When deciding to form a business in Philadelphia, Pittsburgh, Allentown, Erie or elsewhere in Pennsylvania, you should review and evaluate the most recent state laws and regulations that apply to your specific company and, most importantly, seek the advice of a qualified professional who has experience with Pennsylvania corporations like yours. You may want to consider information that could help you determine whether forming a corporation or limited liability company (LLC) in Pennsylvania is right for you.
Business Tax Climate Info Stats | |||
|---|---|---|---|
| #24 | 3.07% | 9.99% | 6.34% |
| Overall Rank | Individual Income Tax |
Corporate Income Tax Rate |
Combined State & Avg. Local Sales Tax Rate |
Source: https://taxfoundation.org/state/pennsylvania/
Business owners who incorporate in Pennsylvania experience the peace of mind derived from the limited liability protection a corporation provides. Pennsylvania corporations can protect your personal assets, since they cannot be used to satisfy debts and liabilities of the corporation. A corporation's limited liability protection also shields its shareholders from any claims arising from lawsuits.
A Pennsylvania corporation's board of directors and officers enjoy the same limited liability protection as do the corporation's shareholders.
Unless you elect to have a special “pass through” tax status with the Internal Revenue Service (IRS) by filing an IRS Form 2553, your Pennsylvania corporation will enable you to shelter and retain more income since a corporation files tax returns and pays its income taxes (at generally lower tax rates than do individuals) while the individual shareholders report and pay personal income taxes only on monies paid them by the corporation. Although shareholders are required to pay taxes on income from dividends paid by the corporation even though income taxes were previously paid by the corporation (called “double taxation”), a Pennsylvania C corporation can facilitate the accumulation of earnings.
Forming a corporation in Pennsylvania should make it easier to get additional capital than it would be with some of the other types of businesses. You can issue and sell stock or a variety of other financial instruments as evidence of interest in the corporation and ownership in Pennsylvania corporations can be easily transferred through the issuance or transfer of stock.
Employees would normally prefer to work for a corporation rather than a proprietorship or partnership and a Pennsylvania corporation has the advantage of being able to attract, motivate and retain quality employees by offering stock option and bonus plans.
Pennsylvania corporation owners working in the business are employees and are therefore eligible for certain fringe benefits such as group insurance plans, retirement and profit sharing plans, and tax-favored stock option and bonus plans. In addition, the corporation allows owners to reduce self-employment taxes.
A Pennsylvania corporation is a separate legal entity and, in a sense, immortal and perpetual since it does not end with the death of a shareholder owner as do some of the other business types.
If you're a small business owner who has chosen to incorporate in Pennsylvania, you may struggle in deciding which type of incorporation is best. At MaxFilings, we hope to clearly distinguish the advantages and disadvantages of starting an LLC vs. a corporation, whether to classify your business as an S Corp or C Corp, and give you a better idea of which option will provide the best results for your continued financial and operational success.
LLC |
C Corp |
S Corp |
|
|---|---|---|---|
| Limits personal liability | |||
| Ownership structure | Unlimited owners | Unlimited shareholders | No more than 100 shareholders (US citizens or resident aliens only) |
| All business income/loss passed through to owners each year | |||
| Owners pay personal income tax on profits | |||
| Business must pay corporate income tax | |||
| Recognized outside of the US | |||
| Flexible management structure | |||
| Annual Meeting Requirement |
Here, in part, is what the Pennsylvania Department of State says about starting a business in Pennsylvania.
The executive staff of the Department of State and the employees of the Corporation Bureau are committed to providing expeditious, courteous and professional service to the business community and general public, in all phases of filing and dissemination of the important records entrusted in its care.
The Corporation Bureau is the repository for the records of more than 1,500,000 companies authorized to do business in Pennsylvania. All records maintained in this office are public and may be inspected upon request.
Our goal is to make Pennsylvania the easiest place in the nation to start a business. Through the PA Open for Business web site, we are doing just that - giving entrepreneurs a one stop shop to start, sustain and expand their businesses.
A Pennsylvania corporation's name cannot be the same as or confusingly similar to another entity's name that is registered or, with certain exceptions under state law, reserved in accordance with Pennsylvania law. The corporation's name must contain the word "corporation", "company", or "incorporated", or an abbreviation thereof.
A Pennsylvania corporation may have one or more directors. The first directors of the corporation may be named in the articles of incorporation or, if not named in the articles of incorporation, elected by the incorporators.
A Pennsylvania corporation must have at least a President and a Secretary with one officer responsible for the preparation of directors' and shareholders' meetings and certification of corporate documents. The officers are to be listed in the bylaws or elected by the corporation's board of directors. The same person may simultaneously hold more than one office.
The intent to file or the actual filing of Articles of Incorporation must be published in two newspapers of general circulation, one of which is a legal journal, if possible. Proofs of such advertising need not be sent to the Pennsylvania Corporation Bureau, but they should be filed with the minutes of the corporation. The corporation's name and a statement that the corporation either is to be, or has been, organized under the provisions of the BCL of 1988 must be contained in the advertisements.
See the Pennsylvania Department of Revenue website.
*For complete and current information concerning Pennsylvania corporations, visit the state's official website and the Pennsylvania Corporations and Business Associations Code. The information listed above is not an attempt to present all you need to know when forming a corporation in Pennsylvania but rather to call your attention to some basic information and requirements you may want to know as you submit information to form your corporation or LLC.
MaxFilings is committed to helping business owners just like you. Here are a few reasons why MaxFilings stands out as the resource of choice when forming a Pennsylvania corporation:
Competitive, Transparent Pricing. There's never any obligation to order and there's no charge for saving your information – you only pay your incorporation fees when you're ready to order. View our competitive pricing - it includes all state fees and other charges, so you'll have no surprises later.
Convenience & Ease of Use. MaxFilings helps you get organized in an orderly way and you set the pace – you can save all your incorporation information in one handy spot online and make changes anytime until you're ready to incorporate…or you can order your incorporation online right now!
Secure & Confidential. As a MaxFilings user, you can rest easy knowing that all your information is completely safe. We use industry-recognized security safeguards for storing and processing your orders, ensuring stringent data security for as long as you want to keep it with us.
Partner Perks. As you incorporate, you need to think about growing and promoting your new corporation. MaxFilings' online promotions partner SEO Advantage offers you expert services in PR, web development, search engine marketing, website optimization and graphic design.
Best of all, your satisfaction is 100% guaranteed!
If you're ready to form a Pennsylvania corporation, you can start entering your information now. You're under no obligation, and there is no charge until you actually place your order.
Wondering what happens after you submit your incorporation order to us? Have questions about using MaxFilings to incorporate your business or form an LLC? Here you'll see basic questions about our system that can help make your experience smooth and hassle-free. FAQ About MaxFilings