If you want to start and run a Pennsylvania limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Pennsylvania LLCs.
Unlike most states, Pennsylvania does not require LLCs to file an annual report. However, Professional Limited Liability Companies (PLLCs) and foreign LLCs engaged in professional services must file a Certificate of Annual Registration (Form DSCB:15-8221/8998) with the Department of State. These must be filed with the Corporation Bureau by April 15th of every year. The registration is filed online or by postal mail. An annual fee of $520 times the number of members of the LLC must be paid.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. In most states, LLCs themselves do not pay income taxes, only their members do.
Starting with tax year 2017, Pennsylvania will no longer impose a Capital Stock/Franchise Tax on LLCs or require LLCs to file Form RCT-101 (PA Corporate Tax Report) with the Department of Revenue (DOR). LLCs required to file Form RCT-101 for the 2015 reporting period should mark that return as their final return. Check with the Department of Revenue (DOR) for more information.
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Pennsylvania, like almost every other state, has a corporation income tax. In Pennsylvania, the corporate tax generally is calculated at a flat 9.99% of taxable income as reported on the business's federal tax return (with adjustments). Use the state's corporation income tax return (Form RCT-101) to pay this tax. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Pennsylvania employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering your business with the DOR either online or on paper (Form PA-100). Once you've registered, you'll need to file withholding taxes on a periodic basis (for example semi-weekly, monthly, or quarterly) using PA-501 (available via the DOR's online e-tides system). You'll also need to use some version of Form REV-1667 each year to reconcile your LLC's tax withholding.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through Pennsylvania's Department of Labor & Industry (L&I). You can register for these taxes online or by using Form PA-100. Then, each quarter, you'll need to report on wages and pay the UI taxes to L&I. For more information, check the L&I website.
If your LLC will sell goods to customers in Pennsylvania, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online or mail in Form PA-100. After you've registered, you'll be sent a PA Sales Tax License. Then, on a periodic basis (for example monthly or quarterly), you must submit sales tax returns to the DOR via the e-tides online system. For more information, check the DOR website.
If you will be doing business in states other than Pennsylvania, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Pennsylvania, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.