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Limited Liability Company (LLC)

Most small to medium businesses, real estate holding, consulting firms

15 Pa.C.S. §§ 8811–8898

Notice: Business entity selection and formation involve legal, tax, and liability considerations that vary by situation. This information is provided for educational purposes. Consult with a licensed attorney and tax professional for guidance specific to your business.

Key Facts

Formation Fee

$125

Liability

Limited liability for all members

Taxation

Pass-through by default; can elect corpo...

Owners

One or more members (no limit)

Liability Protection

Limited liability for all members

Tax Treatment

Pass-through by default; can elect corporate taxation

Management Structure

Member-managed (default) or manager-managed

Ownership

One or more members (no limit)

Advantages & Disadvantages

Advantages

Limited liability for all members
Flexible taxation (pass-through or corporate)
Simple management structure
No ownership restrictions
No publication requirement in PA

Disadvantages

Self-employment tax on pass-through income
Operating agreement strongly recommended but not required
Cannot issue stock
Harder to attract venture capital

Formation Steps

1

Choose a unique business name (check PA name availability)

2

File Certificate of Organization (DSCB:15-8821) with PA Dept of State ($125)

3

Draft an Operating Agreement

4

Obtain EIN from IRS

5

Register for PA taxes

6

Open business bank account

LLC Deep Dive: Pennsylvania PULLCA

Member-Managed vs. Manager-Managed

By default, PA LLCs are member-managed — every member has authority to bind the LLC. If you designate a manager-managed structure, only designated managers have binding authority. Specify this in your Operating Agreement and Certificate of Organization.

Operating Agreement

While PA does not legally require an operating agreement, operating without one is extremely risky. It defines profit sharing, voting rights, transfer restrictions, dissolution triggers, and manager authority. Courts will apply default PULLCA rules in any area your agreement is silent.

Tax Election Flexibility

PA LLCs can be taxed as a sole proprietorship (single-member), partnership (multi-member), S-Corp, or C-Corp. S-Corp election (IRS Form 2553) can save self-employment tax when profits exceed ~$40,000, but requires "reasonable compensation" to owner-employees. PA flat income tax is 3.07%.

Series LLC

Under PULLCA, Pennsylvania permits Series LLCs — a single LLC containing multiple "series," each with its own assets, liabilities, and members. Ideal for real estate investors holding multiple properties. Each series operates as a separate liability shield.

Governing law: 15 Pa.C.S. §§ 8811–8898

LLPCorporation