How to Start a Pennsylvania Corporation


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start a Pennsylvania Corporation

When you plan to start a business in Pennsylvania, you must decide on the appropriate structure. Starting a corporation may be more complicated than creating an LLC in Pennsylvania or a sole proprietorship. However, it is not that difficult as well. There are a few guidelines that you should be aware of when it comes to creating Pennsylvania corporation. Starting a corporation involves a legal process, that is, the process of incorporation.

In this article, I will share a step-by-step guide to start a corporation in Pennsylvania. I will also enlighten you on the advantages and disadvantages of having a corporation. Some people consider starting a corporation in Pennsylvania more than other business structures since it has many advantages over other forms.

What is a Corporation in Pennsylvania

In definition, a corporation is a formal organization established by stockholders, shareholders, or other people to make a profit. Like individuals, corporations can undertake contracts, own assets, sue and be sued, pay taxes, limit state and federal taxes, and loan funds from banking institutions.

Common Types of Corporations

Before you start with the process of forming a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

  • C-Corporation: C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.
  • S-Corporation: An S-Corporation is set up similarly to a C-corporation but has different tax implications and owner limits. S-corps have no more than 100 stockholders and are not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.
  • Non-profit Corporation: Nonprofit businesses are frequently used by religious, educational, and charity institutions to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations. Read how to start a nonprofit corp in Pennsylvania to learn about nonprofit corporations.

If you have a small business, it is recommended that you form an LLC instead of a corporation in Pennsylvania. LLCs have more tax benefits than other structures. Besides, LLCs protect your personal assets. However, it is wise to consult a legal expert before you start setting up your business in Pennsylvania.

LLCBuddy Editorial Team

How to Start a Corporation in Pennsylvania

To start a corporation in Pennsylvania, you must follow the below steps that, include forming a corporation name, appointing a board of directors, filing for Articles of Incorporation, drafting corporate bylaws, meeting with the board of directors, issuing stocks, creating a shareholders agreement, requesting for an EIN, and getting a license and permit. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choose a Corporation Name in Pennsylvania

Naming your business is one of the most crucial activities during the startup phase. Your corporation name serves as the foundation for your brand. Legal procedures should be taken into account when choosing your corporation name. Choose a corporation name that will enable you to develop a strong brand identity without being hampered by irrelevant factors.

If you are forming an LLC, there is a complete guide on Pennsylvania LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your corporation in Pennsylvania-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

Step 2: Board of Directors Initial Appointment

To form a corporation in Pennsylvania, you must appoint an initial board of directors before making them permanent once the corporation is formed. In Pennsylvania, you may appoint at least One board of directors. The initial board of directors is in charge of guiding the overall strategy of your business. The structure, responsibilities, and powers given to a board of directors are determined by the bylaws of a company or organization. So, appointing your corporation’s initial board of directors in Pennsylvania is a big step in forming a corporation.

Step 3: Filing the Articles of Incorporation in Pennsylvania

After you appoint the initial board of directors in your Pennsylvania corporation, the next step is to write and file a Articles of Incorporation. In writing, the Pennsylvania Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Pennsylvania Registered Agent contact information, and the names and addresses of incorporators and/or initial board members, should be written.

Filing a Articles of Incorporation in Pennsylvania may be done with two methods, online and by mail. The Articles of Incorporation fee may vary from different states. However, in Pennsylvania, it costs $125 for online and by mail filing.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail to Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations, P.O. Box 8722, Harrisburg, PA 17105

Step 4: Draft Corporate Bylaws

Now you are done filing a Articles of Incorporation in Pennsylvania, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made-

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 5: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 6: Issuing Stock in a Corporation

After starting your Pennsylvania corporation, one of the first official corporate actions is issuing stock to the shareholders. Keep track of the number of shares issued to each shareholder and the purchase price. A corporation in Pennsylvania is managed by its shareholders, who contribute to the business in exchange for ownership shares.

Step 7: Draft and Finalize a Shareholders Agreement

Even though drafting and finalizing a shareholders agreement is unnecessary, I suggest you still comply since it will benefit your corporation and its shareholders. A small business’s shareholders enter into a shareholder agreement contract. It establishes how ownership will be handled in unexpected situations, like a shareholder passes away, retires, becomes disabled, or quits the corporation. Early on in the life of your Pennsylvania corporation, signing a shareholders’ agreement can help maintain corporate continuity and prevent future disputes.

Step 8: Request an EIN in Pennsylvania

After everything is in place, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your Pennsylvania corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Pennsylvania can be through the following:

  • Apply Online- The EIN online application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 9: Get Licenses and Permits for your Corporation in Pennsylvania

Before your corporation operates in Pennsylvania, you must have a business license. A business license is a document issued by a government agency that permits you to operate your business in the geographic region that that agency governs. To legally operate your corporation, you’ll need a business license. Numerous corporate licenses need to be filed and renewed regularly. Check out how to get business licenses and permits in Pennsylvania to know more.

You must also register a DBA name if you intend to conduct business using a name other than your corporation’s legal name. The DBA name is sometimes known as “doing business as” or a “fictitious business name.” Depending on your location, you may need to register the DBA with your state, city, and county. You can skip this step if your business solely uses your legal company name.

Important Information

Paying your Taxes in Pennsylvania

Even if you have established your corporation in Pennsylvania, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Pennsylvania has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Pennsylvania are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Pennsylvania

A filing and annual fee must be paid to form a corporation in Pennsylvania. Without it, your corporation won’t operate. The initial filing fee for a corporation may vary depending on the state. However, in Pennsylvania, it costs $125 for online and by mail filing. The corporation in Pennsylvania also has to file an annual report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly. If, in the future, you make any changes to your corporation, you must file the Pennsylvania Amendment. It costs $70 to file an amendment in Pennsylvania.

Advantages of Starting a Corporation in Pennsylvania

  1. Limited Liability: The biggest advantage of setting up a Pennsylvania corporation is that the shareholders are not personally responsible for the debts of the company. As a result, when you incorporate as a corporation, personal assets like homes, vehicles, and other possessions are prohibited. One of the main benefits of setting up a corporation over a general partnership or sole proprietorship business structure is that neither the business nor the owners are held legally responsible for the obligations of the business, even if it means giving up their personal assets.
  1. Limitless Corporation: The fact that a corporation’s existence is independent of its owners is another significant benefit of incorporation. In other words, a corporation has an endless life and will continue operating normally even if the owner dies or decides to sell their ownership.
  1. Advantages in Tax: The deduction of health insurance premium payments made on behalf of an owner-employee is one of the many financial benefits to which corporations are entitled. Corporations also save on self-employment taxes since their revenue is not subject to workers’ compensation, Social Security, or medical taxes. Tax rates on corporate profits are lower than those on individual income.

FAQs

What is the process for starting a corporation in Pennsylvania?
The process for starting a corporation in Pennsylvania includes filing a Certificate of Incorporation with the Department of State, appointing a registered agent, publishing a notice of intent to incorporate, holding an organizational meeting, and filing the appropriate paperwork with the Department of Revenue.
What is required to form a corporation in Pennsylvania?
To form a corporation in Pennsylvania, you will need to file a Certificate of Incorporation with the Pennsylvania Department of State, appoint a registered agent, publish a notice of intent to incorporate, hold an organizational meeting, and file the appropriate paperwork with the Department of Revenue.
What paperwork is needed to form a corporation in Pennsylvania?
The paperwork required to form a corporation in Pennsylvania includes a Certificate of Incorporation, a registered agent appointment form, a notice of intent to incorporate, and various other forms that must be filed with the Department of Revenue.
What is the cost to form a corporation in Pennsylvania?
The cost to form a corporation in Pennsylvania depends on the type of corporation you are forming and the fees associated with filing the required paperwork. Generally, the cost to form a corporation in Pennsylvania ranges from $100 to $250.
What are the taxes for a corporation in Pennsylvania?
The taxes for a corporation in Pennsylvania depend on the type of corporation you are forming and the income it generates. Generally, corporations in Pennsylvania are subject to corporate income tax, sales tax, and employer taxes.
What are the requirements for a registered agent in Pennsylvania?
The requirements for a registered agent in Pennsylvania include being a resident of the state, having a physical address in the state, and being available to receive legal documents during regular business hours.
How do I choose a name for my corporation in Pennsylvania?
When choosing a name for your corporation in Pennsylvania, you must ensure that it is distinguishable from other entities registered with the Department of State, and that it complies with the naming requirements set forth by the Pennsylvania Business Corporation Law.
Do I need a business license to form a corporation in Pennsylvania?
You do not need a business license to form a corporation in Pennsylvania. However, you may need to obtain other licenses or permits depending on your business activities.
What are the steps for forming a Pennsylvania corporation?
To form a Pennsylvania corporation, you need to file Articles of Incorporation with the Pennsylvania Department of State and pay a filing fee. Additionally, you’ll need to create a corporate bylaws document and appoint directors.
What information do I need to provide to form a Pennsylvania corporation?
When filing your Articles of Incorporation with the Pennsylvania Department of State, you need to provide certain information such as the name of the corporation, contact information, and the purpose of the corporation.
Is there a minimum number of directors required to form a Pennsylvania corporation?
Yes, a Pennsylvania corporation must have at least one director.
Is there a fee to form a Pennsylvania corporation?
Yes, there is a filing fee that must be paid to the Pennsylvania Department of State when filing Articles of Incorporation.
Can I form a Pennsylvania corporation online?
Yes, you can file your Articles of Incorporation online with the Pennsylvania Department of State.
What are the registered agent requirements for a Pennsylvania corporation?
A Pennsylvania corporation must appoint and maintain a registered agent in the state. The registered agent must have a physical address in the state of Pennsylvania.
How long does it take to form a Pennsylvania corporation?
It typically takes a few days to file your Articles of Incorporation with the Pennsylvania Department of State.
What is the difference between a corporation and an LLC in Pennsylvania?
A corporation and an LLC are both entities formed under Pennsylvania state law but have different legal characteristics. Corporations typically have more formalities and regulations than LLCs.
What are the corporate tax requirements for a Pennsylvania corporation?
Pennsylvania corporations are required to pay corporate income tax on their profits. Additionally, Pennsylvania corporations may be subject to other taxes such as sales and use tax, employer withholding tax, and personal property tax.
What is the process for dissolving a Pennsylvania corporation?
To dissolve a Pennsylvania corporation, you must file a Certificate of Dissolution with the Pennsylvania Department of State and pay the applicable filing fee. Additionally, you’ll need to take care of any outstanding financial obligations and file the required tax forms.
Do I need to file annual reports with the Pennsylvania Department of State?
Yes, all Pennsylvania corporations are required to file an annual report with the Pennsylvania Department of State.
Do I need to hold annual shareholder meetings for a Pennsylvania corporation?
Yes, Pennsylvania corporations are required to hold annual shareholder meetings.
Does a Pennsylvania corporation need to adopt corporate bylaws?
Yes, a Pennsylvania corporation must have corporate bylaws that outline the rules and regulations for the corporation.
How do I change the registered agent for a Pennsylvania corporation?
To change the registered agent for a Pennsylvania corporation, you must file a Statement of Change with the Pennsylvania Department of State and pay the applicable filing fee.
How do I change the address of a Pennsylvania corporation?
To change the address of a Pennsylvania corporation, you must file a Statement of Change with the Pennsylvania Department of State and pay the applicable filing fee.
Can I form a Pennsylvania corporation with only one shareholder?
Yes, a Pennsylvania corporation can have only one shareholder.
Who is responsible for filing taxes for a Pennsylvania corporation?
The shareholders and/or directors of a Pennsylvania corporation are responsible for filing taxes for the corporation.
Do I need to publish a notice when forming a Pennsylvania corporation?
No, there is no requirement to publish a notice when forming a Pennsylvania corporation.
How do I change the corporate name for a Pennsylvania corporation?
To change the corporate name for a Pennsylvania corporation, you must file an Amendment to the Articles of Incorporation with the Pennsylvania Department of State and pay the applicable filing fee.
Can a Pennsylvania corporation have multiple classes of stock?
Yes, a Pennsylvania corporation can issue multiple classes of stock.
Can a Pennsylvania corporation issue stock without a valuation?
Yes, a Pennsylvania corporation can issue stock without a valuation.
What are the residency requirements for forming a Pennsylvania corporation?
There are no residency requirements for forming a Pennsylvania corporation.
What are the requirements for holding directors and shareholders meetings in Pennsylvania?
Directors and shareholders meetings must be held in Pennsylvania if the majority of the corporation’s shareholders or directors reside in the state.
What is the process for merging two Pennsylvania corporations?
To merge two Pennsylvania corporations, both corporations must file Articles of Merger with the Pennsylvania Department of State and pay the applicable filing fee.
Can a Pennsylvania corporation be formed for any lawful purpose?
Yes, a Pennsylvania corporation can be formed for any lawful purpose.

Also Read

Why Pennsylvania Corporation is So Important

One of the key reasons why Pennsylvania Corporation is so important is the way it values its stakeholders. The corporation understands that its success is dependent on the support and trust of its shareholders, customers, suppliers, and other key stakeholders. By prioritizing open and transparent communication, ethical business practices, and a commitment to delivering value, Pennsylvania Corporation builds strong relationships with all who have a vested interest in its success.

Furthermore, Pennsylvania Corporation recognizes the importance of its employees as the backbone of the organization. The corporation invests in its workforce through training, development, and career advancement opportunities, creating a strong and dedicated team that is passionate about the company’s mission and values. By fostering a culture of inclusivity, diversity, and empowerment, Pennsylvania Corporation cultivates a workplace that attracts top talent and drives innovation and growth.

In addition to its stakeholders and employees, Pennsylvania Corporation also prioritizes its role in the communities in which it operates. The corporation takes a proactive approach to corporate social responsibility, giving back through philanthropic initiatives, environmental sustainability efforts, and community engagement programs. By being a responsible corporate citizen, Pennsylvania Corporation not only enhances its reputation but also creates a positive impact on society as a whole.

Another reason why Pennsylvania Corporation is so important is its contribution to the local and state economy. By creating jobs, driving economic growth, and supporting small businesses in the area, the corporation plays a vital role in bolstering the economic vitality of Pennsylvania. Furthermore, through its commitment to innovation and collaboration with academic institutions and local organizations, Pennsylvania Corporation stimulates technological advancements and fosters a culture of entrepreneurship and creativity.

Moreover, Pennsylvania Corporation plays a significant role in driving industry competitiveness and ensuring the state remains a hub for business development and investment. The corporation’s presence encourages other businesses to establish roots in Pennsylvania, leading to a vibrant business ecosystem that attracts talent, capital, and resources. By acting as a catalyst for economic prosperity and growth, Pennsylvania Corporation plays a crucial role in shaping the future of the state’s business landscape.

In conclusion, Pennsylvania Corporation is an integral part of the state’s economic and social fabric. Through its focus on stakeholders, employees, communities, and the economy, the corporation exemplifies what it means to be a responsible and impactful corporate entity. By embodying these values and principles, Pennsylvania Corporation sets itself apart as a beacon of excellence and a model for other businesses to follow.

Conclusion

When determining which corporate form is best for you, be selective. You must know which business structure is bet-fitted for your product/service in Pennsylvania. Consult a legal professional before you take the first step while setting up your business. Finding the ideal ratio of corporate advantages and legal protection that meets your unique needs is very important. In forming a corporation in Pennsylvania, you need to ensure that every detail is well-formed so that your corporation will be successful. And if you have any questions, share them in the comment section below.

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