Business Entities Glossary
Legal documents use specific terms that carry real meaning in Pennsylvania law. This glossary defines the key terms you'll encounter when forming or running a business in PA.
Annual Report
A periodic filing required by the PA Department of State to keep a business entity in good standing. Pennsylvania corporations are required to file annual reports. As of recent PA legislative reforms, LLCs are not subject to an annual report filing requirement. Failure to file when required can result in administrative dissolution.
Articles of Incorporation
The foundational formation document for a Pennsylvania corporation, filed with the PA Department of State using a DSCB form. Establishes the corporation's legal existence, name, registered office, and authorized shares. Once accepted by the state, the corporation legally exists. Compare with Articles of Organization (for LLCs).
Articles of Organization
The foundational formation document for a Pennsylvania LLC, filed with the PA Department of State. Establishes the LLC's legal existence, name, registered office, and management structure. Once accepted, the LLC legally exists as a separate entity. Compare with Articles of Incorporation (for corporations).
Bylaws
The internal governance rules of a Pennsylvania corporation. Bylaws set out how the board of directors is elected, how meetings are called and conducted, officer roles and duties, and other operating procedures. They are not filed with the state but are required for corporations and are routinely requested by banks, investors, and courts.
Corporate Veil
The legal separation between a business entity (LLC or corporation) and its owners. The "veil" means that a creditor or court judgment against the business cannot automatically reach the owner's personal assets. The corporate veil is the whole point of forming an entity — and it can be lost. See Piercing the Corporate Veil.
Corporation
A for-profit legal entity created under Pennsylvania law, governed primarily by the PA Business Corporation Law of 1988 (15 Pa.C.S.). A corporation has shareholders (owners), a board of directors (governance), and officers (management). Corporations are subject to their own income tax at the federal level (C-corps) unless an S-corporation election is made. Corporations must follow formal procedures: bylaws, annual meetings, resolutions, and proper record-keeping.
Corporate Resolution
A formal written record of a decision made by a corporation's board of directors or by LLC members/managers. Banks require resolutions to open accounts, authorize signers, and approve loans. Major contracts often require them. Common examples: resolutions authorizing a bank account, a specific officer to execute a contract, or a borrowing transaction.
Director
A member of the board of directors of a corporation. Directors are elected by shareholders and are responsible for governing the corporation — setting strategy, overseeing officers, and making major decisions. Directors are not typically involved in day-to-day management (that's for officers). Corporations must have at least one director under PA law.
DSCB
Department of State, Commonwealth of Pennsylvania Business Corporation — the series of official forms used to file formation documents, amendments, and other state filings for Pennsylvania business entities. When you form a PA LLC or corporation, you file a DSCB form with the Bureau of Corporations and Charitable Organizations.
EIN (Employer Identification Number)
A federal tax identification number issued by the IRS, used to identify a business entity for tax purposes. Most LLCs (other than single-member LLCs treated as sole proprietors with no employees) and all corporations need an EIN. Required to open a business bank account and to hire employees. Apply directly through IRS.gov — there is no charge. Note: an EIN is a federal tax concept; RepYou412 does not assist with EIN applications.
Fictitious Name
A name under which a business operates that is different from its legal name — also called a "DBA" (doing business as) or trade name. In Pennsylvania, any business operating under a fictitious name must register it with the PA Department of State (54 Pa.C.S. §§ 301 et seq.). Failure to register can prevent you from enforcing contracts in PA courts.
Good Standing
A status indicating that a business entity has met all of its PA state filing requirements and is authorized to conduct business in Pennsylvania. The PA Department of State issues certificates of good standing (also called certificates of existence). Banks, lenders, landlords, and business partners routinely require them.
Limited Liability
The principle that the owners (members, shareholders) of a properly formed and maintained business entity are not personally responsible for the entity's debts and obligations beyond their investment. Limited liability is the central benefit of forming an LLC or corporation. It can be lost if the corporate veil is pierced.
LLC (Limited Liability Company)
A flexible Pennsylvania business entity that combines limited liability protection with pass-through taxation. Governed by the PA LLC Act (15 Pa.C.S.). Owned by members. Managed by members (member-managed) or by designated managers (manager-managed) as specified in the operating agreement. Pennsylvania LLCs do not currently require annual report filings with the state.
Manager
In an LLC, a manager is a person or entity designated to manage the LLC's operations when the LLC is manager-managed. A manager does not have to be a member (owner). Manager-managed LLCs are common when passive investors hold membership interests but active operators run the business. The manager's authority and duties are defined in the operating agreement.
Member
An owner of an LLC. Members hold membership interests in the LLC, which represent their ownership percentage and (usually) their share of profits and voting rights. The governance rights and economic rights of members are defined in the operating agreement. Compare with shareholder (used for corporations).
Officer
A person appointed by the board of directors of a corporation to manage day-to-day operations. Common officer titles: CEO, President, Secretary, Treasurer. Officers act on behalf of the corporation within the authority granted by the bylaws and board. LLCs may also use officer titles informally, but LLC governance is primarily governed by the operating agreement.
Operating Agreement
The internal governance document for a Pennsylvania LLC. Sets out ownership percentages, profit and loss allocations, voting rights, management structure, capital contribution requirements, procedures for adding or removing members, and what happens if the business dissolves or a member exits. Pennsylvania does not require an operating agreement, but having one is essential — especially for multi-member LLCs. Without one, PA's default rules apply.
PA Department of State
The Pennsylvania executive agency responsible for registering and maintaining records for all business entities in PA. Business entity formation, amendments, fictitious name registrations, certificates of good standing, and dissolutions are all processed through the Bureau of Corporations and Charitable Organizations within the PA Department of State.
Partnership
A business relationship between two or more people who share profits, losses, and management. A general partnership requires no formal state filing — it exists by operation of law when people go into business together. Each general partner has unlimited personal liability. A limited partnership (LP) requires a formal filing and has both general partners (unlimited liability, active management) and limited partners (limited liability, passive investment). Both benefit from a written partnership agreement.
Piercing the Corporate Veil
A legal doctrine by which a court disregards the separation between a business entity and its owner, holding the owner personally liable for business debts or judgments. Courts pierce the veil when the entity was not treated as genuinely separate — e.g., commingled funds, sham operations, no meaningful capitalization, or use of the entity to defraud creditors. The best protection is operating your business like a real business: separate accounts, proper records, and following your operating agreement or bylaws.
Registered Agent
A person or entity designated to receive official legal and government notices on behalf of a business entity, including service of process in a lawsuit. Every Pennsylvania business entity (LLC, corporation, LP) must maintain a registered agent with a physical Pennsylvania street address. The registered agent's name and address must be kept current with the PA Department of State. You may serve as your own registered agent if you have a PA street address and are available during business hours.
S-Corporation
Not a separate entity type — an S-corporation is a federal tax election made by a qualifying corporation (or sometimes an LLC). The election allows income to pass through to shareholders' personal tax returns, avoiding double taxation. S-corps have restrictions: no more than 100 shareholders, one class of stock, and shareholders must be U.S. citizens or permanent residents. The S-corp election is made with the IRS using Form 2553 — not a PA Department of State filing.
Shareholder
An owner of a corporation, holding shares (also called "stock") representing their ownership interest. Shareholders elect directors, vote on major corporate actions, and receive dividends. Compare with member (used for LLCs). The rights and relationships of shareholders in a closely held corporation are typically governed by a shareholder agreement.
Sole Proprietorship
The simplest business structure — a single individual operating a business without a separate legal entity. No formal state filing is required. The owner and the business are legally the same; there is no limited liability protection. Income is reported on the owner's personal tax return. If the business operates under a name other than the owner's legal name, a fictitious name registration is required in Pennsylvania.
Disclaimer: This glossary provides general legal information about Pennsylvania law and is not legal advice. Reading this page does not create an attorney-client relationship with Rob Cowburn, Esq. or Represent Yourself, LLC. Every legal situation is unique. If you have specific legal questions about your circumstances, contact an attorney for advice.
Attorney Advertising. Represent Yourself, LLC. 1207 Arrowood Dr, Pittsburgh, PA 15243.