By: Larry Zahn
One of the more popular business entities used for small businesses today is the Limited Liability Company, commonly referred to as an LLC. Many small businesses start out as sole proprietorships, filing a Schedule C with their personal income tax return. However, the LLC offers several advantages that make this form of entity the preferred choice for many taxpayers.
An LLC is a hybrid between a partnership and a corporation. Owners of an LLC are called members, and single member LLCs file their personal taxes just as a sole proprietorship does, using the Schedule C. If the LLC has more than one member, then a partnership return would be filed with each partner picking up their pro rata share of profit or loss. Members of LLCs can include individuals, corporations, or other LLCs. Similar to a corporation, an LLC protects its members from personal liability for business debt. Unless a member personally guarantees a debt, generally only the assets of the LLC will be liable to pay the business debts.
It is very simple to form an LLC in the state of Pennsylvania. There are only two forms that are required to be filed, a Certificate of Organization [DSCB:15-8821] accompanied by a New Entity Docketing Statement [DSCB:15-134A]. These forms are filed with the Bureau of Corporations and Charitable Organizations together with a fee of $125. There are no advertising requirements when forming a domestic LLC.
LLCs engaged in performing certain professional services are also required to annually file a Certificate of Annual Registration [DSCB:15-8221/8998]. These restricted professional services are defined as the following professional services: chiropractic, dentistry, law, medicine and surgery, optometry, osteopathic medicine and surgery, podiatric medicine, public accounting, psychology or veterinary medicine. All other LLCs are not subject to the annual filing.
Contact us today to schedule a consultation if you would like more information regarding LLC formation in Pennsylvania.