Pennsylvania Business License

In order to legally kickstart your business venture in Pennsylvania, obtaining the appropriate business licenses is a requirement to operate legitimately within a specific jurisdiction (e.g., on a local, state, or federal level).

Unfortunately, since there is no one-size-fits-all Pennsylvania Business License for all businesses, it can be tricky to sort through the web of federal, state, and local permits and identify which ones you need.

Our guide aims to simplify this process, and help you understand what’s needed to legally launch your business. Continue reading to confidently navigate your business journey.

Do I Need a Business License in Pennsylvania

In Pennsylvania, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• Sales Tax Licenses: In Pennsylvania, businesses that sell tangible goods or certain services are generally required to obtain a Sales Tax License, as this is what allows them to pay the required 6% sales tax. The Department of Revenue issues this license, and the most convenient way to secure it is by filling out the PA-100 form through the online portal, myPATH
• Professional Licenses: Certain professions will require your business to obtain a specific license to operate. These are typically issued by the Department of State, and you can apply for them through the Pennsylvania Licensing System (PALS). Other specialized licenses may fall under the jurisdiction of different agencies, like that for home improvement contractors, which is handled by the Attorney General’s Office
• Environmental Permits: In most cases, business activities with the potential to damage the environment will have licensing requirements. For example, if your company deals with the handling and disposal of hazardous materials, it will need to obtain a relevant hazardous waste permit from the Pennsylvania Department of Environmental Protection

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Pennsylvania plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

• Local: There are numerous licenses and permits at the local level that may apply to your business. As an example, most cities in Pennsylvania require businesses to obtain a Building Permit issued by that municipality’s Building Department in order to be able to perform construction or significant renovations to existing structures
• State: On top of this, there are a range of statewide licenses and permits your business may need, depending on the type of operation. One example is the Liquor License, which businesses that sell or distribute alcoholic drinks will need to get from the Pennsylvania Liquor Control Board
• Federal: If your business operates within certain industries or does specific types of work, you might need federal licensing. These sectors primarily include agriculture, alcohol sales, and firearms, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Pennsylvania

In order to get your business license(s) in Pennsylvania, you will need to complete the following steps:

• Form Your Business
• Obtain a Federal Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Pennsylvania, it’s pivotal that you first choose an appropriate business structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Pennsylvania to register as a Limited Liability Company (LLC). Here are a few reasons why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Pennsylvania Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: In Pennsylvania your business’s licensing needs can vary depending on its location since these requirements often differ between municipalities. For example, in the City of Philadelphia, businesses are obligated to get a Food Establishment Retail License from the Philadelphia Department of Public Health if they’re planning to operate a restaurant, food truck, or catering service
• Statewide Licenses: The two most common licenses needed by businesses at a state level are sales tax licenses and professional licenses. Be sure to see the Pennsylvania Department of State’s website to find out which professional licenses (if any), you may need. You can also apply for most importance licenses by filing form PA-100: Pennsylvania Enterprise Registration
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For more detailed information on municipalities and their contact information, check out the PA Business One-Stop Shop.

Step 4: Renewal of Licenses and Permits

Many Pennsylvania business licenses must be renewed periodically every few years in order to keep them valid. If you’re uncertain whether you need to renew any of your business’s licenses, make sure to reach out to the agency that issued your business license for clarification.

Alternatively, due to how complicated each step of applying for and renewing business licenses is, third-party services that handle this entire process are becoming an increasingly popular option. This not only helps you to avoid potential fines, but also to be as time-efficient as possible.

Keep in mind that, for legal or tax advice, you will need to talk to a professional business attorney.

How Much is a Business License in Pennsylvania

Ultimately, your total business license cost will depend on your business’s unique needs. For example, while a sales tax license can be obtained at no cost, registering for certain professions or industries might require a fee that varies depending on the specific license. On top of this, you’ll also need to take into account the potential cost of renewing these licenses.

When starting to evaluate your Pennsylvania business’s licensing needs, consulting with the Small Business Administration (SBA) is a great way to get an idea of this cost and ensure you meet both commonwealth and local legal criteria.