- [Narrator] How to form a LLC in Pennsylvania.
Pennsylvania is an excellent place to form a new LLC.
Hosting the sixth largest economy in the country,
with a high business survival rate,
and great access to venture capital.
Every state has slightly different requirements
for forming a LLC, follow along closely to learn
the requires steps for creating
your own Limited Liability Company
in the state of Pennsylvania.
(slow piano music)
There are two ways to form a LLC in Pennsylvania.
You can for one yourself, or you can hire a service
to do it for you.
Option one, do it yourself.
Let's start by looking at the five basic requirements
to form an LLC in Pennsylvania on your own.
You can also find these steps in more detail
on our website, linked in the description below.
One, name your LLC.
Every state has it's own rules about what kind of names
are allowed for LLCs, in general, you will need to observe
these naming guidelines.
Your name must include the phrase Limited Liability Company
or one of it's abbreviations, LLC or L.L.C. with a period
following each letter.
Restricted words such as
bank, attorney, law office, et cetera, may require
additional paperwork and may also need
a licensed professional to be part of the LLC.
Your name cannot include works that could confuse
your LLC with a government agency such as
FBI, Treasury, State Department, et cetera.
You cannot use a name that has already been registered.
To see if your name is available in your state,
you'll need to do a name search.
This free service is available on your state's
Secretary of State website.
Check out our free guide for finding the direct link
to your state, we also recommend that you check
to see if your business name is available as a web domain.
Even if you don't plan to make a business website today,
you may want to buy the URL in order to prevent others
from acquiring it.
Two, choose a registered office.
You are required to submit the address
of your registered office for your Pennsylvania LLC.
A registered office is the official mailing address
for all legal mail from the state related to your business.
Your registered office must be a street address,
not a PO Box, within the state of Pennsylvania.
Your registered office can also be the address
of a commercial registered office provider,
or commonly know as a Registered Agent service.
Three, file the Certificate of Organization.
To register your Pennsylvania LLC, you'll need to file
the Certificate of Organization with
the state of Pennsylvania.
This can be done online, or by mail.
You should decide whether your LLC will by member-managed,
or manager-managed.
Member-managed means all the members
of the LLC manage the company.
This is good for small organizations where everyone
is involved in the day to day operations.
The second option is manager-managed, where individuals
are appointed to manage the LLC.
This is appropriate for larger organizations
where not everyone is involved
in the day to day affairs of the business.
Four, create an Operating Agreement.
Although not every state requires it, your should always
create an Operating agreement to establish ownership terms
and member roles for your LLC.
This foundational document is the core of your LLC
and will help you maintain your organization, as well
as further establish your LLC as a separate legal entity.
There are six main sections of an Operating Agreement.
Organization outlines when and where the company
was created, who the members are, and how
the ownership is structured.
Management and voting addresses how the company is managed
as well as how the members vote.
Capital contributions covers which members
financially support the LLC and how more funds will
be raised in the future.
Distributions outlines how the company's profits and losses
are shared among members.
Membership changes describes the process for adding
or removing members as well as if, and when members
can transfer their ownership shares.
And dissolution, which explains the circumstances
in which the LLC may be dissolved.
An Operating Agreement is an internal document.
It does not need to be filed with the state, however,
it should be updated every time there is a change
in membership or management at the company.
You can download a free sample Operating Agreement,
or create a custom one using our free Operating Agreement
tool at howtostartanLLC.com.
Five, obtain an EIN.
Lastly, you'll need to get
an Employer Identification Number, or EIN from the IRS.
Also know as a Federal Tax Identification Number, your EIN
is like social security number for your LLC and is how
the IRS tracks your business for tax purposes.
An EIN is also necessary to open a business banking account
and legally hire employees.
EINs are free of charge, and can be obtained from the IRS
online or through the mail.
And with that, you'll have formed
a Pennsylvania LLC on your own.
Option two, hire a professional service.
The second way to create a Pennsylvania LLC, is to hire
a professional service to create you LLC for you.
Hiring a professional service to file your forms and act
as your Registered Office, more commonly know as
a Registered Agent, will cost you
an additional 50 to 150 dollars, however, there are several
benefits to working with a pro.
A hired Registered Agent helps with getting your reports
filed on time, helps you stay organized by keeping
your business mail separate, and is available at all regular
business hours to accept official mail and legal papers
on your LLC's behalf.
A final and important additional benefit of using
a service is privacy.
A professional service will provide a level of privacy
by withholding your personal name and home address from
the LLC's contact information.
There are many reasons why you might now want your personal
information easily accessible and associated
with your business.
Hiring a professional LLC formation service is an easy way
to accomplish this.
Now that you have seen the different requirements
and ways you can form an LLC in Pennsylvania, visit our site
and take some time to research your options and establish
a solid foundation for your business activities.
Click on the links in the description below to research
the top five professional formation services or get more
information on how to form a Pennsylvania LLC on your own.
Now you know all the steps to form an LLC in your state.
For a more detailed guide, how to howtostartanllc.com.
You can also create an Operating Agreement
and use our business plan tool free of charge.
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And if you have questions or encounter any road blocks,
leave a comment below.
Good luck in starting your small business.
(relaxing music)