Originally from:
Legal Aspects of Doing Business in North America - 2nd Edition - Loose leaf
Legal Aspects of Doing Business in North America - 2nd Edition - Electronic
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Pennsylvania
Julie E. McGuire
Hull McGuire PC
Pittsburgh, Pennsylvania
Establishment of Enterprises
In General
Pennsylvania business enterprises are now most often formed as either:
• A corporation; or
• A limited liability company (LLC).
Historically, the corporation has always been a favored form of doing business
in Pennsylvania and in the United States. Years ago, a disadvantage of using the
corporate form of doing business was that the corporate form was less flexible
than the partnership form. However, the corporate form always provided
investors with liability protection that the partnership form did not provide.
While Pennsylvania has made the corporate form more flexible, a second
significant disadvantage to the corporate form remains: two levels of taxation
are imposed on the corporate shareholder⎯the corporation must first pay tax on
its income, and then the shareholder must pay tax when it receives income in the
form of a dividend.
The partnership has also had a long tradition of use in Pennsylvania. The partnership provides great operational flexibility, and each partner is taxed on the partner’s share of income only once, not at the partnership level, but only at the partner level. More recently, however, the partnership form of doing business has become disfavored with the introduction of the LLC in the United States.
The LLC is a form of doing business that provides the limited liability
protection afforded by a corporation, but with only one level of taxation. This
flow-through tax result is achieved as long as the LLC does not elect to be
treated as a corporation for tax purposes. The LLC, then, operates, as does a
partnership, with the income flowing through to its members, and with no
income tax being imposed on the LLC entity itself.
Pennsylvania
Establishment of Enterprises
Acquisition of Enterprises
Acquisition of Realty
Taxation
Intellectual Property Protection
Employment Law
Banking Law
Julie E. McGuire Hull McGuire PC Pittsburgh, Pennsylvania
