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Forming a company doesn’t have to be difficult

| Jan 15, 2021 | Uncategorized

Forming a business in Pennsylvania can be a complex task to accomplish. However, this largely depends on the type of company that you want to form. Take a look at the various organizational structures that you can choose from and what you need to do to create your preferred business entity.

Sole proprietorships are the easiest to form

In most cases, you won’t have to fill out any paperwork with the state to operate as a sole proprietor. However, it may be necessary to obtain permits to sell certain items within state lines, and you may also be required to collect and remit sales taxes on behalf of your customers. It may also be necessary to register as a fictitious name.

Any profits or losses that sole proprietors realize in a given tax year are recorded on a Schedule C and pass through to their individual tax returns. Profits and losses incurred by a partnership will also pass directly to each partner’s individual tax return.

It’s slightly harder to create and maintain a corporate entity

To create a corporate entity that is separate from its owners, you must file paperwork with the Pennsylvania Corporation Bureau.  After the entity is recognized, it will be required to file state and federal corporate tax returns as well as an additional annual report with the state.  If there are employees, there are additional obligations such as workers compensation and unemployment compensation.  Corporations are required to have an annual meeting and adhere to other reporting requirements.

An LLC can be a hybrid between a partnership and a corporation

Generally speaking, a limited liability company or LLC takes less time and effort to create compared to a true corporation. However, it can offer greater liability protection than is afforded to a partnership. The LLC itself can choose to be treated like a partnership or a corporation for tax purposes.

If you’re looking to start a company, it may be a good idea to do so with the help of a business formation attorney. Legal counsel may make it easier to obtain, fill out and submit paperwork in a timely and convenient manner.