Philadelphia, PA., is a bustling city with plenty of businesses. However, not all those businesses are structured the same way, and one of those structures is a Limited Liability Partnership (LLP). Many businesses find the tax flexibility and other benefits of an LLP appealing. But the question is, can any business form an LLP in Philadelphia? In this blog, we’ll explore the process for forming an LLP in Philly and what you need to consider before doing so.
The Data
The Pennsylvania Department of State governs business structures in the state of Pennsylvania. This includes LLPs. To form an LLP in Philadelphia, you’ll need to file a Certificate of Registration. You can complete this process online through our website. The filing process will require payment for filing fees, and in some cases, a name reservation fee.
Before you file, you need to ensure that your business is eligible. An LLP is a partnership, meaning it’s a business entity type that involves two or more people. So, if you’re running a sole proprietorship, an LLP is not an option for you. Additionally, certain professional services, such as accountancy, legal or architectural services, require you to register as a reserve or regular professional corporation or a professional limited liability company.
The Taxes
Once you’ve established that your business is eligible and have provided the necessary documentation, your LLP will need to meet the requirements of Philadelphia’s Business Privilege Tax. This tax has two parts, a gross receipts tax, which occurs on business transactions, and a net-income tax on profits after depreciation and employee compensation. However, the city will only tax a certain percentage of income based on how many members your partnership has, so an LLP may be an attractive tax structure to businesses of all sizes.
The Benefits
Meanwhile, beyond taxation, LLPs offer business owners several benefits. Firstly, they’re easy to form, which means you can spend more time running the business than worrying about legal structure. Additionally, it provides a layer of personal liability protection for business owners, which separates business debts and obligations from personal assets.
Lastly, because LLCs are partnerships, it allows companies and their owners to avoid double taxation. Double taxation is often a pressing concern for small business owners. An LLP ensures that business taxes are only paid once, at the personal level, and provides tax flexibility and considerable liability and asset protection.
So, Can Any Business Form an LLP in Philadelphia?
In Philadelphia, LLPs are a viable business structure for companies of any size and type. However, before deciding whether this entity type is suitable for your business, thorough due diligence is required. Consult with a lawyer or accountant and ensure your business structures align with all Pennsylvania state and Philadelphia city requirements. Once you’re confident in your research, you can file your Certificate of Registration and start reaping the benefits of establishing an LLP. We hope that has answered your question of “Can Any Business Form an LLP in Philadelphia?”
