A limited liability company (LLC) is a hybrid between a partnership and a corporation. It may be thought of as a limited partnership without a general partner. Owners of a limited liability company are called members and may include individuals, corporations or other LLCs. The limited liability company provides the liability protection of a corporation for owners, with the advantage of being treated as a partnership for taxation purposes. A limited liability company may have any lawful purpose other than acting as an insurer, regardless if the propose is for profit. Limited liability companies are generally presumed to be for profit. If an LLC has a purpose that is not for profit, its purpose must be stated in the certificate of organization.
A Pennsylvania limited liability company is formed by filing a Certificate of Organization [DSCB:15-8821], accompanied by a docketing statement [DSCB:15-134A], with the Bureau of Corporations and Charitable Organizations. Please see the forms and instructions, available on the Bureau’s Registration Forms page, for detailed information about the application.
A Certificate of Organization is not required by law to be prepared by an attorney. However, because of complex legal issues involved when starting any business, including tax considerations, it is advisable to seek legal counsel before filing to assure that all legal consequences receive proper consideration.
Several types of specialized limited liability companies may be organized under Pennsylvania law. These limited liability companies may be formed as such at the time of filing of the certificate of organization or may elect specialized status by amendment of existing certificate with the requisite vote of the members.
Restricted Professional Companies – 15 Pa.C.S. §§ 8995-8998 and 19 Pa. Code Chapter 71
Limited liability companies rendering certain professional services must form as a restricted professional company. If a limited liability company is a restricted professional company, its certificate of organization or foreign registration statement must contain a statement to that effect, including a brief description of the restricted professional service or services to be rendered by the company. Restricted professional services are defined as the following professional services: chiropractic, dentistry, law, medicine and surgery, optometry, osteopathic medicine and surgery, podiatric medicine, public accounting, psychology or veterinary medicine.
Any domestic or foreign restricted professional company in existence on December 31 of any year is required to file a Certificate of Annual Registration [DSCB:15-8221/8998). This form and the corresponding annual registration fee must be filed on or before April 15 of the following year. Failure to file the annual registration will result in additional fees, penalties and interest. A Uniform Commercial Code lien will also be placed against the business until all fees have been satisfied.
Benefit Companies – 15 Pa.C.S. §§ 8891-8898
These are Pennsylvania limited liability companies, with a purpose of creating a general public benefit, in addition to any other purposes they have as a limited liability company. A general public benefit is defined as a material positive impact on society and the environment, taken as a whole and assessed against a third-party standard, from the business and operations of a benefit company. A benefit company may also have as a purpose the creation of one or more specific public benefits. These include: (1) providing low-income or underserved individuals or communities with beneficial products or services; (2) promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business; (3) preserving the environment; (4) improving human health; (5) promoting the arts, sciences or advancement of knowledge; (6) promoting economic development through support of initiatives that increase access to capital for emerging and growing technology enterprises, facilitate the transfer and commercial adoption of new technologies, provide technical and business support to emerging and growing technology enterprises or form support partnerships that support those objectives; (7) increasing the flow of capital to entities with a public benefit purpose; and (8) the accomplishment of any other particular benefit for society or the environment.
A benefit company offers entrepreneurs and investors the option to build, and invest in, businesses that operate in a socially and environmentally responsible manner.
Each year, the benefit company must prepare and distribute to its members an Annual Benefit Report [DSCB:15-8898] describing its efforts to create public benefit during the preceding year. The report must be filed with the Department of State, thus making it a matter of public record. The report must also be posted on any public website maintained by the company. The fee for this filing is $70.
No advertising is required when forming a domestic limited liability company.