To function legally at the federal, state, and municipal levels, a small business in Pennsylvania must get licenses and permits. Certain businesses are not necessary to obtain a business license, while others must have all applicable permissions and licenses linked to the functioning of the business. Here’s a look at what to expect when researching how to get a small business license in PA and the cost of a retail license.
An LLC in PA helps you obtain licenses and permits from numerous licensing agencies, and the LLC itself is a form of business entity. You can indeed obtain permits and licenses without an LLC, but you will discover that incorporating a PA LLC provides only a limited degree of security to your business.
What Are Business Licenses and Permits?
Business licenses and permits are legal documents that allow you to conduct business or provide a service without fear of government sanctions. In turn, the government provides you with the required license or permit because you’ve shown that you can follow the regulations represented by the license or permit.
In general, the state of Pennsylvania does not oversee business licenses and permits. Instead, these issues are managed at the local level. There are certain exceptions, such as the Pennsylvania Department of Environmental Protection, but you’ll need to check with your local city hall for the licenses and permits your LLC will require.
Business licenses
The type of business you run will determine the type of license you need to operate in PA. Because they are not open to the public, some businesses, such as home-based service businesses, may not require a license at all. In contrast, to sell to the general public in PA, a retail business selling tangible items from a physical location must have a local business license as well as a state sales tax license. Businesses that provide food and beverages must have the appropriate licenses to serve these things to the public.
On the PA Business One-Stop Shop website, you can learn more about the needs your municipality has for a license and permit.
Permits
Permits differ from licenses in that they are meant for a specific purpose, such as the building of a home or the installation of a mechanical system. When applying for a permit, you may be needed to provide plans and intent for the work you’re performing, as well as proof that you can follow the local codes covered by the permit.
Does Pennsylvania (PA) Require a Business License?
Before providing services or conducting business activities, Pennsylvania requires firms to get the necessary licenses and permissions. Many firms will need to submit a PA Business Entity Registration with the Department of Revenue, which creates an account that permits the small business to establish other accounts and licenses.
A sales tax license is the most common license required. A business that sells taxable goods and services, including digital products sold online, must have this license. A sales tax license enables a company to collect and remit the mandatory 6% sales tax.
Additional licenses, such as professional licenses controlled by the Pennsylvania Department of State, may be necessary. Some service experts, such as:
- Barbers
- Cosmetologists
- Engineers
- Medical professionals
- Pharmacists
- Real estate agents
- Social workers
If your business operates in a regulated sector, such as the sale of food or alcoholic beverages, you may additionally require licensing.
When Do You Need a Business License in Pennsylvania?
If your industry, profession, or location requires it, you must obtain a business license before beginning operations. This means that if you don’t have a legitimate license, you can’t even sell your products or services.
Filing a form PA-100 with the Department of Revenue completes the PA Business Entity Registration. This form serves as the central registration for a variety of state tax accounts, including:
- Employer withholding tax
- Public transportation assistance tax and fees
- Sales, use, and hotel occupancy tax
- Tobacco products license
- Unemployment compensation
- Vehicle rental tax
- Wholesaler certificate
A sales tax license is required for all firms that sell taxable goods or provide taxable services. The following services are subject to sales tax:
- Secretarial services
- Lawn care services
- Pest control
- Building maintenance services
- Self-storage services
- Catering
- Premium cable
it may take up to ten business days to acquire the licensing approval.
How to Get a Business License PA
You can receive a small business license in PA by applying to the appropriate licensing or regulatory agency. Your business’ location and the nature of its operations will determine which agency you should apply to.
Basic information such as your LLC name, EIN, business address, and contact information are often required on business license applications. A questionnaire concerning your business activities is also included in many of them.
There are three major licensing jurisdictions:
- State licensing
- Local licensing, such as a county, city, township, etc.
- Federal licensing
#1. State of Pennsylvania Business Licensing
The sales tax license, often known as a seller’s permit, is Pennsylvania’s only state-level permit or license. If you do any of the following, you are required to obtain a sales tax license:
- Have a Pennsylvania business
- Plan to sell or lease tangible personal items and some services that, if sold at retail, would normally be subject to sales tax.
Get a sales tax license by going to the Department of Revenue.
Furthermore, businesses in particular professions must have specific state licenses or permits. Further information about different types of licenses and how to register for them can be found on the Pennsylvania Licensing System website.
#2. Local Pennsylvania Business Licensing
Depending on your business activity or location, Pennsylvania may require additional licenses or permits from your local government. Anybody conducting business in the City of Philadelphia, for example, is required to acquire a Commercial Activity License, and certain businesses require extra licenses and permissions.
#3. Federal Business Licenses and Permits
By submitting an application to the appropriate licensing and regulatory agency for your business in PA, you can obtain a business license. Business license requirements are determined by the activity and location of your business (zoning requirements).
If your business engages in federally controlled activities, you must apply for the necessary business license or permission.
Steps for Obtaining a Business License in PA
The Business Entity Registration Form is the first step in getting your company licensed in Pennsylvania. The online portal is the best approach to processing this form. Here are the important actions you must take:
- Go to the Department of Revenue’s website.
- Choose “Register.”
- Complete the online registration by following the onscreen steps.
- Await registration approval.
Business License PA Cost
There are no fees in Pennsylvania because the state does not offer a general business license. A state-level occupational license or a municipal-level license or permit may be required for your business to function, nevertheless. Depending on where you do business and what industry you are in, the filing fee for these licenses will vary. To be honest, we can’t forecast how much your particular PA business license will cost.
For example, licenses granted by a county with a large population are typically more expensive than licenses issued by less populated, rural counties. Furthermore, licenses for regulated businesses, such as childcare facilities, are typically more expensive than licenses for general businesses.
A license or permit may not be required at all for your LLC, though. As a result, the cost of your PA business license may be $0.
What Can Businesses Expect in Pennsylvania?
Pennsylvania is a huge and diversified state with a wide range in the cost of living and conducting business. We spoke with entrepreneurs and small business owners from around the Keystone State to learn how the present economic scenario affects and defines their future expectations.
Here are four facts regarding conducting business in Pennsylvania that you should know:
#1. Pennsylvania’s closeness to potential markets is advantageous to business.
Philadelphia, a sizable city with a low cost of living, is located in Pennsylvania. Furthermore, it is in the same geographical neighborhood as some of the largest cities on the East Coast. Its proximity facilitates the expansion of professional networks, access to other significant markets, and the pitching of business ideas to possible investors.
#2. Pennsylvania’s tax rates are manageable.
Pennsylvania’s taxation situation is a mixed bag. The personal income tax rate for pass-through entities, such as LLCs, is quite low at 3.07%. Pennsylvania is the 12th least-taxed state in the union, with an average of $1,416 in state and local income tax receipts per person. Sales taxes are around average at 6%, and property taxes are quite cheap at an average of 1.49%.
#3. The labor market in Pennsylvania is competitive.
While Pennsylvania’s unemployment rate is much higher than the national average, the labor market is still extremely competitive, posing a problem for small businesses. This competitive job market is exacerbated by Philadelphia’s booming IT community.
#4. Pennsylvania’s business climate is promising.
The majority of Pennsylvania entrepreneurs we spoke with were optimistic about future business growth. Small businesses in Pennsylvania anticipate success shortly, fueled by opportunities and confidence in their capacity to overcome obstacles.
Do You Need Business Insurance in Pennsylvania?
Businesses in Pennsylvania are legally required to obtain workers’ compensation insurance when it comes to small business insurance. Also, any company that employs company automobiles must receive commercial automobile service. You may also be needed to purchase general liability insurance depending on local legislation and the nature of your business.
How Often Do You File Sales Tax Returns in Pennsylvania?
In Pennsylvania, you must file returns based on the sales tax you collect. You may have to pay taxes monthly, semiannually, quarterly, or annually. The 20th of the month after the reporting period is always the deadline for filing sales tax reports. Quarterly sales tax filers, for example, will be expected to remit Q1 sales taxes by April 20.
You can file sales tax returns with the state in one of three ways: online with the Pennsylvania Department of Revenue, by phone at (800) 748-8299, or by mail. Pennsylvania also permits small businesses to keep 1% of collected sales tax income as reimbursement for compliance labor.
How much does a PA business license cost?
When you register your business with the Department of Revenue, there is no cost to you. A sales tax license will not be levied on you.
Is a business license required in PA?
Yes. Before you may start doing business in Pennsylvania, you must obtain a business license according to the law. License requirements vary depending on the goods or services offered and the structure of the firm.
What is considered a business license in PA?
A business license is required to lawfully conduct business in PA. The state requires enterprises to have the necessary licenses.
Does Pa require a business license for an LLC?
Yes. To operate in Pennsylvania, firms must register their business structure with the Pennsylvania Department of State, such as an LLC, partnership, corporation, or other structure.
What is a PA type of business?
A professional association (PA) is a form of corporation made up of people who work in a licensed, certified, or registered profession.
What does business PA mean?
The term “P.A.” stands for “Professional Association,” which is a business entity engaged in a primary business that offers a professional service.
Conclusion
Consult with an attorney or Small Business Administration (SBA) business consultant as you begin to analyze your Pennsylvania business license needs to ensure compliance with all Commonwealth and local rules and regulations. Most businesses will register with the Department of Revenue and then fulfill the licensing requirements.
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