, if used, adds its own charge; LLC cost by state adds up the full first-year bill.

Can you use a commercial registered office provider instead of a Pennsylvania address?

Yes. The certificate lists either a Pennsylvania street address or the name of a commercial registered office provider and the county, not both. The department describes the provider route as an option for a company without a physical location or mailing address in Pennsylvania, and asks you to sign a contract with the provider first (form instructions).

One difference matters later: the department mails annual report reminders to street-address registered offices, but sends providers only a list, and it is up to the provider to tell you (annual reports). Agent duties and changes are covered in registered agents.

When is the Pennsylvania LLC annual report due?

An LLC files its annual report between January 1 and September 30 each year, for $7, starting the year after it was formed. An LLC with a not-for-profit purpose pays no fee (Department of State).

The report is short: name, state of formation, registered and principal office addresses, at least one member or manager who manages the LLC, principal officers if any, and the entity number. No financial information is asked for. Online filing is approved within minutes.

The annual report replaced the old ten-year (decennial) report, so older advice may say no yearly filing exists. The department mails a reminder at least two months before the deadline, but a missed reminder does not excuse the filing, and it warns about third parties charging far more than the state fee. A restricted professional company also files a separate certificate of annual registration, with its own fee, by April 15 (Department of State).

The state report is not the federal beneficial ownership report; see who still files a BOI report. Every state's fee and date are in LLC annual fees and reports by state.

What happens if you skip the Pennsylvania annual report?

A Pennsylvania LLC that does not file becomes subject to administrative dissolution. Enforcement starts, after a transition period, with reports due in 2027: an LLC that misses one is subject to dissolution six months after its due date (Department of State).

A dissolved LLC loses the exclusive right to its name, cannot get a subsistence certificate (Pennsylvania's good standing certificate), and may only wind up its affairs or apply for reinstatement. Reinstatement has no time limit, but it needs a fee, current annual report information and a charge for each missed report, and if another company has taken the name meanwhile, the LLC must choose a new one. Steps are in reinstating your company.

Does a Pennsylvania LLC pay state income tax itself?

Usually not. Pennsylvania follows the LLC's federal classification: unless it is taxed as a C corporation, profit passes to the owners, who pay personal income tax at 3.07% (Department of Revenue).

A multi-member LLC files the information return if it has any Pennsylvania income or at least one Pennsylvania resident member, whether or not it distributed the profit (personal income tax guide). It must also withhold Pennsylvania tax on the Pennsylvania-source income share of members who live in another state (personal income tax guide).

A married couple's LLC is the exception: Pennsylvania's guide treats an LLC owned jointly by husband and wife as disregarded, so its profit goes on PA-40 Schedule C or E and it files no PA-20S/PA-65 (personal income tax guide). Federally, such an LLC generally files a partnership return (IRS); see spouse and family LLCs.

One trap: Pennsylvania taxes eight separate classes of income. A loss in one class cannot offset income in another, and losses cannot be carried to other years, so a first-year business loss does not reduce tax on wages (Department of Revenue). Federal treatment is in how LLCs are taxed.

No tax is withheld from LLC profit, so an owner who expects $14,000 or more of income without withholding makes Pennsylvania estimated payments, due April 15, June 15, September 15 and January 15 (estimated tax instructions). Federal estimates are in quarterly estimated tax payments.

What if the Pennsylvania LLC is taxed as a corporation?

An LLC classified as a corporation for federal tax is a corporation in Pennsylvania too. As a C corporation it files the RCT-101 and pays corporate net income tax at 7.49%, a rate scheduled to fall each year (Department of Revenue). A federal S election carries over automatically unless the company files form REV-976 to opt out, by the due date, or extended due date, of its RCT-101 report for the first year the opt-out applies (Department of Revenue; personal income tax guide); the S choice is covered in state S corporation elections.

Which local taxes can a Pennsylvania LLC or its owners owe?

Outside Philadelphia, most owners pay a local earned income tax on their LLC profit to the municipality and school district where they live, on top of the state tax; Philadelphia residents pay the city's own taxes instead (below). Some places add a local services tax or a tax on business gross receipts. Find your home and work rates with the DCED address lookup.

The earned income tax treats an S corporation differently: the official return instructions say pass-through S corporation income is not taxable and its loss is not deductible, while wages paid to the owner are (DCED return instructions; Act 32 questions). Philadelphia differs: its residents pay the city's School Income Tax on S corporation income (City of Philadelphia). The local services tax limit and quarterly rule are on DCED's page; gross receipts taxes are defined in the state glossary.

Philadelphia runs its own system. Every LLC doing business for profit in the city, including residential or commercial rentals, files a Business Income and Receipts Tax return on both gross receipts and net income, even with no profit, and the city no longer offers its old small-business exemption. It also needs an active Commercial Activity License to operate there. A new business pays no estimate with its first return, but its second return also prepays the next year's tax, equal to the prior year's. An LLC based outside the city also files once it has $100,000 or more of Philadelphia gross receipts in any twelve-month period ending in the year (City of Philadelphia). The separate Net Profits Tax reaches LLC profit of city residents wherever the business runs and of nonresidents doing business in the city, with estimates due April 15 and June 15 based on the prior year's tax (City of Philadelphia).

Does a Pennsylvania LLC need a sales tax license or employer accounts?

Only if it sells taxable goods or services or hires. The sales tax license, employer withholding and unemployment accounts are all opened through the Department of Revenue's online business tax registration (Department of Revenue). See when you must collect sales tax and setting up payroll.

Example

These examples are illustrative; all figures are in US dollars.

A single-member electrician in Pittsburgh

An electrician forms a one-member LLC and pays $125. He files nothing more with the Department of State that year; from the next year, he files the $7 annual report by September 30. The LLC files no Pennsylvania return of its own. He reports $70,000 of profit on PA-40 Schedule C and owes about $2,149 of state tax (3.07%), paid in quarterly state estimates. He also owes local earned income tax on the same $70,000 at his home municipality's and school district's combined rate, paid in quarterly estimates and settled on the local return by April 15.

A two-member LLC in Lancaster

Two members split $80,000 of profit equally. The LLC files the PA-20S/PA-65 Information Return and gives each member a Schedule RK-1. Each reports $40,000 on PA-40 and owes about $1,228 of state tax, plus local earned income tax where each lives. If one member later moves out of state, the LLC starts withholding Pennsylvania tax on that member's share.

A shop in Philadelphia

A new LLC opens a store in Philadelphia with $150,000 of first-year sales and a $5,000 loss. It gets a Commercial Activity License and a state sales tax license before opening. After its first year it still files a Business Income and Receipts Tax return and a Net Profits Tax return, because both are required even with a loss. The net income part of the Business Income and Receipts Tax is zero, but the gross receipts part is not: about $212 on the $150,000 at the city's current $1.41 per $1,000. A business that does not file receives a non-filer notice.

Different for you?

• Two or more members: the LLC files a federal partnership return plus the PA-20S/PA-65 and an RK-1 for each member; the federal side is in how partnerships are taxed; plan the setup with business formation help.
• Spouses own the LLC together: the state and federal filings can differ; see spouse and family LLCs and line them up with business formation help.
• The business or a rental is in Philadelphia: a Commercial Activity License comes before opening, the first year's activity is taxed on returns due by April 15 of the next year, profit or not, and prepayments follow; plan them with business formation help.
• You are weighing an S election: see should you elect S corporation status and state S corporation elections; decide it at formation with business formation help.
• A member lives in another state: nonresident withholding and a second state's return follow; get business formation help.
• The owner lives outside the US: follow a US LLC for non-residents, step by step; for filings in two countries, see cross-border tax help.
• The LLC will be taxed as a C corporation: see how C corporations are taxed; for the RCT-101 and federal return, see corporate tax help.
• A property you own is moving into the LLC: the deed can owe Pennsylvania and local realty transfer tax unless an exemption applies (Department of Revenue); whether to do it at all is in rental property in an LLC.
• Annual reports were missed or the LLC was dissolved: see reinstating your company.
• You just filed and want the full checklist: see after you form your company.