Obtain a Tax ID (EIN) Number and Register Your Business in­ Pennsylvania

Starting a Pennsylvania business may seem intimidating if you’ve never been in the role of entrepreneur, but thanks to the sheer number of online resources available to you, it’s easier than ever to make your business idea a reality. Once you familiarize yourself with the business structures available to you and the legal requirements of your Pennsylvania business, everything will seem much more appropriate.

Pennsylvania is an ideal environment for aspiring entrepreneurs. After a few years of stagnation, Pennsylvania’s economy rebounded enormously in 2017, and that growth has been continuing throughout 2018 and into 2019. In fact, it’s now one of the fastest-growing economies among the Mid-Atlantic states. Growth in education and health services, as well as developments in the energy sector are responsible for much of this growth.

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Steps to Obtaining a Tax ID (EIN) Number and Registering a Pennsylvania Business

  1. Forming a Business in Pennsylvania
  2. Federal Tax ID (EIN) Number Obtainment
  3. Pennsylvania State Tax ID Number
  4. Localized Licenses and Permits in Pennsylvania


1. Forming a Business in Pennsylvania

Before you get too far into the business planning process, you’ll need to decide which structure you want for your company. With all that information in place, you’ll be able to decide which of the major business structures will suit your business best.

These are some of your best options:

  • Sole proprietorships. First, there are sole proprietorships. These are single-person operations, and are usually best for small operations with no intentions of scaling in the future. You’ll pay taxes as an individual on any money you make in this structure, and it’s relatively easy to start one. The downside is you’ll be exposed to personal liability; you could be held liable for any issues that arise in response to your business practices.
  • Partnerships. Partnerships are very similar to sole proprietorships, except there are multiple people working together, splitting costs and income. They’re subject to the same liability problem as sole proprietorships.
  • Limited liability companies (LLCs). LLCs are a little more difficult to start and manage, but they provide much more liability protection. They’re treated as separate legal entities, so you’re much less likely to be held personally liable for your business interactions. LLCs are pass-through entities, so you may not owe taxes on LLC income, but you’ll pay taxes as an individual on any salary or profits you withdraw from the business. In Pennsylvania specifically, you’ll need to file a Certificate of Annual Registration with the Department of State every year. The fee for this filing is $520 for each member of your LLC.
  • Corporations. Corporations are subject to more rules and regulations, and are therefore harder to start and manage, but they offer a distinct benefit: the ability to raise funds with public shares. This makes them ideal for national-scale operations. Corporations offer much more liability protection than any other business structure, but will owe corporate taxes on any income generated by the business; you’ll also owe taxes on salary and profits you obtain through the business, resulting in a kind of double tax. In Pennsylvania, in addition to federal taxes, you’ll most likely owe the flat rate of 9.99 percent on all income generated in the state.

While it’s possible to change the structure of your business in the future, it’s better to finalize a business structure that suits your business indefinitely.

2. Federal Tax ID (EIN) Number Obtainment

Before you start generating income, you’ll almost certainly need to have a federal tax ID number. This 9-digit, unique number serves as an identifier for your business, and getting one is a way to register your business with the federal government. This is also frequently called an employer identification number, or EIN.

There are many conditions that may require you to have an EIN number. You’ll need one in any business that has more than one member, like a partnership, LLC, or corporation. You’ll also need one if you plan on hiring employees (hence the alternative title of the tax ID number). EINs are also required by financial institutions, so you’ll need one if you want to open a business bank account or apply for business credit.

If you want to get your federal tax ID quickly, make use of our federal tax ID number obtainment services. Through our online application, all you’ll need to do is provide a few details on your business and you’ll receive your tax ID via email in less than an hour.

3. Pennsylvania State Tax ID Number

While similar in name, your Pennsylvania state tax ID number is an entirely different ID number, and serves a number of different purposes. You’ll need a Pennsylvania state tax ID number if your business is going to hire any employees in the state of Pennsylvania, if you’re selling taxable goods and services in the state, or if you’re going to owe excise taxes, which apply to some regulated goods. Applying for this number registers your business with the Pennsylvania state government.

To get your Pennsylvania state tax ID, you’ll first need to get your federal tax ID. Once you have that, you can utilize our Pennsylvania state tax ID number obtainment services to apply online and get your tax ID as quickly as possible. Once done with the application, you should receive your state tax ID number in 4 to 6 weeks.


4. Localized Licenses and Permits in Pennsylvania

There is no single, generalized business license or permit required of Pennsylvania businesses. Instead, nearly all permits and licenses are regulated at the local level. In other words, you’ll need to check in with your local Chamber of Commerce to see which business licenses or permits your company may need, based on the city or county in which it’s located. Your business license requirements will depend on your industry.

In Pennsylvania, there are more than 1 million small businesses currently in operation. Together, they account for 98.2 percent of all Pennsylvania businesses. They also cumulatively employ 2.4 million Pennsylvania employees, or 46.9 percent of the working population. Philadelphia, Pittsburgh, Harrisburg, and Erie all have thriving entrepreneurial hubs, home to many startups and small businesses, but you can also find business opportunities in some of Pennsylvania’s smaller cities and rural areas. It all depends on who your target audience is and what your goals are.

If you have a strong business idea, you’ve already taken the first step to making your entrepreneurial dream a reality. Once you choose how to structure your business, you’ll be ready to take the legal steps necessary to establish your company. Use our federal tax ID number and state tax ID number obtainment services to make that process faster and easier.

Written by Maurice Mallory