Forming a business can be overwhelming. You have to navigate government regulations, select the appropriate business entity form, obtain licenses and insurance, and so much more. How-to books and legal websites make it appear simple, but there are many pitfalls for the inexperienced. Here is a brief guide to forming a new business in Pennsylvania.
How do I form a business?
Forming a business is not as formidable as it seems. You can form a new business entity in one day if you have all the necessary paperwork complete.
Here are the steps to forming and registering a business entity with the state of Pennsylvania.
- Create a business plan. No, jotting it down on a napkin is not a business plan. Without a plan (i.e. goal) you won’t know where you are going or how to get there.
- Determine whether there is a market for your service or product. Then, determine how you can find a place in that market.
- Select a unique business name that is not likely to be confused with another business.
- Select your choice of entity. You can set up as a sole proprietor (no legal business entity), a corporation, limited liability company, or partnership.
- File organizing documents with the Pennsylvania Department of State.
- Obtain a tax identification number from the IRS.
- Obtain any necessary government permits.
- Create governance documents. Depending upon which type of entity you selected, you may need bylaws, shareholder agreements, operating agreements, or partnership agreements.
- Complete the Pennsylvania Enterprise Registration (PA-100) to obtain certain business tax accounts.
These steps are merely the legal formalities to form a business entity. There are many other considerations to get your business open for customers. Here at Concerto Law, I guide you through the business, marketing, and tax considerations before you open your door to the public.
For more information specific to starting a new business in Pennsylvania check out this link: https://www.pa.gov/guides/starting-a-business/
Quick tips for success
After you have completed the first steps, you have important decisions to make about the daily operations of your business. Of course, they will vary depending upon the type of business, but most businesses face the same basic questions.
- Identify your business location (ex. home office, a building you own, a building you rent).
- Negotiate leases if you rent space.
- Review zoning, parking, signage, and building code ordinances. You don’t want to set up shop and then learn you violated Code.
- Contracts with your workers: You might need employment agreements or independent contractor agreements.
- Identify vendors for inventory, equipment, products, utilities, and services your business needs. Do you need formal contracts or purchase agreements? Are you leasing equipment? Review these with your attorney to avoid unexpected surprises and risks.
- Purchase insurance. Yes, insurance is a contract in which you pay someone to shift the economics of your risks.
- Obtain financing. You can’t operate for long without cash.
- Open a bank account for your business. Don’t mingle your business and personal accounts.
- Purchase accounting software to keep track of your income, expenses, accounts receivables, and accounts payable.
- Check out this link for ideas for financing your business idea, especially if you are veteran of the Armed Forces. Even if you are not, you will still find valuable gems here.
- Post required labor law and safety posters
- Create job descriptions. Don’t be tempted to make it up as you go. Your relationship with your employees is more likely to be successful if you employee knows on day 1 what the job expectations are.
- Know the labor laws, especially the ones about wages and the ones about discrimination.
- Require all new hires complete the I-9 Employment Eligibility Verification Form. You don’t want to pay fines for failing to do this.
- Develop employee handbooks and policy & procedure manuals
- Learn about the 8 Elements of a Great Employee Handbook.
Protect Your Brand
- Before you spend money on business cards, website domains, and signs, have Concerto Law perform a trademark search. It is costly to rebrand. You don’t want to start your business and later learn you cannot use the name.
- Read Why Should I Register a Trademark if you need more convincing.
Start your business on solid footing
Concerto Law does more than complete the legal paperwork. We provide practical advice so you start off on solid footing.
Don’t be distracted by and waste time with scouring the internet for the answers. Concerto Law breaks through the noise and tells you just what you need to know.
Schedule a consultation by clicking on the link at the very top of this page. We look forward to working with you!