Home » How to Start a Small Business » How to Start a Business in Pennsylvania in 11 Easy Steps
Pennsylvania was the keystone for our nation’s revolutionary democracy, supporting the country in times of change.
And it could do the same for your business.
Look at the statistics:
What’s impressive, though, is Pennsylvania’s small business funding of $27.7 million, doubling the national average!
Add the many tax incentives and a low flat income tax rate of 3.07%, and it’s easy to see why starting a business in Pennsylvania is a brilliant choice for entrepreneurs.
You don’t choose a business idea like Storage Wars, invest, and hope for the best.
There’s too much time and money at stake. You need a dead cert. And that’s why you must develop a business idea that’s viable and sustainable.
Many successful business ideas are born from necessity, while others derive from more traditional ways, like:
Pennsylvania has many business opportunities because of its four seasons, national parks, lakes, and ski resorts.
Entrepreneurs in the recreation business can serve one demographic during the summer and another in winter.
Your idea could be a restaurant, microbrewery, Boutique hotel, B&B, campground, or one that serves them. There’s an abundance of ideas for your business in Pennsylvania, including:
Once you have an idea, you must validate it.
Validation means confirming a large enough market for your business idea, assessing the competition, identifying your target audience, and determining what people will pay for your service or products.
And that’s where your business plan comes into play.
A business plan helps turn your idea into a reality by plotting your route from start-up to success.
It’s what validates your idea, where you set your goals, create completion timelines, and convince investors to provide the funding.
The three key parts of a business plan confirm the market need for your idea, how much money you’ll require, and how you’ll sell to your target audience.
Before starting your business, conducting thorough market research is crucial for identifying your potential customers, understanding their needs, and analyzing your competition.
By understanding your market, you ensure your business idea caters to your customer’s demands and stands out from your rivals.
Key questions to ask during your market research:
Your market research determines how much money you’ll need and where you’ll spend it.
Your financial plan contains the expenses involved in launching your business and ongoing costs like rent, utilities, and supplies to ensure you have sufficient funds until it becomes profitable.
For funding, a financial plan must include a sales forecast and a budget to estimate your expected revenue, expenses, and projected profit.
Your financial plan should include the following:
Here’s where your market research and competitor analysis determine how people shop for your products or services and discover your competition’s marketing strategies.
Once you have that information, you can create a marketing strategy that promotes your brand where your target audience sees it, driving sales.
Pennsylvania State has convenient access to New York City, Baltimore, Washington, D.C., and Cleveland, so it’s perfect for businesses that work out of state.
But small businesses relying on local foot traffic, like food and retail, need a location that suits their target audience with convenient public transport, road access, and parking.
Some Keystone State locations are more suited to different business ideas, for example:
For help finding the perfect location for your business, visit the Commonwealth of Pennsylvania website.
Municipal governments and local authorities issue permits that allow specific businesses to operate in certain locations.
To see what applies to your new business, check the PA Business One-Stop Shop website and the search tool relative to all municipalities and towns.
What’s the nature of your business?
Will it be online, a physical store, or a combination?
You can start with one option and expand later, so consider that a possibility.
If you’re launching an online business, here are the essential elements you’ll need:
Brick-and-mortar store owners should also create a Google My Business listing to promote their business, display reviews, and show their location.
Your business name must project the right impression to get the right emotional response from your target audience.
The best business names are simple, memorable, leave a lasting impression, and are easy to find online.
Ideally, your business name will match your website domain and social media accounts to establish a powerful online presence.
To come up with a business name, you must also consider the following:
The Keystone State’s rules to register a business name are:
A DBA (Doing Business As), also known as a fictitious name, allows sole proprietors and partnerships to trade using a more professional-sounding business name.
LLCs can also use a DBA to run multiple businesses under one structure or use a catchy brand name relative to their niche.
Before you start your business in Pennsylvania, you must choose a business structure.
Choosing the right business structure is essential because it determines your start-up and running costs, tax obligations, and level of liability protection.
Sole proprietorship:
A sole proprietorship is a non-separate legal entity; you and your business are one, there’s no liability protection, and your personal assets are at risk.
General Partnership:
Like a sole proprietorship, but with 2 or more people.
Limited Liability Partnership (LLP):
An LLP is a separate business structure that protects partners from personal liability regarding the company’s debts or legal matters.
Limited Liability Company (LLC):
LLCs come in 8 variations, combining a corporation’s liability protection with a partnership’s simplicity.
S Corporation:
An S corporation provides limited liability protection, allows pass-through taxation, and enables shareholders to sell stocks, making it an appealing choice for entrepreneurs seeking to raise capital.
You can find LLC, limited partnership, corporation, and fictitious name registration forms on the Pennsylvania Department of State Registration Forms website.
Sole proprietors, LLCs, and corporations all have things in common. To stay in business, they need efficient bookkeeping and credit lines. And, of course, they must pay taxes.
Business bank accounts, credit cards, certified accountants, and accountancy software are how they achieve it.
Legal entities like LLCs, LPs, and S corporations need separate business accounts to avoid losing liability protection.
Sole proprietors and general partnerships can use them to look more professional to suppliers and clients.
And everyone can use one to simplify their bookkeeping by separating personal and business expenses, which helps reduce accountancy fees come tax time.
Some banks only give business checking accounts to businesses with an EIN, and others require a business license.
Credit cards help manage a business’s cash flow by separating business and personal expenses. They can also improve your credit history, which can help you get lower-interest loans and provide a credit line when you need it.
Most businesses need an accountant to help with federal, state, and city taxes; payroll taxes; quarterly estimated taxes; and annual tax returns.
A Pennsylvanian accountant can help you comply with specific state tax requirements, especially when first starting your business.
Additionally, SMBs can also reduce costs by using accounting software and apps that integrate with your business accounts, enabling you to control your daily business bookkeeping needs.
A U.S. Bank study shows that 82% of businesses fail because of a lack of cash flow and 80.6% fail by year five.
You don’t need a math degree to see the connection!
But only some start-ups can self-fund until they earn a profit. Fortunately, several other options exist
The SBA helps small businesses by backing financial institutions to provide funding with long repayment terms and lower interest rates than standard commercial bank loans.
Pennsylvania SBA loans include:
For further information regarding SBA loans, visit the SBA.gov website.
Credit unions are often a financial lifeline for small businesses offering low-interest variable and fixed business loans, credit cards, and commercial mortgages.
Check out the Pennsylvania Department of Banking and Securities for further information and this list of Keystone State credit unions for one in your area.
Besides loans, other funding options include angel investors, venture capitalists, equity crowdfunding, and government grants.
Here are some key resources to consider:
For more information on Pennsylvania small business grants, visit USGrants or SBDC Pennsylvania, which helps entrepreneurs start and grow their businesses.
Angel and venture capital (VC) investors provide alternative funding options for small businesses to secure financial support for a percentage of ownership.
Ramp.com provides a free list of Pennsylvania VCs and angel investors to help you fundraise.
The insurance policies you need depend on your business type, if you’re an employer and Pennsylvania’s insurance requirements.
Small businesses often need the following insurance coverage:
Pennsylvania requires businesses with employees to have workers’ comp insurance to cover loss of earnings and medical expenses due to work-related injuries.
Employers must also contribute to the state’s Unemployment Compensation Program, which benefits-eligible workers who become unemployed through no fault of their own.
For further information on Keystone State insurance requirements, visit the Pennsylvania Insurance Department.
Illinois doesn’t issue a state business license. However, municipalities may require a local license or permit for your business to operate.
The only Pennsylvania state license is a seller’s permit, also called a tax license.
Visit PA One Stop Shop to see which permits or licenses your new business might need.
Business owners pay self-employment and income tax to the IRS. And employers must withhold social security and Medicare taxes, federal income, and federal unemployment Tax.
Visit the IRS website for more information on federal tax.
Many Pennsylvania business owners must also pay state and local taxes.
For example:
Scroll through the PA One Stop Shop to learn more about Pennsylvania state business taxes.
The Keystone State has 67 counties, each with specific regulations. However, one rule applies to all Pennsylvania countries: LLCs have no franchise tax.
Contact your local tax collector or the Philadelphia Dept of Revenue for more information on Pennsylvania-specific regulations.
Building a strong team is essential for any business, but when hiring, you must comply with the legal requirements.
Such as:
Surrounding yourself with the right people is how you grow your business. Hiring the right employees is essential as they’ll run your daily operations.
But many small businesses also need outside help; fortunately, Pennsylvania provides it.
Before you hire employees, familiarize yourself with the state’s payroll regulations.
Here are key aspects to consider:
Once you have your team, consider using a payroll service to track working hours and issue paychecks to help simplify your tax compliance.
Most start-ups lack the resources for full-time employees in every role, and managing everything alone is impractical.
Fortunately, contractors offer a solution.
Hiring independent contractors, like an accountant under a retainer, allows your business to delegate tasks while avoiding legal obligations such as payroll taxes and employee insurance.
Correctly categorizing workers as either employees or independent contractors is vital to prevent misclassification problems, which can lead to hefty fines.
Pennsylvania uses the “ABC” test, presuming workers to be employees unless they satisfy the following conditions:
Pro tip:
When hiring contractors, have a written agreement outlining the working relationship, work schedule, payment terms, and other relevant details.
To grow your business in Pennsylvania, you must build a brand your target audience resonates with and then create a marketing strategy that puts it where your target audience sees it.
Here are 6 proven ways to do it:
In the marketing world, mailing lists and newsletters are how you engage customers to subscribe and receive emails from your business.
Over time, these subscribers become part of a trusted community familiar with and loyal to your brand.
To entice more subscribers:
Special offers play a crucial role in enticing potential customers to overcome hesitation and purchase by offering them exclusive opportunities, whether saving money or receiving additional benefits.
Strategies you can use:
Collaborating with other businesses and engaging in cross-promotion can expand your reach and let you connect with a wider audience.
How to find potential collaborators:
Word-of-mouth (WOM) marketing is a powerful strategy that leverages satisfied customers to promote your business through positive experiences.
How to get word-of-mouth marketing:
Positive customer reviews are how you create credibility, and research shows as few as 10 can influence people’s trust in your brand.
It’s important to respond to unfavorable reviews, demonstrating your dedication to customer satisfaction and transforming a negative experience into a long-term customer relationship.
A powerful long-term marketing strategy involves offering valuable content for free to your target audience, such as informative podcasts, captivating images, engaging blogs, and instructional videos.
This approach aims to build trust with your ideal clients before directing them to your sales platforms.
To find the right content strategy:
Now you know how to start a business in Pennsylvania. Next, tell the world you’re open.
Your launch event is a one-time opportunity to leave a lasting impression on your target audience and generate excitement around your brand.
Tips for planning a successful launch event:
Landing your first sale confirms your business resonates with your target audience, and they want what you sell.
Remember to create introductory offers to entice potential customers to purchase. And enable them to leave a glowing review!
You have a rare opportunity when you start a business in Pennsylvania. The Keystone State wants your business to thrive and provides support on many levels.
Use our steps to guide your journey and contact the agencies in this post because as the African proverb says, “We go fast alone but far together.”
The business license fee in Pennsylvania varies depending on the type of license and local requirements.
Since Pennsylvania doesn’t issue a state-level business license, costs vary by individual municipalities and counties.
Contact the regional government offices or visit their websites to determine the price.
To get a business license in Pennsylvania, you must provide a business name, address, contact information, and, in certain situations, a federal employer identification number (EIN).
Forming an LLC in Pennsylvania costs $125.
There’s no cost for a seller’s permit in PA.
Pennsylvania ranks fourth on the Forbes “Best States to Start a Business” list because of its abundant resources and funding opportunities for entrepreneurs.
No, Pennsylvania doesn’t require a state-level “general” business license for sole proprietors.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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