Due to variations in laws and taxation, different states offer different conditions for companies, and the registration process may also differ. In some cases, it is worth going to additional difficulties to obtain the most favorable conditions for your company’s development. In this article, we will tell you how to start a business in Pennsylvania with the least effort.
Table of Contents
Brief Information about the State
The state of Pennsylvania (Commonwealth of Pennsylvania) is second in the USA. The famous Appalachians are located here. The state is next to the Atlantic Ocean but has no access to it.
- Nickname: Quaker State, Keystone State.
- Population: more than 13 million people.
- The capital is Harrisburg, with about 48 thousand inhabitants.
- The largest city is Philadelphia, with more than 1.5 million inhabitants.
- Large cities: Pittsburgh, Allentown, Erie, Reading.
- 67 counties.
- Neighbors: New Jersey (east), Delaware (southeast), Maryland (south), West Virginia (southwest), Ohio (west), and New York (north).
Philadelphia was once the capital of the United States of America, and here was the first mansion of the American president.
Profitable Areas for Business
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You can open a company in any field. It is crucial to be able to promote it in the local market and offer a unique or better product than competitors. Flexibility and the ability to adapt to customer requests are also crucial in any business.
A small list of promising areas.
- Development of projects on alternative energy sources.
- IT technologies.
- Biotechnology.
- Tourism.
- Medical care, pharmacies.
- Production of craft products and drinks – cheeses, beer, wine.
- Bakeries, confectioneries.
- Farming, including growing black cherries and mushrooms.
- Transport sector.
- Cafes, pizzerias, restaurants.
- Household services: dry cleaning, cleaning, laundry, etc.
- Credit organizations, pawnshops.
The startup idea depends on the city. Thus, a successful decision would be to open a company in Philadelphia that delivers correspondence, food, and goods, repairs electronics, provides loans, leases residential and commercial real estate, etc.
In small cities, family-type businesses (cafes, beauty salons, personal services) will be successful) or activities independent of the company’s location.
Registration Procedure
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To open a business, you must first come up with a name, but in its complete form, it must be combined with the legal form, such as Corp., LCC, Ltd, Incorp. or in their extended interpretation. For an LLC formation in Pennsylvania, you can read the step-by-step guide here.
Types of Legal Forms in Pennsylvania.
The state allows the functioning of several business structures.
- SP: private enterprise. Selling or providing services for a fee. Registration will be required if a private person operates under a fictitious name rather than his name.
- Corporation: There are two types of corporations. A Type C Corporation (C-Corp.) has double taxation (corporate profits and personal income of shareholders), limited founders’ liability for risks, and no limit on the number of shareholders. An S Corporation (S-Corp.) has pass-through taxation, limited liability, and up to 100 shareholders.
- Partnership: There are three types of this form. GP is a partnership on a general basis, with equal rights and personal liability for partners. LP and LLP – an association of general and limited partners. The difference is in the level of responsibility. In an LP, it is personal for the primary partner; in an LLP, all partners are responsible for risks only within the limits of their contributions to the company’s business.
LLC is a limited liability company. Owners are responsible for risks only within the authorized capital. The tax burden is the same as in a Partnership or Corporation.
Foreign business owners can form a C Corporation or LLC in Pennsylvania. Organizing a C Corporation is beneficial for attracting investments; this form allows you to offer your shares in exchange for investments.
Taxes in Pennsylvania
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Pennsylvania’s tax system is three-tiered. Contributions must be made at the federal, state, and individual district levels.
- Federal income tax – 21%.
- Corporate income and franchise tax – 9.99%. LCCs in Pennsylvania are exempt from this burden.
- Deductions from personal income – 3.07%.
- Sales and use royalties – 6%.
- Property tax – 1.35%.
Pennsylvania has a state funding program. Those who have decided to start a business in project development and production of alternative energy, environmental restoration, purification of water and air from pollution, leasing agricultural land, working in IT technologies, etc., can participate in it.
Difficulties of Self-Registration
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Problems with business registration can arise at any stage of the process, including the choice of legal entity and name. Businessmen who do not have experience in registering companies abroad often make mistakes when collecting and submitting documents.
A professional translation of all papers into English is required, and each sheet must be certified separately by a notary. In more than 60% of cases, packages prepared without the participation of qualified intermediaries are rejected. As a result, a procedure that could take 2–3 weeks takes several months.
If you intend to start a business in the US, it is worth enlisting the help of a professional intermediary organization. Specialists will help you through the most challenging stages of the procedure, prepare and execute papers, and open accounts.
Conclusion
Pennsylvania is a great place to register a company. The state allows the functioning of different structures, which gives some freedom. However, some areas of activity require a separate license. Keep this in mind when checking out. In addition, you can always enlist the services of experienced specialists to avoid difficulties during the first stages of your company’s life.
