Pennsylvania recently overhauled how it tracks businesses, replacing a filing you only had to think about once a decade with one you now file every year. The good news is it's cheap. Here's what it takes to start a business in Pennsylvania in 2026.
1. Which business structure fits you?
Before you file anything, it helps to know what you're actually choosing between.
- Sole proprietorship. No filing required to start, and you and the business are legally the same entity. Simple, but you're personally liable for whatever the business owes.
- Partnership. Two or more people running a business together, with the same liability exposure as a sole proprietorship, just split across partners.
- LLC. The most common structure for small businesses in Pennsylvania. It separates your personal assets from the business's debts and lawsuits.
- Corporation, either S-corp or C-corp. More paperwork and more formality, usually worth it once you're bringing on investors or multiple shareholders.
For a deeper comparison, see our guide on choosing a business structure.
LLCs and corporations register with the Pennsylvania Department of State's Bureau of Corporations and Charitable Organizations, the agency that handles business filings statewide. Sole proprietorships and general partnerships don't register there.
2. Register your business
Forming an LLC
You form an LLC in Pennsylvania by filing a Certificate of Organization with the Department of State. The filing fee is $125, and online filings through the Business One-Stop Hub typically process in about a day.
Every LLC needs a registered office, Pennsylvania's term for a registered agent, with a physical in-state address. You can use your own address if you live in the state, or hire a commercial registered office provider.
Pennsylvania doesn't require an operating agreement by law, but write one anyway, especially with more than one member, since it's what governs how decisions and profits get split.
Sole proprietorships and DBAs
Sole proprietorships don't file with the Department of State. If you're operating under a fictitious name, you'll register it with the state through a Fictitious Name registration, which in Pennsylvania is a state-level filing rather than a county one.
3. Get an EIN
An Employer Identification Number is free straight from the IRS and takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even if you're a single-member LLC with no employees.
4. Check licenses and permits
Pennsylvania doesn't have one general statewide business license either. What you need depends on your industry and city: professional licensing for regulated fields, a local business privilege license in some municipalities, health permits for food businesses, and sales tax registration with the Department of Revenue if you sell taxable goods. Our guides on professional licensing by industry and zoning laws for home businesses cover more of this.
5. Understand Pennsylvania taxes
Pennsylvania has a flat personal income tax rate of 3.07%, one of the lowest flat rates in the country, so your rate doesn't change as your income grows. If your LLC elects corporate tax treatment, the corporate net income tax rate is 7.49% for 2026, on a scheduled phase-down toward 4.99% by 2031.
Sales tax is a flat 6% across nearly the entire state, with two exceptions: Philadelphia adds 2% for a combined 8%, and Allegheny County (Pittsburgh) adds 1% for a combined 7%. Every other county stays at the flat 6%.
6. Stay compliant
Starting in 2025, Pennsylvania now requires every LLC to file an annual report with the Department of State by September 30 each year, for $7. This replaced the old decennial report, which only had to be filed once every ten years. There's no monetary late fee yet for 2025 or 2026 reports, but starting with reports due in 2027, a missed filing can lead to administrative dissolution six months after the deadline. Reinstatement runs $35 to $40 plus $15 per missed report, so it's worth building the habit now.
Pennsylvania business costs at a glance
| Item | Cost |
|---|---|
| Certificate of Organization (LLC) | $125 |
| Annual Report (every year, due Sept 30) | $7 |
| Registered office service (optional) | $50 to $125/year |
| EIN | Free (IRS) |
| State income tax | 3.07% flat |
| State sales tax | 6% (8% in Philadelphia, 7% in Allegheny County) |
Frequently asked questions
What changed about Pennsylvania's annual filing in 2025?
Pennsylvania replaced its old decennial report (filed once every ten years) with an annual report, now due every year by September 30.
How much does Pennsylvania's new annual report cost?
Just $7.
How much does it cost to form an LLC in Pennsylvania?
$125 for a Certificate of Organization, with online filings typically processing in about a day.
What's the personal income tax rate in Pennsylvania?
A flat 3.07%, one of the lowest flat rates in the country.
Does sales tax vary by city in Pennsylvania?
Mostly no, it's a flat 6% statewide, except Philadelphia (8% combined) and Allegheny County/Pittsburgh (7% combined).
Fees and rates above come from the Pennsylvania Department of State and Department of Revenue as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Pennsylvania-licensed attorney or CPA about your specific situation.