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Pennsylvania is one of the best states to start a business in America. In fact, it is considered among the top ten most prosperous states in the USA. It’s located in the eastern part of the USA and has a rich history as one of the original 13 colonies. Pennsylvania (PA) is home to some of the biggest insurance and financial businesses. They also are home to many 50 Fortune 500 companies. For many business owners, the fastest and easiest way to start a business in PA is by creating a LLC.
A LLC, or limited liability company, is a kind of business that’s great for startups and small to medium-sized businesses. You will receive the benefits and protections of bigger Pennsylvania corporations, but with much simpler and uncomplicated rules. Before we dive into the benefits of starting a business in Pennsylvania, here’s a quick guide to starting a Pennsylvania LLC.
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1. Business Benefits of an LLC in Pennsylvania
If you open a business with a LLC in Pennsylvania, you are able to take advantage of several tax credit programs. Those programs are initiated by Pennsylvania Department of Revenue and Department of Community and Economic Development.
As a business owner you will always have limited liability when it comes to the debts or judgements if any against the corporation. However, this is only if you open a corporate company in Pennsylvania. At the same time, you can also benefit from no income taxes if you are running as S corporation losses. Otherwise the income will be passed through to the stockholders. It is also important to know there are also a few exceptions as well.
Did we mention how as LLC business owners you will have flexible profit distribution too? If you are a new company or a start-up in Pennsylvania, you will have the benefit of being able to choose different ways of distribution of profits. It’s not like a partnership where the profit distribution is 50-50.
For a start-up company in Pennsylvania, businesses (small and medium-sized) need financial assistance in order to bring their new ideas and technology to the forefront. This is where the state plays an important role. A few programs exist to provide the much needed financial assistance to businesses. You will be able to enjoy limited liability protections similar to what a corporation enjoy too.
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2. Pennsylvania Business Incentives
As soon as you have registered for a new LLC in Pennsylvania, there are a few business incentives and programs your company can benefit from.
In PA they have Pennsylvania Opportunity Zones made to help businesses. Its governor has designated 300 tracts based on economic data reserved as opportunity zones for new businesses. The DCED initiated this program. Businesses located in these zones can enjoy several benefits like deferral of gain invested in an opportunity zone property.
Its primary objective is to enable a growth in economic development as well as job creation especially in weaker communities. As an investor you will be able to defer tax on any prior gains that was invested in a Qualified Opportunity Fund (QOF). If you have held a QOF investment for more than 5 years, then you can benefit from a 10% exclusion of the deferred gain.
They also have a job creation tax credit program (JCTC). It’s primary aim is to secure job-creating economic development opportunities through new LLC business development or through the expansion of existing businesses. You will be eligible for this program after you have registered a new business in Pennsylvania. It’s also applicable if your business is able to create 25 or more jobs within 3 years of existence or if the business helps in increasing employment by 20%. As a part of the program, you will be able to claim a max tax credit of US $1,000.
There are plenty of benefits in starting an LLC business in Pennsylvania. Tax credits, grants, loans, special development zone, opportunity zones, assistance in infrastructures, and facilities improvement, you name it. However, you may be wondering if there are any disadvantages to it?
In reality, there are no downsides except the ones that are specific to the business nature you register. For example, if you are an LLC business and has a limited life, it can get dissolved if one of its members die.
Are you looking to start a new LLC business in Pennsylvania? If you are, look for a registered agent today!
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