Pennsylvania LLC Taxes

An overall low cost of living and easy access to natural areas makes Pennsylvania a compelling place to start a business. But, as more business owners choose to start their ventures within the state, many may find it challenging to understand the business taxes involved. 

Regardless of the size of your business, if you operate a limited liability company (LLC) in Pennsylvania, you’ll need to stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you must pay for your Pennsylvania LLC.

Recommended: Schedule a free consultation with an accountant to stay on top of your taxes.

Pennsylvania LLC Taxes Owed

LLCs benefit from pass-through taxation, which means the business’s profits pass through to its members’ individual tax returns. As a result, your LLC itself doesn’t pay taxes to the federal government or the state of Pennsylvania. Instead, LLC owners must pay taxes on their portion of the income generated by the LLC. 

In Pennsylvania, LLC owners can expect to pay the following taxes:

Federal Taxes

Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.

Federal Self-Employment Taxes

It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%. 

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.

Pennsylvania State Taxes

All states have their own laws that dictate how they tax individuals and businesses. Below you’ll find an overview of the most relevant state-level taxes for LLCs operating in Pennsylvania.

Pennsylvania Income Taxes

The state income tax rate for Pennsylvania is 3.07% — one of the lowest in the nation. This makes Pennsylvania quite a business-friendly state for those running LLCs and other ventures.

Pennsylvania Sales and Use Tax

Pennsylvania’s state sales tax rate is 6%. You may end up with a higher rate, however, depending on where you make purchases or do business due to local sales taxes. The average local sales tax rate is 0.34% so make sure to check if your county or city has a local sales tax before you begin operating your LLC.

Register for a Pennsylvania Sales Tax License

Businesses in Pennsylvania that sell products to consumers may need a sales tax license. Those businesses must register for a license with the Pennsylvania Department of Revenue in order to file a Sales and Use Tax Return each year.

For more information about the state’s sales tax requirements, visit the Pennsylvania Department of Revenue website.

Additional State Taxes

The Pennsylvania Department of Revenue oversees the collection of various state-specific taxes businesses may have to pay, depending on their location, industry, and number of employees. A few examples of these additional taxes include:

  • Cigarette Tax
  • Malt Beverage and Liquor Tax
  • Motor and Alternative Fuel Taxes
  • Motor Carriers Road Tax
  • Vehicle Rental Tax

The Pennsylvania Department of Revenue website has more information on these and other taxes that may affect your LLC.

Pennsylvania Local Taxes

The local laws and ordinances in Pittsburgh may differ greatly from those in Philadelphia. Regardless of where you live in Pennsylvania, we recommend you check with your local jurisdiction to ensure your business obtains the proper local permits and follows any local regulations that may impact its operations.

Pennsylvania LLC Compliance

You must obey Pennsylvania’s state and local laws in order to maintain your business in good standing. While LLCs technically don’t file taxes with the state, your Pennsylvania business may still need to file a decennial report.

Pennsylvania LLC Decennial Report

All LLCs in Pennsylvania may need to file a decennial report at some point in their operation. Rather than require an annual report like many other states, Pennsylvania only makes LLCs file a decennial report once every 10 years.

These reports are due on December 31 of each year ending in “1” (e.g., 2011 and 2021). The filing fee is $70. If you file late, another company can take your business’s name.

Unlike the annual reports businesses must file in other states, Pennsylvania’s decennial reports aren’t mandatory and you only need to file one if your business hasn’t filed any kind of report with the Pennsylvania Bureau of Corporations and Charitable Organizations in the last 10 years. As such, your LLC may never need to file a decennial report. However, we highly encourage you to check with the Pennsylvania Department of State each year to see if you need to file anything in between and verify the status of your business.

For more information, check out our Pennsylvania LLC Decennial Report guide.

LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure you handle your business taxes correctly.