Frequently Asked Questions about the Pennsylvania LLC

Form a Pennsylvania LLC

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What is a Pennsylvania Limited Liability Company (LLC)?
A Pennsylvania Limited Liability Company, commonly referred to as a LLC, is a legal entity that is formed at the state level to separate a business owner from his or her business. Like a corporation, the owners of a LLC are not personally liable for the debts of a properly formed and maintained LLC. Like a partnership or sole proprietorship, an LLC has operating flexibility and is a pass-through entity for tax purposes. This means that the profits of the LLC are passed through and taxable to the owners of the LLC unless the LLC elects to be taxed as a corporation.
 
How long will it take to form my LLC?
The processing time for forming an LLC in Pennsylvania depends on the turnaround times of the service you use to prepare your LLC documents plus the processing times of the State of Pennsylvania. The standard packages for most formation companies require 23-5 weeks but Pennsylvania Business Formation processes and submits all filings as an expedited filing which means your LLC is formed .
 
What is a Registered Agent?
A registered agent is a person appointed by an LLC to accept services of process and any other important documents on behalf of the LLC. Pennsylvania requires that a registered agent be located in Pennsylvania and it must have a permanent legal street address where legal papers can be personally delivered during business hours.  PO Boxes and mailbox services are not valid.  If you are a manager or member of your LLC and you have a Pennsylvania address, you can serve as your LLC’s registered agent.  Otherwise, you can purchase our Registered Agent service.  Also, the registered agent’s name and address is a matter of public record.  Some business owners prefer to keep their information private and if so, you can purchase the Registered Agent services we offer.
 
How many people are needed to form an LLC?
In Pennsylvania, an LLC must have at least one member but can have as many members as desired (there is no limit in # of members).  An owner of an LLC is commonly known as a member of that LLC (similar to shareholders of a corporation).
 
How is Ownership established with an LLC?
Ownership in an LLC is usually structured in two ways: (1) by percentage or (2) by membership units, which are similar to shares of stock in a corporation. In either case, ownership generally confers the right to vote and the right to share in the profits of the LLC.   Ownership is generally established and evidence with ownership provisions in the LLC Operating Agreement.
 
A limited liability company can also be organized with different classes of ownership interests, which provides flexibility for special allocations of profits and voting power. If you are thinking about having a complex structure like this, it is advisable that you consult an attorney and accountant.
 
What is an Operating Agreement?
An Operating Agreement is the primary contract among the members of a LLC that governs the membership, management, operation and distribution of any income of the company.  It is similar to a corporation’s Bylaws. An Operating Agreement should be in place directly after the LLC becomes active. While an operating agreement is not required to form a Pennsylvania LLC, a limited liability company is REQUIRED to adopt a written Operating Agreement after it is formed.
 
How is an LLC taxed on its income?
By default, LLCs do not pay income tax at the entity level. Instead, the LLC's income is passed through to the members, who must recognize their allocated income or loss on their personal tax returns. For a single-member LLC, this income is reported on the individual owner's Form 1040, Schedule C.  For multiple member LLCs, an informational return is filed with the IRS and members are given K-1s.  However, an LLC Can elect to be taxed as a corporation.
 
How is an LLC managed?
An LLC can be either “member managed” or “manager managed.” The initial members (owners) can decide whether they, as members, want to each be responsible for managing the LLC or whether they want to set up a Board of Managers (manager managed) and elect persons to be managers similar to the way a corporation is managed by its Board of Directors. 
 
How much will it cost to form and run an LLC?
Pennsylvania charges an initial filing fee of $105 to form an LLC.  If you choose to hire a service like Pennsylvania Business Formation or an attorney, there will be a service fee as well.   Pennsylvania Business Formation sells its basic package for $139 service fee. Attorneys typically charge between $1000 to $5000 for new business formations.
 

 

 

 

 

 

 

 

 
 
Disclaimer: The information provided on this site is for educational purposes only and does not constitute the provision of legal advice.  A document preparation and filing service is not a lawyer service and is not the substitute for legal advice.  Any new business owner seeking legal or professional advice regarding new business legal entity, tax or other legal matters should seek the advice of an attorney or accountant
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