How to Form an S Corporation in Pennsylvania:
Official 2025 Guide
Pennsylvania entrepreneurs can establish S Corporations through coordinated state and federal filings to achieve pass-through taxation while maintaining liability protection. This comprehensive guide uses official Pennsylvania Department of State procedures and IRS regulations to outline the complete formation process.
📋 Table of Contents
Understanding S Corporation Structure in Pennsylvania
An S Corporation combines the liability protection of a corporation with pass-through taxation benefits. According to the Internal Revenue Service, S Corporations "provide the limited liability protection of the corporate structure, but allow income, deductions, losses and credits to pass through to shareholders for federal tax purposes."
Pennsylvania Legal Framework:
The Pennsylvania Business Corporation Law governs corporate formation, while federal S election follows Internal Revenue Code Section 1362.
Key S Corp Advantages in Pennsylvania:
- • Pass-through taxation eliminates Pennsylvania Corporate Net Income Tax
- • Limited liability protection under Pennsylvania law
- • Enhanced business credibility and structure
- • Potential self-employment tax savings on distributions
Pennsylvania S Corporation Formation Requirements
State-Level Corporate Formation
Pennsylvania Department of State Filing Requirements:
According to Pennsylvania Department of State regulations, corporations must file Articles of Incorporation containing:
- • Corporate name compliance with 15 Pa.C.S. § 1334
- • Registered office address in Pennsylvania
- • Number and class of authorized shares
- • Incorporator information and signature
Filing Fee Structure:
The Pennsylvania Department of State fee schedule establishes:
- • Articles of Incorporation: $125 standard processing
- • Expedited processing: Additional $100
- • Name reservation: $70 (valid for 120 days)
Federal S Election Process
IRS Form 2553 Requirements:
The Internal Revenue Service Form 2553 Instructions specify that corporations must:
- • File within 75 days of incorporation date
- • Obtain unanimous shareholder consent
- • Meet eligibility requirements under IRC Section 1361
⚠️ Critical Timing Issue
Problem: Missing the 75-day S election deadline
Solution: File Form 2553 with late election relief under Revenue Procedure 2013-30
Result: Potential S status with IRS approval and reasonable cause demonstration
Step-by-Step Pennsylvania S Corp Formation
Step 1: Corporate Name Selection and Reservation
Pennsylvania Name Requirements:
Under 15 Pa.C.S. § 1334, corporate names must:
- • Include "corporation," "company," "incorporated," or abbreviations
- • Be distinguishable from existing Pennsylvania entities
- • Not contain prohibited words without proper licensing
Name Availability Search:
Use the Pennsylvania Department of State Corporation Search to verify name availability before filing.
Name Reservation Process:
Submit Name Reservation Application with $70 fee for 120-day reservation period.
Step 2: Registered Agent Appointment
Pennsylvania Registered Agent Requirements:
According to 15 Pa.C.S. § 1341, every corporation must maintain:
- • Registered agent with Pennsylvania street address
- • Agent available during normal business hours
- • Written consent from appointed agent
Registered Agent Options:
- • Self-appointment (if maintaining PA address)
- • Professional registered agent service
- • Attorney or business service company
Step 3: Articles of Incorporation Filing
Required Articles Content:
The Pennsylvania Department of State Articles template requires:
Standard Articles Include:
- • Corporate name and registered office
- • Share structure (number and par value)
- • Incorporator name and signature
- • Purpose clause (may be general)
Filing Methods:
Submit through Pennsylvania Department of State online portal or mail to:
Pennsylvania Department of State
Corporation Bureau
401 North Street, Room 206
Harrisburg, PA 17120
Step 4: Federal EIN Application
IRS EIN Requirements:
Apply for Employer Identification Number through IRS online EIN application.
EIN Application Process:
- • Complete IRS Form SS-4 information online
- • Receive EIN immediately upon approval
- • Required for bank accounts, tax filings, and employee reporting
Step 5: S Corporation Election Filing
Form 2553 Submission:
File IRS Form 2553 within 75 days of incorporation with:
- • Complete corporation information
- • Tax year selection (calendar or fiscal)
- • All shareholder signatures and consent
- • Stock ownership percentages
IRS Processing Address:
Mail completed Form 2553 to the IRS processing center based on your state:
Internal Revenue Service
Cincinnati, OH 45999
S Election Confirmation:
The IRS will send confirmation of S election status, typically within 60 days of filing.
Pennsylvania Tax Implications for S Corporations
State Tax Treatment
Pennsylvania Corporate Net Income Tax Exemption:
According to Pennsylvania Department of Revenue regulations, S Corporations are generally exempt from the 8.99% Corporate Net Income Tax.
Pennsylvania Personal Income Tax:
S Corporation shareholders pay Pennsylvania Personal Income Tax at 3.07% on their distributive share of S Corp income, regardless of distributions received.
Federal Tax Obligations
Annual S Corp Tax Return:
File IRS Form 1120S annually by March 15th (or 15th day of third month after tax year end).
Shareholder Reporting:
Provide Schedule K-1 to each shareholder showing their share of income, deductions, and credits.
Ongoing Compliance Requirements
Pennsylvania Annual Reporting
Decennial Report Filing:
Under 15 Pa.C.S. § 1541, Pennsylvania corporations must file a Decennial Report every ten years with updated information.
Annual Fee Schedule:
Pennsylvania does not require annual reports, but corporations must pay applicable franchise taxes if gross receipts exceed thresholds specified in Pennsylvania Tax Code.
Federal Compliance Obligations
Quarterly Estimated Taxes:
S Corp shareholders may need quarterly estimated tax payments per IRS Publication 505 if owing $1,000 or more in taxes.
Employment Tax Responsibilities:
If hiring employees, comply with IRS employment tax requirements including:
- • Federal income tax withholding
- • Social Security and Medicare taxes
- • Federal unemployment tax
Common Pennsylvania S Corp Formation Issues
Timing and Deadline Management
S Election Deadline Compliance:
Problem: Incorporating December 15th but missing February 28th Form 2553 deadline
Solution: File late election relief with Revenue Procedure 2013-30 showing reasonable cause
Result: Potential S status effective from incorporation date
Shareholder Eligibility Requirements
S Corp Shareholder Restrictions:
Per IRC Section 1361, S Corporations are limited to:
- • 100 shareholders maximum
- • Individual shareholders (no corporate shareholders)
- • U.S. citizens and residents only
- • One class of stock
Pennsylvania Corporate Maintenance
Registered Agent Continuity:
Problem: Registered agent resignation without replacement
Solution: File Statement of Change with new agent information
Result: Maintained good standing with Pennsylvania Department of State
Professional Services and Resources
Legal and Tax Advisory Services
Consider professional assistance for:
- • Complex ownership structures with multiple shareholders
- • Tax planning and optimization strategies
- • Ongoing compliance management
- • Specialized industry licensing requirements
Official Pennsylvania Resources
Pennsylvania Department of State Business Resources:
- • Corporate Formation Guidance
- • Fee Schedules and Forms
- • Online Filing System
Federal Tax Resources
IRS Resources:
Conclusion
🎯 Bottom Line:
Pennsylvania S Corporation formation requires coordinated filing of Articles of Incorporation with the Pennsylvania Department of State ($125 fee) and timely federal S election via IRS Form 2553 within 75 days of incorporation for optimal tax benefits and liability protection.
The process combines Pennsylvania corporate law compliance with federal tax election procedures. Success factors include proper name selection, registered agent appointment, timely S election filing, and ongoing state and federal compliance maintenance.
Pennsylvania S Corporations provide pass-through taxation benefits while maintaining corporate structure advantages under Pennsylvania Business Corporation Law and federal tax regulations.
Disclaimer: This guide references official Pennsylvania Department of State regulations and IRS procedures current as of 2025. Consult qualified legal and tax professionals for advice specific to your business circumstances. Tax laws and filing requirements are subject to legislative changes.