Think about your LLC a year from now: raking in profits and taking Pennsylvania by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Pennsylvania.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Pennsylvania startup fees here.
Bare Minimum Cost to Start an LLC in Pennsylvania
- Optional: LLC Name Reservation Fee
- $70 for online or paper submissions
- Required: Certificate of Organization Fee
- $125 for online or paper submissions
Overall Pennsylvania LLC Formation Costs
LLC Name Reservation Fee
Reserving a business name isn’t a mandatory step in the LLC formation process. However, it can be a useful option. If you’ve come up with a great business name but you aren’t ready to start your business, consider applying for a name reservation, which costs $70 but gives you exclusive rights to that name for 120 days. On the other hand, filing the Certificate of Organization will automatically register your name, so if you’re ready to start your LLC, skip ahead to that step instead.
Certificate of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Pennsylvania LLC. Successfully filing the Certificate of Organization is what officially registers your business with the Department of State, allowing you to begin doing business. The filing fee is $125 and you can complete it online or using a hard copy. If time is short, you can also select one of three expedited processing options: same-day service for $100, three-hour service for $300, or one-hour service for $1,000.
Business and Professional Licenses
Not every Pennsylvania needs to obtain specific licensure before commencing business, but some do. Even after your Certificate of Organization has been accepted, you may still need to apply for a license through commonwealth agencies or local governments. For example, accountancy firms must apply for licensure with the State Board of Accountancy, and barber shops with the State Board of Barber Examiners.
Further, cities and/or counties often have their own licensure requirements. The cost of these license applications depends on the type and location. Check with the Department of State Licensing Services page and your local government to see which your LLC needs.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services offer basic LLC formation service like Certificate of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
IncFile and LegalZoom are two of the most popular LLC formation services that offer reasonable prices. IncFile’s pricing starts at $49 while LegalZoom’s starts at $99. If you’d like to compare their services, and see why we prefer IncFile overall, check out our in depth comparison guide.
Registered Agent Service
Appointing a registered office is an important part of your LLC formation process. Your registered office provider is responsible for handling sensitive legal and tax documents and keeping your business compliant with Pennsylvania business law. In short, you need someone you can trust.
While you can be the registered office provider for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your LLC maintenance filings are submitted efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. You’ll want to do some research to make sure you’re finding a good fit for your LLC. Search, compare, and contact Pennsylvania business attorneys using a site like Avvo. Dig into Avvo’s extensive lawyer database and you’ll be confident in your selection.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Pennsylvania. Any foreign LLC looking to do business in Pennsylvania will file a “Foreign Registration Statement” rather than a Certificate of Organization.
All foreign business entities are required to foreign qualify in Pennsylvania, or they could incur some pretty severe penalties. To foreign qualify, submit an Foreign Registration Statement either online or by mail. There’s a $150 application fee, but like the Certificate of Organization, you only need to pay this fee once.
LLC Annual Fees
Many states require their businesses to complete Annual Reports, but Pennsylvania is not one of them. But that doesn’t mean you won’t have any LLC maintenance fees. Be sure you continue to update the Department of State on new business developments like registered office changes, amendments to your formation documents, and professional license renewals.
Income taxes are fairly straightforward for Pennsylvania LLCs – they aren’t required. By default, the federal government considers LLCs “pass-through” entities, which means that they don’t need to file separate corporate tax returns; instead, their owners and/or members report income and losses on their personal returns. At the state level, Pennsylvania doesn’t impose a “franchise” or “privilege” tax on its LLCs.
But this doesn’t mean you’re completely off the hook for business-related taxes. If your LLC hires employees, it will be responsible for paying a Withholding Tax and an Unemployment Compensation Tax. Or, if it sells merchandise, it will owe a Sales and Use Tax. There are other specific taxes it might owe as well, depending on the type of business you do. Learn more on the Department of Revenue website and register for necessary taxes using Pennsylvania’s Online Business Registration.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Let’s say you don’t file the Certificate of Organization or Foreign Registration Statement. Your LLC will not be allowed to do business in the state, and if it does, you could be fined or penalized. Failure to keep the Commonwealth in the loop on registered office updates and other changes can result in your business losing its good standing and potentially being administratively dissolved. Without good standing, an LLC cannot foreign qualify in most other states, renew business licenses, apply for business loans, and more. And an LLC that has been administratively dissolved can no longer transact business in Pennsylvania.
Missing tax payments can result in serious consequences as well. Late tax filings will incur monetary fines and accrue interest, although the amounts depend on the type of tax and how overdue it is. You can determine how much you might owe using the Department of Revenue Penalty and Interest Calculator.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Pennsylvania.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few maintenance fees – like registered office changes – so your business doesn’t fall out of good standing.