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For entrepreneurs wondering how to start a business in Pennsylvania, there’s plenty to learn. This can include how to create a business plan, pay business taxes, and market your brand. It’s not all just about the process, but also the fertile business climate. For example, Pennsylvania is one of the largest economies in the country. Imagine having a business idea in such a promising state but not knowing how to make it a reality.
Starting a small business in Pennsylvania will take plenty of time and money, but the rewards that come with building a profitable business is worth all of the hard work. In this guide, we’ll be offering some steps to help you start a business in Pennsylvania.
There are plenty of benefits to starting a new business in Pennsylvania. As we mentioned above, the state has a great economy that’s welcoming to small business. It also offers tax benefits, credits, and programs to qualifying small businesses.
For startup business owners, specifically, Pennsylvania boasts the following:
Starting a small business in Pennsylvania requires a lot of dedication and research. The same can be said about doing business in any state, but with this guide, we’ll be focusing only on the Keystone State. Following this guide can help you transform your idea into a profit.
If you’re a first-time entrepreneur and aren’t sure how to start a business in Pennsylvania, your first step will be to write a business plan. Although it may feel overwhelming at first, it’s crucial to spell out the details of your business idea, address potential problems with provided solutions, hone in on your customer types, and set S.M.A.R.T. objectives (goals that are specific, measurable, attainable, realistic, and timely).
A business plan will help flesh out your business structure, create an analysis of the customer market in Pennsylvania, and price your products or services. It’s also imperative to compare factors like the cost of living, median income, unemployment rate, and population. Do that in various Pennsylvania cities to estimate:
You may be able to obtain funding from government resources and Pennsylvania lenders, including private business loans, government grants, and initiatives. The Pennsylvania Department of Community and Economic Development’s Funding and Program Finder is a great starting point. Another is the U.S. Small Business Administration’s (SBA) page on funding programs and USA.gov’s page on financing for small business owners.
The type and size of business you plan to launch will help determine which business structure you’ll choose to form with the Bureau of Corporations at the office of the Pennsylvania Department of State.
While most small startups will probably opt to become a sole proprietor or limited liability company (LLC), the Pennsylvania Department of State Bureau of Corporations and Charitable Organizations created a free Guide to Business Registration in Pennsylvania, which explains the various options for choosing a business structure.
Opting to form a sole proprietorship doesn’t typically require a lawyer. That’s because a sole proprietorship business is owned by a single individual. Revenues are considered personal income and are taxed at the individual’s personal tax rate.
Likewise, with an LLC, individual members or managers aren’t personally liable for the company’s obligations and debts, despite providing the federal tax benefits of a partnership. It’s important to understand that LLCs can be taxed in a few different ways.
For instance, an S-corporation LLC is a “pass-through entity.” That means the owners are taxed directly on their share of the income.
Starting a corporation in Pennsylvania can take some work. You’ll have to do such things as filing Articles of Incorporation and a Docketing Statement with the Bureau of Corporations and Charitable Organizations of the Department of State.
Although the work to start a corporation may seem a lot, this specific business structure can be beneficial. Be sure to do some research on it or speak to a business attorney for more information.
Before choosing your business entity, research the specific municipality where the company will be located to see if specific permits or business licenses are required. Philadelphia and Harrisburg, for example, require that all businesses obtain an annual business privilege license.
As you learn how to start a business in Pennsylvania, it’ll become obvious that there are expenses to cover before you begin operations. This can include applying for necessary licenses and registering a domain name to promote your small business online. Many of these expenses, including travel, advertising, and training, are capital expenses that you can deduct over time.
Familiarizing yourself with the many costs that come with setting up and running a business will require knowing some important terms. The Pennsylvania Department of Revenue is a good resource for understanding terms like amortization, depreciation, and deductions. In the meantime, there are things you can do to lighten your tax burden and ensure tax season is more manageable.
As you estimate your one-time, fixed, and ongoing expenses, it may be helpful to solicit advice from the many entrepreneur assistance centers in the state, many of which can be found through the Pennsylvania Department of Community and Economic Development.
The organization’s free Entrepreneur’s Guide includes both a startup and operating costs worksheet that covers everything from building leases and initial inventory to payroll taxes and equipment leasing.
Pennsylvania can help arm entrepreneurs with more specific assistance in terms of financing, mentorship, hiring, and procurement thanks to a variety of resources designed to help underserved populations, such as veterans and minorities.
It may be tempting to simply name your business after a city in the state and your product or service, but a quick search with the Pennsylvania Department of State will determine that names like “Lancaster Plumbing” and “Philadelphia Bicycles” are already taken. Get creative to find a unique business name by brainstorming industry-specific terms, puns, or even made-up names.
There are some specific rules you’ll need to follow in Pennsylvania when choosing a business name. For example, Pennsylvania law dictates that LLCs must include “limited,” “company,” “limited liability company,” or an abbreviation of one of those terms.
You can always create a fictitious business name too, called a “doing business as” (DBA) name. So, while Scranton Travel Agency Limited may be the formal name on your filing paperwork and business taxes, your business cards, signs, and banners could use the DBA “Scranton Travel” if it’s not taken. You can register a DBA with us.
Marketing your small business after you’ve established it will be a must to secure customers. One of the best ways to market is online. Don’t assume that a business name that’s available with the Pennsylvania Department of State is also free on social media and as domain registration. Register your domain name with us.
As long as you avoid legal repercussions and market your business without confusion, the process of choosing a name can be fun.
Once you’ve registered your small business structure and name with the Pennsylvania Department of State, it’s time to open financial accounts and get business insurance.
Start by obtaining a federal employer identification number (EIN) from the IRS if you’ve chosen an LLC. If you’re set on being a sole proprietor, you can use your social security number to file (though an EIN may be required in some cases, so do your research). Then, open a business bank account to keep your finances separate from your personal account.
A business bank account is highly suggested over using your personal account since, depending on the business structure you’ve chosen, liability may be an issue.
Next, ensure you’ve obtained any required licenses, zoning, or building permits. These will vary by location, business type, and business structure. To get started, check the PA E-Library website, which offers zoning ordinances for townships throughout the state.
It’s also a good idea to think about getting business insurance. This can include professional liability insurance or general liability insurance. A Pennsylvania business insurance vendor can advise you on the different policies you may need.
In the old days, new businesses might run an ad in the Pittsburgh Post-Gazette, get a listing in the Yellow Pages, and join the Pittsburgh Chamber of Commerce in hopes of networking to eventually drum up some new business. While advertising, business directories, and word-of-mouth still hold value to promote a new business, technology has made marketing easier, inexpensive, and more efficient.
Use social media platforms like Facebook, Twitter, and Instagram to market your business, and optimize your website to attract users. Look for opportunities to promote your business and network on LinkedIn and in Facebook groups. Capitalize on free resources like a listing on Google My Business to engage and connect with local customers performing searches on Google Search and Maps.
Entrepreneurs need to weigh a variety of factors to determine what businesses will be feasible, profitable, and fun. A stay-at-home parent may want to consider opening a home daycare, selling baked goods, or providing virtual assistance services.
Experience may also play a role for someone leaving employment to venture out on their own to launch a web design, internet technology, or tax accounting service. In Pennsylvania, where key industries include manufacturing, tourism, life sciences, natural gas, plastics, and agribusiness, it may make more sense to create a spin-off type of business that supports larger sectors, such as wine tour companies, commercial photography, or pest control.
Don’t be intimidated if you don’t know how to start a business in Pennsylvania. Although choosing a registered agent, creating an operating agreement, and filing annual reports can feel scary, a little help from experts can make these tasks more manageable.
Remember, entrepreneurs don’t have to be good at everything. That’s where research and outsourcing come into play. Focus on finding the right business for your interests, skills, and time, and whatever endeavor you pursue will feel less like work and more like an exciting adventure!
Livability lists Chambersburg, Erie, and Easton among the best cities for entrepreneurs.
The Pennsylvania Department of State charges $125 to file a Certificate of Organization for an LLC.
Pittsburgh has earned numerous accolades for access to capital, a living wage, and affordability.