Pennsylvania boasts the country’s sixth-largest economy and ranks as the fourth best in business survival rate. With over 1 million small businesses contributing to 99% of businesses in Pennsylvania, the Keystone State provides a superb platform for those who want to start a new business there.
How to Start a Business in Pennsylvania:
1. Determine your business structure.
Choosing the right legal structure for your company is important. Your choice will have an impact on taxes, paperwork, personal liability, and your ability to raise funds.
You can choose from the following legal structures:
A sole proprietorship is the simplest structure and usually involves one individual who is solely responsible for the enterprise while a partnership is suitable for businesses with two or more owners. A corporation is a standalone entity with shareholders while a Limited Liability Company (LLC) is the most popular type because of minimal paperwork, flexibility, tax benefits, and simple implementation process. LLC business owners are not obligated to file a corporate tax return.
Businesses are regulated by Pennsylvania state laws and must be registered through the Pennsylvania Business One-Stop Shop.
2. Write a business plan.
Your business plan is the foundation of your new business and will serve as an invaluable guide for how to structure, run and grow your company. The business plan must meet your needs and can fall into one of two common categories: traditional or lean startup.
The traditional plan is very detailed, takes more time to write, and is quite comprehensive while the lean startup plan is streamlined and fast to write.
A strong business plan can help you get funding and makes opening a new business easier. You can consult with the Pennsylvania Small Business Development Center, a free service that offers business planning and consulting for small business owners in Pennsylvania.
3. Sign up for business banking.
Your business and personal finances must be kept separate to maintain accurate records. With a business bank account, you can easily obtain statements and access products that would not be available to you as an individual.
Best Banks for Small Business in Pennsylvania:
4. Seek funding.
Opening a new business often requires capital. If you are unable to fund your new business, you will need to take out a loan. There are three common ways to fund your business: commercial loans, business lines of credit and small business loans.
Some popular organizations that can assist you with small business loans in Pennsylvania are BFS Capital and the Funding & Program Finder that is managed by Pennsylvania’s Department of Community and Economic Development.
5. Decide on a business name.
You will need to do a trademark search to ensure that the business name that you chose has not already been trademarked. You can perform the trademark search at the U.S. Patent and Trademark Office and the Trademark Electronic Search System. These databases have a comprehensive list of business names that are registered together with their classification.
After you have confirmed that your business name is not trademarked, you need to check the Pennsylvania Department of State website to ensure that your business name is not the same or similar to another corporation registered in Pennsylvania.
If you are satisfied that your business name is available, you can then register it on the U.S. Patent and Trademark Office website. You can check out our guide on How to Name a Business to assist you with naming your business.
Once you have found a suitable name, make sure to register the matching web domain and social media handles, should you wish to market your business online.
6. Request an Employer Identification Number (EIN).
Registering for an EIN is very easy—all you need to do is go to the IRS website. You can complete the application online, and save your EIN confirmation notice once you receive a number from the IRS.
7. Acquire business licenses and permits.
The state of Pennsylvania does not require businesses to have a statewide business license.
You may, however, need specific business licenses and permits depending on the type of business you start in Pennsylvania. You can refer to the Pennsylvania Department of State website to check if you require a business license or permit.
You may also require a municipal license or permit, depending on your location. You can refer to the Pennsylvania Business One-Stop Shop to check if you require one.
8. Hire employees.
To start hiring you will need to register at the Pennsylvania Department of Labor & Industry. Each employee will need to be registered within 30 days of starting work. This does not apply to independent contractors.
The Pennsylvania Human Relations Act protects job applicants against discrimination on the basis of age, race, creed, color, sex, sexual orientation, gender identity, national origin, religion, or disability.
With reference to the pre-employment screening process in Pennsylvania, an employer is entitled to view a job applicant’s criminal history and obtain the relevant records from the criminal justice system.
Important Posters at Pennsylvania Business Premises:
- Safety and Health Protection.
- Minimum Wage Law.
- Unemployment Compensation.
- Equal Opportunity & Fair Practices.
- Pennsylvania Right to Know Law.
- PA Clean Indoor Air Act.
- Pennsylvania Child Labor Act.
9. Check your business employer requirements.
Business employer requirements are specific to the type of business that you are starting and include various labor, safety and tax obligations that need to be met. You should consider hiring a tax or business attorney to ensure your business is fully compliant with the laws in Pennsylvania.
If you are starting a business in Pennsylvania, you will need to take note of the following important items:
Pennsylvania’s law requires all employers to provide workers’ compensation coverage to their employees. You can obtain more information at the Pennsylvania Department of Labor & Industry website.
Health insurance isn’t a requirement for small businesses in Pennsylvania.
In Pennsylvania, your small business is required to establish an unemployment insurance tax account with the Pennsylvania Department of Labor & Industry. If your business is required to contribute towards unemployment insurance, you will need to file quarterly reports.
Pennsylvania Sales and Use Tax
Every individual or entity selling taxable tangible personal property in the state of Pennsylvania is required to pay a sales and use tax. Services rendered are not taxable. You will need to register for a sales tax permit with the Pennsylvania Department of Revenue.
How much does it cost to start a business in Pennsylvania?
Pennsylvania articles of incorporation for LLCs and for Corporations cost $125.00.
You can view a comprehensive list of costs here.
How do I register a business in Pennsylvania?
You can register your business with the Pennsylvania Business One-Stop Shop which is managed by the Pennsylvania Department of State.
How do I start a business in Pennsylvania with no money?
- Use services to generate cash flow and fund a product-based business.
- Get creative to discover funding sources.
- Grind it out and look for business, even if you don't get paid for it.
- Use your current resources in different ways to generate income.
- Get a credit line to help with the early stages of your business.
- Locate an accelerator if you can hit the market swiftly.
- Crowdfund and allow the public to invest a small percentage of money in return for a future buy-in.
- Use a business incubator to provide funding designed specifically to financially assist a startup company.
How can I protect the name and logo of my business in Pennsylvania?
The easiest way is to register your business name on the U.S. Patent and Trademark Office website. Prior to registration, remember to check on the Trademark Electronic Search System and the Pennsylvania Department of State website to ensure that your business name is not already registered by another company.
Do I need workers' compensation for my new business in Pennsylvania?
All employers in Pennsylvania are compelled to provide workers’ compensation coverage to their employees.
Does my business in Pennsylvania need to contribute to health insurance?
Health insurance isn’t a requirement for small businesses in Pennsylvania.
Pennsylvania Formation and Registration Fees:
Domestic corporation for profit
Registration of Fictitious Name
Browse The SMB Guide for more helpful articles for small business owners, and be sure to download our How to Start a Small Business checklist.