In the United States, state rather than federal law determines how corporations are created. To incorporate in Pennsylvania, therefore, you must comply with Pennsylvania state law. However, federal law determines how your new corporation will be treated for federal tax purposes.
Naming Your Corporation
Pennsylvania law requires that the name of a business corporation include the designation “incorporated,” “corporation,” “limited” or “company.” Because more than 2 million companies are registered in Pennsylvania, it's possible that your chosen name -- or one confusingly similar to that name -- is already be in use. The Department of State maintains a database of corporate names that are already in use and of names that have been reserved for future use. Once you have settled on an available name, you can reserve it for 120 days by written request to the Department of State and payment of a fee.
Articles of Incorporation
The document that creates, defines and organizes your new corporation is called its articles of incorporation. The articles must state the name of the corporation, declare the aggregate number of shares authorized for issuance by the corporation, specify the effective date of creation of the corporation, identify its initial registered office and identify the individuals who are forming the corporation. The Department of State provides model articles on its website, or a third-party legal document provider can assist you.
Filing the Articles of Incorporation
Your printed, signed articles must be filed with the Department of State and all appropriate filing fees paid. You must also file a form called a docketing statement. Again, these forms are available from the Department of State or from a third-party legal document provider. Once you've completed the paperwork, the state will issue a charter of incorporation, which serves as evidence of the existence of your corporation.
EIN and Corporate Tax Structure
Your newly formed corporation will require a number to identify it to the IRS for tax purposes, called an employer ID number, or EIN. You can apply online for an EIN at the IRS website. You will also need to select the corporate tax structure that best serves your particular circumstances: a traditional C corporation or an S corporation. C corporations are taxed, whereas S or "pass-through” corporations pass profits and losses through to the shareholders, who in turn must report the income on their personal tax returns. The IRS’s “Small Business; Federal Tax Responsibilities” publication will assist in determining which tax structure is best for you.
- Corporations and Other Business Organizations; Melvin Aron Eisenberg
- Commonwealth of Pennsylvania: Pennsylvania Open for Business
- Pennsylvania Department of State: Corporation Bureau
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