Pennsylvania’s educated workforce, convenient location, and low cost of living make it an attractive place to start a business. Around 99.5% of all companies in Pennsylvania are small businesses, which shows just how popular Pennsylvania is for independent business owners. This guide is for you if you want to join the party but have never started a business before.
This article will provide a comprehensive guide on starting your own Pennsylvania business from scratch. You will learn to choose a good business idea, write a business plan, register your business, and market your new business.
Step 1: Choose an Idea
The first step in starting your new business in Pennsylvania is to develop a working business idea. This idea is what your business will be built on; it forms the foundations of your business. To help choose a good and profitable business idea, answer the following questions:
- Do you have any useful passions, skills, or hobbies?
- Can these activities be turned into a profitable business?
- Can you see yourself working or running a business every day?
- Do you have the skills to run this business?
- Are there any businesses like yours already?
- Is there a need for your business?
- How is your business different or solving a consumer’s problem?
In addition to answering the above questions, take advantage of asking your friends and family for help. Their valuable insight as consumers can also help you in this step.
Step 2: Pick a Name
The name of your business is very important as many people will base their first impressions of your business based on the name.
The name should also be easy enough for consumers to read and pronounce, it should be unique to the industry you are in, and it should also give consumers some idea of what your business does.
In Pennsylvania, you cannot register a business with a name already registered with the state. So, to check if your desired business name is available, you can conduct a business entity search on the Pennsylvania Secretary of State website.
If you are battling to pick a name or even just to think of one in the first place, try out these helpful methods below:
- Create a word dump. This is a list of words that pops into your mind when you think about your business and what your business does. The key to doing this is to not think too hard about what to write down.
- Use an online name generator. These are free and generate randomized names.
- Brainstorm with friends and family.
Step 3: Write Your Business Plan
Now that you have built the base, the hard work starts. In this next step, you need to write a business plan. Your business plan is the guide to your business. It should be thorough enough that a person should be able to know everything about your business just from reading through it. Your business plan will typically include all your planning, day-to-day operations, product information, and financial information.
Pennsylvania has no rules about what needs to be included in your business plan. In fact, a business plan is not a legal requirement for Pennsylvania businesses, but when creating a business plan, you should include the following information:
- What is your business, and why have you started the business?
- What products or services does your business offer?
- Who are your direct competitors?
- Who is your target audience?
- How do you plan on turning your target audience into paying customers?
- How much will you need to start the business?
- Do you have the money, or will you need to get funding?
- What equipment is needed?
- What type of employees will you need?
- What are your financial goals and predictions?
If writing a business plan sounds very complicated, don’t stress, as there are plenty of ready-to-use business plan templates you can download off the internet to help you get started.
Step 4: Get Funding
To start a business in Pennsylvania, you need money for all startup costs like equipment, stock, and rent. If you don’t have this money on hand, you will need to get it elsewhere. You can do this through grants, loans, or an investor.
Receiving a grant is one of the most desirable ways of funding as this money does not need to be paid back. While Pennsylvania doesn’t have a lot of business grants or loans, they do have some, which you can check out on USA.gov. Loans can also be taken out through your local bank or other financial institutions. However, loans will need to be paid back and generally accrue in interest.
Alternatively, if you are happy to part with some shares in your business, you can have an investor fund the startup costs for you.
Step 5: Choose a Business Structure
There are several different types of businesses in Pennsylvania. Choosing the correct business structure for your new business is essential, as each structure has various benefits that are attractive to different business owners. Here are the structures that you can choose from.
This is an informal business structure with only one owner, with no separation between the owner’s and the business’s assets. This business structure is commonly used for low-risk businesses like freelancers.
A partnership is also an informal business structure similar to a sole proprietorship. While there is no separation between the owner’s assets and the business’s in this business structure, it differs from a sole proprietorship in that there is more than one owner. In addition, all the owners have equal shares in the business.
Limited Liability Company
The limited liability company, also known as an LLC, is a commonly used business structure for small businesses. This is because an LLC is a hybrid business structure. It has the flexibility and simplicity of a sole proprietorship or partnership and the liability protection of a corporation.
C or S Corporation
This formal business structure is used mainly by large companies with multiple shareholders. A corporation is an entirely separate entity from the owners. This business structure also comes with some tax benefits.
Step 6: Register the Business
Once you have chosen what business structure to use, you may need to register it with the state before you can officially begin trading.
Because this is not a formal business structure, you do not need to register your sole proprietorship with the Secretary of State. However, if you want to operate your business under a different name, you must file a fictitious name with the Pennsylvania Secretary of State.
This business structure does not need to be registered, but you will be required to file your fictitious name with the Secretary of State, if applicable. There is also the option to have all owners sign a partnership agreement in case of conflict within the business, but this does not have to be submitted to the state.
Limited Liability Company
Registering your LLC in Pennsylvania is a surprisingly simple process. To do so, you must complete and submit the Certificate of Organization and the New Entity Docketing Statement to the Pennsylvania One Stop Business Portal. You will need to set up your profile on the portal before filing the documents. The fee to register your LLC is $125.
To register your corporation, you will create your profile with the One Stop Business Portal and submit the completed Articles of Incorporation. The fee to do this is $125.
Step 7: Set Up Your Finances & Accounting
You should set up your business finances before you begin trading. To set up your finances, you need to open a bank account for the business, apply for a company credit card, and set up a payment method for customers to use. You should also install a payroll system for managing employee salaries and taxes.
It is a good idea to hire an accountant to assist you with taxes and look after the books. In addition, an accountant can help you avoid overpaying taxes.
Step 8: Get Business Insurance
Every business needs business insurance as you never know when disaster can strike and how much it will cost you. Having at least a general liability insurance policy is highly recommended, as this policy will cover you for general damage and injury and everything you need on a day-to-day basis.
Other insurances you also might want to take out include:
- Commercial auto insurance
- Commercial property insurance
- Limited liability company insurance
- Business owner’s insurance
- Workers compensation insurance
Chat with your local insurance broker for professional advice on what else you may need.
Step 9: Obtain Any Permits or Licenses Needed
In Pennsylvania, you need to have a business license before you can begin trading. To get your license, you need to apply for one on the Pennsylvania Department of State Licensing Services for $125. If you are using a business structure that had to be registered, the license will have been included in the application.
Depending on the nature of your business, you may also need to apply for additional permits or licenses. Check with your local county clerk to determine what else you need to remain compliant.
In addition, you must apply for a Sales Tax Permit from the Pennsylvania Department of Revenue.
Step 10: Build a Website
As a business owner, having a website for your business is important as this is a great way to interact with your potential customers, advertise your products, and create content. You can either build the website yourself or pay a professional to do it for you.
Keep the following in mind when building a business website:
- The font should be a good size and easy to read.
- Make sure it has relevant and up-to-date content.
- Do not clutter your webpage with loads of images, videos, and GIFs, as this can drastically slow down your loading times.
- Make sure the website is mobile-compatible.
- Include an attractive call to action.
- Link to your other social media accounts.
Step 11: Hire Employees (If Any)
If you need to hire employees for your business, draft a job post, and interview your preferred candidates when the applications roll in. Offer the job to your top choice, and ensure they have the relevant expertise to handle it.
You will need to report all the new hires to the Pennsylvania Department of Labor and Industry. This can be done on the Business One Stop Portal. New employees need to be reported within 20 days from the hire date. There is no fee to report new hires.
Step 12: Market Your Business
The last step in starting your business in Pennsylvania is to market the business. There are so many easy and creative ways to do this on any budget. When marketing your business, you should always remain consistent and use relevant content.
Here are some good ways to market your business:
- Make use of your business website.
- Use social media like Facebook and Instagram to advertise for free.
- Make use of pay-per-click advertising.
- Create a Google Business profile.
- Advertise in your local newspaper and radio station.
- Attend markets and expos.
- Run competitions and giveaways.
- Attend local networking events.
You can choose to market the business yourself or hire a marketing agency or marketing expert to do it.