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Setting up an LLC in Pennsylvania takes you down a road filled with financial hurdles and paperwork. It seems overwhelming when you first peek at it. Yet, diving deeper into the process opens up savvy ways to manage costs effectively.
We’re here to provide you with nifty insights into the nuts and bolts of the process and to introduce ace services like Tailor Brands. They’re ready to steer you through while keeping your costs in check.
Let’s dig into what it really costs to kickstart an LLC in Pennsylvania and discover why being careful with your budget can become your biggest advantage.
What Is the Cost of Forming an LLC in Pennsylvania?
The main expense when setting up an LLC in Pennsylvania is the $125 fee. This amount is for the online submission of your LLC’s Certificate of Organization to the Pennsylvania Department of State.
Pennsylvania Foreign LLC Formation Costs
Suppose you already own an LLC registered in another state and want to expand your business to Pennsylvania. In that case, you must register your LLC as a foreign entity in this state.
There is a $250 registration fee to do this. To register your foreign LLC in Pennsylvania officially, you must submit a Foreign Registration Statement, known as Form 15-412.
Annual Cost for LLCs in Pennsylvania
Keeping a Pennsylvania Limited Liability Company (LLC) up and running involves certain costs, which cover several essential areas:
Starting in 2024, Pennsylvania LLCs must submit an annual report each year, which comes with a fee of $7.
While there’s an initial grace period, missing this deadline can result in penalties. Using a Registered Office/Commercial Registered Office Provider (CROP) service for your Pennsylvania LLC will generally incur an annual fee.
If your business is in a regulated industry, you’ll need to obtain state licenses and permits. The costs for these vary depending on the specific license or permit needed.
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How Much Does It Cost to Start an LLC in Pennsylvania With the Best LLC Service?
Tailor Brands LLC Formation Cost
To set up an LLC in Pennsylvania, the basic filing fee is $125, which might change if you opt for additional services. Normally, it takes 2 to 3 weeks to process the paperwork. However, you can expedite this to 5 to 7 days for an extra $50, or even quicker, 2 to 3 days for an additional $100.
Tailor Brands offers several LLC formation plans. The Lite LLC plan is the most budget-friendly option, covering just the state filing fee and standard processing time. The Essential LLC plan costs $199 plus state fees, including expedited processing, annual compliance services, and an operating agreement. This plan also requires an annual payment of $199 to maintain these services.
The Elite LLC plan, priced at $249 plus filing fees, is Tailor Brands’ premium option. It includes everything from the Essential plan, along with extra tools like a free business domain for the first year, a DIY website and online store builders, eight free logos, a digital business card, a business card tool, and a social media post maker. To keep these services, customers pay an annual fee of $249 to Tailor Brands.
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Additional Costs When Starting an LLC in Pennsylvania
Pennsylvania LLC Name Costs
Selecting a name for your Limited Liability Company (LLC) doesn’t cost anything. The approval of your Pennsylvania LLC name is included when the state accepts your Certificate of Organization, with no extra fees involved.
You may have seen online claims that reserving an LLC name is mandatory, but this is rarely true in most states. Starting an LLC typically doesn’t require a name reservation.
However, if you want to hold onto your chosen name for up to 120 days before officially forming your LLC, you can file a Name Reservation/Transfer of Reservation form (Form 15-208) and pay a $70 filing fee.
Pennsylvania Registered Agent Costs
Pennsylvania LLC Registration Fee ($0 or $125/year)
When you set up an LLC in Pennsylvania, you’re legally required to have a Registered Office. The good news is that listing this office on your Certificate of Organization is free.
In Pennsylvania, a Registered Agent can be either an individual or a business entity responsible for receiving legal documents and state communications on behalf of your LLC. This agent must have a physical street address within the state, known as the Registered Office, and should be available during normal business hours.
Choosing yourself or someone you know as your Registered Agent incurs no additional cost.
Alternatively, you can opt for a Registered Agent service or a Commercial Registered Office Provider, which charges between $100 and $300 annually. These providers offer valuable business services and can enhance your privacy protection.
Using a Registered Agent service is advisable if:
- You don’t have an in-state address (Pennsylvania requires a physical address in the state for the Registered Office).
- You prefer to keep your address private (some services allow you to use their address for privacy reasons).
Pennsylvania Operating Agreement Costs
Setting up an LLC Operating Agreement in Pennsylvania won’t cost you a dime. This document, essential for both Single-Member and Multi-Member LLCs, outlines ownership percentages, management strategies, and how profits get split. Make sure you hang onto it in your business records and hand out copies to all members involved.
While getting this document together is free, many websites might charge you anywhere between $50 to $200 to help you draft one.
Pennsylvania EIN Cost
Securing an LLC EIN Number, also called an Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), typically incurs fees on various websites. However, you can get it for free. This unique identifier is essential for filing income taxes, opening an LLC bank account, and recruiting employees.
You can obtain an EIN for your LLC at no cost through a simple online application process provided by the Internal Revenue Service (IRS), and it only takes a few minutes to finish.
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Pennsylvania LLC Taxes
The yearly costs tied to Pennsylvania LLC taxes can vary greatly because of the different taxes owners must pay. These taxes include:
Federal Income Taxes
For your Limited Liability Company’s (LLC) federal income taxes, the IRS offers multiple treatment options.
Single-Member LLC Taxes (Default Status)
For Single-Member LLCs, the IRS classifies them as Disregarded Entities for tax reasons. This classification means that the LLC isn’t required to file a separate federal income tax return. Instead, the LLC’s owner is responsible for filing the return and managing the federal income tax payments.
How the LLC is taxed federally hinges on the owner’s situation:
- If the owner is an individual, the tax treatment mirrors that of a Sole Proprietorship.
- If the owner is another company, it’s taxed like a branch or division of the parent company.
Multi-Member LLC Taxes (Default Status)
When an LLC is owned by multiple individuals, the IRS classifies it as a Partnership for taxation. This classification requires the LLC to submit a 1065 Partnership Return and provide each owner with a Schedule K-1 form, which outlines their respective shares of the profits. These profits “flow-through” to the owners, who must then report the income on their personal tax returns using Form 1040 and pay the corresponding income taxes.
Husband and Wife LLC Taxes
In certain states, a husband and wife who own an LLC can file their taxes as a Single-Member LLC or a Qualified Joint Venture. However, this option is unavailable in states that don’t adhere to community property laws, like Pennsylvania.
Electing Corporate Taxation for LLC
Apart from standard tax classifications, an LLC can choose to be taxed as a Corporation. There are two corporate tax options:
- S-Corporation: To achieve this status, an LLC must file Form 2553 with the IRS. Choosing S-Corporation status can lead to tax benefits for profitable businesses, especially regarding self-employment taxes.
- C-Corporation: An LLC can elect to be taxed as a C-Corporation by submitting Form 8832. This option may be advantageous for larger employers who wish to save on healthcare fringe benefits.
It’s advisable to consult with an accountant before deciding on corporate taxation.
Pennsylvania State Income Tax
In Pennsylvania, Single-Member LLCs generally don’t have to file a state-level return. Instead, the owner reports the LLC’s profits or losses on their personal state tax return.
For Multi-Member LLCs in Pennsylvania, the situation is slightly different. These LLCs may need to file a Partnership return at the state level, while the owners include the LLC’s profits or losses on their individual state tax returns.
Local Income Tax for Pennsylvania LLCs
The LLC and its owners might need to file and pay income taxes at the local level, which includes municipalities such as towns, cities, or counties. It’s advisable to consult an accountant to ensure proper filing of local income taxes.
Pennsylvania Sales Tax
If you’re selling products to consumers in Pennsylvania, getting familiar with the sales tax regulations is crucial. You may be required to collect sales tax and secure a Seller’s Permit. This permit, also known as a resale license, wholesale license, or sales tax permit/license, can be obtained from the Pennsylvania Department of Revenue via MyPATH.
Pennsylvania LLC Payroll Taxes
If your Pennsylvania LLC employs staff, you must handle payroll taxes. This includes withholding federal and state income taxes and paying Social Security, Medicare, and various unemployment taxes.
While you can manage these filings independently, the complex calculations and the risk of mistakes suggest that getting help from a payroll company or an accountant is a wise decision.
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Pennsylvania LLC Cost – FAQs
Conclusion
Setting up an LLC in Pennsylvania entails more than just the initial fee. It includes various costs associated with documentation, registered agents, operating agreements, and obtaining an EIN. Using LLC services such as Tailor Brands can offer essential financial advice. With these insights and support, entrepreneurs can confidently establish their Pennsylvania LLC, creating a solid foundation for sustained success.
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