Glossary: Pennsylvania LLCs
A means of legally keeping a assets from being seized by creditors.
A corporation is another type of legal entity and is owned by its shareholders, who must then elect a board of directors. One of the key distinctions between a corporation and an LLC is that a corporation is taxed twice (once at the corporate level and second, at the shareholder level).
This is referred to as “double taxation.” Corporations often times have more regulations to meet and are more popular among larger companies who foresee a public offering in the future.
The IRS process which allows an LLC to elect to be taxed as a partnership (for multi-member LLCs), as a disregarded entity (for single member LLCs) or as a corporation.
Check-the-box is the method of filling an LLC’s Entity Classification Election via IRS Form 8832.
The default means by which an LLC with only one owner is considered for tax purposes.
Single member LLCs are taxed as if they are sole proprietorships unless the owner elects to be taxed as a corporation.
Distinguishable upon the record
The name of the Pennsylvania LLC must not be too similar to the name of another company already registered to conduct business in the state. In Pennsylvania, the phrase “distinguishable upon the record” replaces “deceptively similar.”
For instance, a new company cannot use a name that only differs from the name of an existing company simply because the punctuation is different (“X.Y.Z. Company” vs. “XYZ Company), or it contains a different article (“An XYZ Company” vs. “THE XYZ Company”), or uses a different business designation (“XYZ, Inc.” vs. “XYZ, LLC.”)
Business profits may be taxed twice if they are subject to both a corporate level tax and in addition to being taxed when they are distributed to the individual business owners.
EIN (Employer Identification Number)
A federal tax ID number for a business which hires employees and withholds tax payments for them.
Federal Tax ID Number
A unique nine digit number issued by the IRS to identify a business entity.
It is considered to be the “social security number” of a business. It is used for tax withholding purposes, as well as opening business banking accounts.
An LLC which conducts some or all of its business in a state or country other than the one in which it was formed.
For example, an LLC formed in Delaware, but conducting business in Pennsylvania would be considered a Foreign LLC in Pennsylvania.
Limited Liability Company (LLC)
A business structure which allows members to be taxed individually on their profits without risking all of their personal assets in the event of any bad business debts.
An owner of an LLC.
An LLC with more than one owner. Multi-member LLCs are treated as partnerships for tax purposes.
A contract document between the members of an LLC which defines the functional structure of the company, the members’ rights and responsibilities, and the distributive shares of the members.
A group of two or more people associated with one another for the purposes of business.
Each partner contributes money, property or services to the business and shares in the profits and losses.
Pass Through Entity
A business entity which itself is not liable for taxes. The profits from the business are are passed-through to the business owners, who then pay taxes on their share of the profits on their own individual income taxes.
Limited liability companies are pass through entities. Pass through entities are sometimes referred to as flow-through entities.
Pierce the corporate veil
A court decision resulting from a lawsuit against a company which is shown to have not been run properly.
When the court is able to “pierce the corporate veil” of an LLC, the individual members of the LLC then lose their limited liability protection and may be personally liable as a result of the ruling.
A person or business entity designated by a limited liability company to act as a representative for the LLC. The agent’s office is the registered address for the LLC in the state where they are conducting business.
They are able to receive Service of Process and also help the LLC stay in compliance with the state.
In Pennsylvania, the registered agent must be a street or rural route address. P. O. Boxes are not acceptable addresses for a Pennsylvania LLC.
Service of Process
Sometimes called Notice of Litigation, Service of Process occurs when court documents are served to an individual, usually a defendant, for a pending lawsuit.
Single Member LLC
An LLC with only one owner. By default, single member LLCs are taxed as disregarded entities.
An unincorporated business with only one owner.
Single member LLCs file federal taxes as if they are sole proprietors unless they elect to be taxed as a corporation.
The LLC Formation Course
Regarded as “Pennsylvania’s #1 Online Course for LLC Formation”, our online course provides you with lifetime access to the LLC formation documents (there are 2 you need) as well as detailed, step-by-step video lessons taking you through each line of all the documents.
You do not need to hire an attorney and spend thousands of dollars to form an LLC in Pennsylvania!
The PA State filing fee is $125, and the LLC Formation Course™ is only $179.
For $304, you can form your PA LLC yourself, and rest assured knowing that it is filed correctly.
To learn more about The LLC Formation Course™, Click here.