The Pennsylvania limited liability company (LLC) operating agreement is a legal document that the members use to determine how the company will be operated and regulate their relationships within the company.
The LLC operating agreement, or business operating agreement, also outlines the initial contribution of each company member and determines the share of the company’s profits based on that contribution.
Is an Operating Agreement Required in Pennsylvania?
No, an operating agreement is not required when forming an LLC in Pennsylvania. However, many parties that want to outline the company’s management structure and regulate the operations within the company still choose to draft the operating agreement.
4 Main Types of Operating Agreements
In Pennsylvania, you have four main types of operating agreements you can choose to draft for your LLC:
Types of Operating Agreements
Single-member LLC operating agreement: This type of operating agreement is used for companies with only one member due to its simpler form.
Multi-member LLC operating agreement: Used in companies with two or more members. It regulates the company's operation and the relationships between the members.
Member-managed LLC operating agreement: This type of operating agreement determines the managerial rights and duties of company members who have decided to manage the company personally.
Manager-managed LLC operating agreement: Here, the members have decided to delegate their decision-making rights to the professional manager, and the operating agreement outlines the managerial rights and duties of the manager.
Laws and Legal Requirements for LLC Operating Agreements in Pennsylvania
Title 15, Chapter 88 of the Pennsylvania Statutes regulates the status of limited liability companies in Pennsylvania.
Moreover, Section 8815 regulates the status of operating agreements in Pennsylvania.
Section 8812 provides a definition of the operating agreement as follows:
“‘Operating agreement’ - The agreement, whether or not referred to as an operating agreement and whether oral, implied, in record form or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning matters described in section 8815(a) (relating to contents of operating agreement). The term includes the agreement as amended or restated.”
How to Form a Limited Liability Company (LLC) in Pennsylvania
Below, you can find the easiest way to form a limited liability company in Pennsylvania:
How to Form a LLC in Pennsylvania
#1. Choose a Business Name For Your LLC
First, you should choose a business name that is distinguishable from other business names registered in Pennsylvania. Otherwise, your application might be rejected.
To check if your business name is distinguishable, visit the Department of State’s website and do a business name search.
#2. Choose the Type of LLC
You can choose between two types of LLCs:
Domestic LLCs: Companies that are established and registered in Pennsylvania.
Foreign LLCs: Companies initially established elsewhere but registered in Pennsylvania due to their business expansion.
#3. Nominate an Agent
Here, you should choose a person who will be in charge of receiving official notifications and documents on behalf of the LLC. You can appoint someone from your LLC, a lawyer, or a professional agency that provides these services.
The most essential requirement for the agent is that it be an individual with a registered address in Pennsylvania or an entity with the authority to operate within the state.
#4. File the Application Documents
For foreign LLCs, you should file the Foreign Registration Statement. You can complete this step online or by filling out Form DSCB:15-412.
Regardless of the type of LLC you are establishing, you must also submit the Docketing Statement.
#5. Pay the Required Fee
The filing fee will depend on the type of LLC you are registering. For domestic LLCs, it is $125, and for foreign LLCs, it is $250.
When filing online, you will be instructed to pay with your credit card. However, if you are filing your application via mail, you should write a check, attach it to the application, and send it to the following address:
Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations, P.O. Box 8722, Harrisburg, PA 17105-8722
#6. Create your LLC Operating Agreement
After registering your LLC, you can draft the operating agreement and outline the management structure of the company, as well as the rights and obligations of the LLC members.
#7. Apply For an Employer Identification Number (EIN)
If you want to open a company bank account or hire employees, you should obtain the EIN.
There are two options for getting the EIN: