Starting a Business in Pennsylvania: The Complete Guide

Even if you know you want to start a business and have a great idea or product to do it, the actual steps you need to take to make things official may be a mystery. What type of business and how to go about starting it are two of the most daunting things to figure out, after actually deciding to start a business, that is.

When it comes to starting a business in Pennsylvania, specifically, there are a number of criteria you want to think about as a future small business owner. The good news? With about 1 million small businesses, Pennsylvania is clearly a state that small businesses love to call home. And if you’re wondering how to start a business in Pennsylvania yourself, we’re here to help.

Starting a business in PA in 8 steps

In this eight-step guide, we’ll take you through everything you need to do when starting a business in Pennsylvania, from choosing a business entity to registering your small business with the state to opening a business bank account and securing the funding you need to make your business idea a reality.

Step 1: Choose a name and business entity.

First things first, you need to decide on the name of your company when you’re starting a business in Pennsylvania, or anywhere else, for that matter. Any forms you file to make your business official will need to include a name (the exact same name). So whether you’ve had a name picked out from day one or have been going back and forth, now is the time to make a final decision. Maybe you already have a name in mind, maybe not, but it’s one of the first things you should decide about your business.

Of course, once you settle on the perfect name for your business, you’ll have to make sure the business name you want is actually available and not already in use in the state of Pennsylvania. You can do this by searching the Pennsylvania database of registered businesses. Simply type the business name you want into the search bar, and if a business with the same name already exists in the state of Pennsylvania, it’ll appear in the results. In that case, you’ll need to go back to the drawing board.

Source: Commonwealth of Pennsylvania Department of State

Once your name is established, it’s time to choose a business entity structure. The two might go hand in hand if you decide you want to start a business as a sole proprietor using your name as the business’s name as well. This can also have some benefits because you might not have to do all of the same registrations other businesses might have to.

There are more than 10 business entity types for you to choose from—from sole proprietor, to limited liability company, to C-corporation, and beyond—and the one that makes the most sense for your business will depend on a variety of factors, including the type of business you’re running and whether you have partners or are running it solo. It will also have significant tax and legal implications, so it’s best to consult a business attorney and/or tax professional before deciding which business entity is right for your small business.

Step 2: Create a business plan.

Once the name of your business and the type of business you want to start are nailed down, the next step to starting a business in Pennsylvania is to create a business plan. These three things will all be necessary to register your business (more on that later). A business plan details everything from what your business is and what product or service it will provide to a marketing and sales plan and at least three years of financial projections.

If you’re looking for capital to help start your business in Pennsylvania, you’ll also want a business plan to help you secure funding. Whether you’re trying to attract investors or get a loan, a business plan is an important part of the application process. Before writing a check investors and banks alike want to know that you have a vision for your business and a concrete plan for how to reach your goals.

You can use a business plan template to help you create one if you’re not sure where to start, and these business plan software options also make it easy to create and customize a business plan. Having a formal business plan will also help you stay organized and keep you from getting bogged down along the way when starting a business (especially in the beginning) might feel overwhelming.

Step 3: Register your business.

There are a few different registrations you need to complete when starting a business in Pennsylvania, and, depending on your type of business, there may be special registrations, as well. Again, working with a lawyer who is familiar with Pennsylvania business law will help ensure you don’t miss any steps.

You should first apply for a federal employer identification number (EIN), also known as a business tax ID number, which is how you’ll identify your business with the state. Keep in mind, you apply for an EIN through the IRS, not through the Pennsylvania state government’s website.

When starting a business in Pennsylvania, you’ll also need to register your business structure (which you set up in Step 1) with the Pennsylvania Department of State. However, if your business is a sole proprietorship operating under your legal name (first and last name), you are not required to register. To register your business, you can file online with the Pennsylvania Department of State.

If your business is going to have a fictitious name, meaning the name your business is operating under is different from the legal name you registered with the department of state—also known as “doing business as” (DBA) or “trading as” (T/A)—you’ll need to register that name with the department of state as well. This can also be filed online with the Pennsylvania Department of State.

Source: Commonwealth of Pennsylvania Department of State

Step 4: Register for tax and employer accounts.

To officially start a business in Pennsylvania and operate legally, you’ll next need to register for state tax and employer accounts. This will be how you get your business set up to pay taxes in Pennsylvania. Depending on what business you’re in, there might be different taxes you’re responsible for paying, like sales tax, hotel occupancy tax, or unemployment compensation tax.

Registering for your tax and employer accounts can be done online through the PA-100 Enterprise Registration Form. Of course, once you’ve registered your state tax and employer accounts, you will then face paying taxes. Pennsylvania business taxes are filed with the state’s department of revenue and the department of labor and industry.

When you pay your taxes depends on what type of business you are. Sole proprietors, for example, pay their taxes on the same schedule as their individual taxes. Partnerships, on the other hand, can establish their own fiscal year to determine when they pay taxes. This guide to small business taxes can help you better understand your tax responsibilities as a small business, but consulting a tax professional is always a good idea.

Step 5: Registration for local taxes, zoning requirements, licenses, or permits.

Additional registrations, licenses, and permits may be required, depending on your type of business. As you reach the final stages of starting your business in Pennsylvania, consult the state’s website to find out exactly what you need to file. Their comprehensive website allows you to input the address of your business and see who to contact in the government about any local registrations, permits, and zoning requirements necessary for a business in that area.

You can also search to see who to contact about whether your business requires special registrations. This is also a great resource to help answer your questions about registering your business and business name, registering for business taxes, general questions, and more.

If you’re starting a business that will provide a professional service, you will also need a professional license. This would apply to professionals like doctors, dentists, lawyers, and more. These professional licenses are required before you can begin business operations, as they’re designed to protect the public from anyone operating with false expertise or credentials.

Step 6: Open a business bank account.

Now that you’ve officially registered your business, organizing your business’s financials is the next step when starting a business in Pennsylvania. Having a bank account specific to your business and not muddled with your personal finances is essential to properly running your business, no matter what type of business you have. Having a separate business checking account can help boost your business credit score and keep your personal finances from influencing your business credit health. You can get your free business credit report online, but keep in mind with a brand-new business, it will take time to build up a good credit score.

When choosing a business bank account, you’ll want to factor in your business’s needs to decide which features and benefits will be the most important to your day-to-day operations. Other criteria like maintenance fees, transaction allowances, and account minimums should also play a role in your decision.

You may also decide to get a business credit card. This card is specifically for buying items that relate to your business. It’s important to keep these purchases separate from your personal charges, just like you keep your bank accounts separate. Having, using, and paying off your business credit card in a timely manner can help you build credit and keeps your finances separate—something you will be especially thankful for when it’s time to file taxes..

Step 7: Acquire business insurance.

Like business bank accounts and credit cards, the type of business insurance your small business needs will depend on what your business actually does. But when you’re starting a business in Pennsylvania, or anywhere, you want to make sure you’re covered and that your business is protected, along with any employees you have.

Some types of insurance are required for all small businesses, such as workers compensation insurance and unemployment compensation insurance. In the state of Pennsylvania, disability insurance is not required, though you might decide to opt into it.

Other types of insurance include general liability insurance, commercial property insurance, professional liability insurance, product liability insurance, employment practices liability insurance, and key person insurance. Which types of insurance your business will wind up carrying, again, depends on your specific business, but your legal professional can help you decide which types of insurance are best for you, as well as how to get business insurance.

Step 8: Fund your business.

Now that much of the required paperwork is filed and done with, you can start getting to the fun part of your business, actually starting and running it. But if you find that you could use some capital to help your business get off the ground, or to keep up with demand once it takes off, small business funding can help.

There are several types of business loans that can provide your business with the financial help you need, when you need it. From SBA loans to equipment financing, or even a 0% intro APR business credit card (when used correctly) can be the financial solution that takes your business to the next level.

Starting a business in PA: The bottom line

Now that you have all the steps you need to start a business in Pennsylvania, you’re ready to take your great business idea and turn it into a real, functioning operation. Starting a business can feel overwhelming, but following this guide and getting all of your information organized can make the process as painless as possible. Then you can focus on the important things, like marketing and growing your business.