Starting a company is exciting, but the choices you make in the first few weeks affect your taxes, your liability, and your relationship with co-owners for years. As a business formation attorney, Kostrub Law Firm, PLLC helps new owners in Washington and Allegheny counties pick the right entity, file the right papers, and write the agreements that keep partners on the same page. Business formation is one part of our small business legal services.
If you want a do-it-yourself checklist, our blog post on the steps to set up an LLC in Pennsylvania walks through the filing basics. This page explains what a lawyer adds.
What happens after you call: we ask about your business idea, owners, and timeline, then set a meeting to map out the right structure.
What business formation is
Business formation means creating a legal entity that is separate from you. The common choices in Pennsylvania are:
- Sole proprietorship. No filing needed, but you are personally liable for business debts.
- General partnership. Two or more people in business together. Each partner can be personally liable for the partnership’s debts.
- Limited liability company (LLC). Owners, called members, are generally shielded from company debts. Taxes can be flexible.
- Corporation. Owners hold shares and elect a board. A corporation may be taxed as a C corporation or elect S corporation status with the IRS.
The right choice depends on how many owners you have, how you plan to raise money, and how you want profits taxed. We often coordinate with your accountant on the tax side.
Pennsylvania law that matters
- Associations Code, 15 Pa.C.S.. This title governs Pennsylvania entities. LLCs fall under Chapter 88. Business corporations fall under the Business Corporation Law, Chapters 11 through 19.
- Certificate of organization. An LLC is formed by filing a certificate of organization with the Pennsylvania Department of State. A corporation files articles of incorporation.
- Operating agreement. Pennsylvania does not require an LLC to have a written operating agreement. Without one, default rules in Chapter 88 control things like voting, profit splits, and what happens when a member leaves. Those defaults may not fit your deal.
- Fictitious names, 54 Pa.C.S. Ch. 3. If you do business under a name other than your legal entity name, you may need to register it.
- Annual reports. Pennsylvania now requires most LLCs and corporations to file an annual report with the Department of State.
- EIN. Most entities need an Employer Identification Number, a federal tax ID issued by the IRS. You need it to open a business bank account and hire employees.
- Local taxes and registrations. Some Pennsylvania municipalities charge a local business privilege or mercantile tax and require local registration. You may also need a Pennsylvania sales tax license if you sell taxable goods.
Common situations in Washington and Allegheny counties
- Side business going full time. A Canonsburg welder who has worked as a sole proprietor wants an LLC before taking on a large energy-industry job.
- Partners opening a restaurant. Two friends in Bridgeville need an operating agreement that covers what happens if one wants out.
- Real estate holding companies. Owners of rental property in Bethel Park or Upper St. Clair set up an LLC to hold title. Deed and lender issues need attention.
- Family companies. A South Fayette family business converts from a partnership to an LLC as the next generation joins. Succession terms should match each owner’s will or trust.
What happens if you don’t act
- Without an entity, your personal savings and home may be exposed to business claims.
- Without an operating agreement, Pennsylvania default rules decide disputes between owners, and those rules may surprise you.
- Mixing personal and business money can weaken liability protection in court.
- Missing annual reports can cost your company its good standing.
- A co-owner who leaves with no buyout terms can stall the company or force a lawsuit.
Starting a company in Washington or Allegheny County? Call (304) 982-1586 · Request a consultation · After you call, we gather the basics and schedule a planning meeting.
How we handle it, step by step
- Plan the structure. We discuss owners, funding, liability, and tax goals, and help you choose an entity.
- Check the name. We confirm your desired name is available with the Department of State.
- File formation papers. We prepare and file the certificate of organization or articles of incorporation.
- Draft the operating agreement or bylaws. As your operating agreement attorney, we write terms for voting, profit splits, capital contributions, buyouts, and deadlock.
- Get the EIN and set up records. We help you obtain an EIN and set up a basic company record book.
- Cover the next steps. We list local registrations, tax accounts, and contract templates you may need, including first-hire paperwork for new employers and customer and vendor agreements.
What to bring to your first meeting
- Names and addresses of all owners
- Your proposed business name and any backup names
- A short description of what the business will do
- How much each owner will contribute (money, equipment, or work)
- Any existing contracts, leases, or loan papers
- Your accountant’s name and contact details, if you have one
Fees
We explain fees before any work begins. State filing fees are separate from legal fees and are paid to the Commonwealth.
Who handles this
Business formation is handled by Daniel B. Kostrub and Heather N. Kostrub. The firm has served the region since 2006.
- Daniel B. Kostrub concentrates on energy law and oil and gas transactions. Read more about attorney Dan Kostrub.
- Heather N. Kostrub focuses on estate planning and family and business succession. Read more about attorney Heather Kostrub.
Frequently asked questions
Do I need a lawyer to form an LLC in Pennsylvania?
No law requires one. You can file a certificate of organization yourself. A lawyer helps with the parts that cause later trouble: choosing the right entity, writing an operating agreement, planning buyouts, and handling tax elections with your accountant. Owners with partners or valuable assets often find that help worthwhile.
What is the difference between an LLC and an S corporation?
An LLC is a type of legal entity formed under state law. An S corporation is a federal tax status. An LLC or a corporation can elect S corporation tax treatment with the IRS if it qualifies. Talk with your accountant about whether that election makes sense for your income.
Does a Pennsylvania LLC need an operating agreement?
Pennsylvania does not require a written operating agreement, but it is strongly advisable. Without one, state default rules control voting, profit sharing, and member exits. Banks and lenders may also ask to see one. A single-member LLC benefits too, because it helps show the company is separate from you.
How long does LLC formation in Pennsylvania take?
Processing times at the Pennsylvania Department of State vary. Online filings are often processed faster than paper filings. Drafting a good operating agreement can take a little longer, especially with several owners. Plan ahead if you need the entity in place before signing a lease or contract.
Can I put my rental property into an LLC?
Often, yes, but there are steps to plan. Transferring a deed can trigger realty transfer tax unless an exclusion applies, and your mortgage lender may have rules about transfers. Your insurance policy should also be updated. Talk to a lawyer before signing a new deed.
What is a buy-sell agreement?
A buy-sell agreement sets the rules for what happens to an owner’s share if they die, retire, divorce, or want out. It can set a price formula and a payment schedule. It is often built into the operating agreement or bylaws and should match each owner’s estate plan.
Start your company on solid ground
Call (304) 982-1586 or reserve a planning meeting. After you call, we gather the basics about your owners and goals, then plan your formation filings and agreements with you. Service area: Pittsburgh, Cecil Township, and Washington and Allegheny counties. Hours: Monday–Friday, 7:00 a.m.–7:00 p.m..
This page is general information, not legal advice. Reading it does not create an attorney-client relationship.