Pennsylvania LLC
Operating Agreement

Home » Pennsylvania LLC » Pennsylvania Operating Agreement

Need to save time?

Hire a company to form your LLC:
Northwest ($39 + state fee)

Quick Start Guide
This Quick Start Guide is a brief overview of how to form an LLC in Pennsylvania.

Detailed Lessons:

 

Pennsylvania LLC Costs:
Pennsylvania state fee: $125

Need to save time?
Hire a professional to form your LLC in Pennsylvania:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

★ Check out Northwest vs LegalZoom

LLC Operating Agreement (template + instructions)

Downloads

Both links below are to the same document. The 1st is a Word document. The 2nd is a PDF.

Operating Agreement (Word)

Operating Agreement (PDF)

Next Step

After you’ve completed and signed your LLC’s Operating Agreement, you can then proceed to Lesson 4: Tax ID Number (EIN).

Matt Horwitz


Matt Horwitz
Founder & Educator, LLC University®
Matt Horwitz has been the leading expert on LLC education for the past decade. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC that other companies weren't offering. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
 
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.

22 comments on “Pennsylvania Operating Agreement”

Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

  1. Thank you so much for developing such a thorough and easy to understand resource!

    • Thank you for the awesome compliment Yasmin!! So glad we could help. You’re very welcome!

  2. Thank Matt, your site has been invaluable. My husband submitted required docs to PA to establish a single member LLC for a real estate investment he owns (note we live in AZ). Also obtained EIN as sole member We are using NW Registered Agent. Because I am on the loan (and have been for years), the bank is now requiring that I be included as a 25% member in the LLC in order to transfer loan to LLC name. I have done a lot of research and seen the term husband and wife LLC used, including in your presentations. Only my husband’s name is on the Initial Resolutions submitted to the state and the PA Certificate of Organization does not list either of our names nor does it specify the type of LLC. We are thinking we can just include my name and % interest in the Operating Agreement as you did in the husband and wife example you used here. Does that sound right or do you think we need to amend something with the state? We plan to file taxes on schedule E for both Federal & PA as we have always done when he operated as a sole proprietorship.
    Thanks for feedback.

    • Hi Beth, the Pennsylvania LLC Certificate of Organization doesn’t list Members, so you don’t need to amend that. And the Initial Resolution is just that… the Initial Resolution. It’s doesn’t get amended. And it’s not set in stone. Meaning, it can be overridden. Here’s the overview to becoming a Member of your husband’s LLC. First, your husband needs to transfer/assign 25% of his 100% LLC membership interest to you. This is usually done via an Assignment of LLC Membership Interest. Then you’ll want to amend the LLC’s Operating Agreement. Then you need to update the IRS since the tax classification of the LLC will be changing. The LLC has been taxed as a Sole Proprietorship. After you become a Member, it will need to be taxed as a Partnership. This tax classification change is done via IRS Form 8832. You’ll also need to update the Pennsylvania Department of Revenue and the bank to add yourself as a signer. Hope that helps!

      • Thanks for quick response, and happy new year. To clarify, the LLC is brand new for 1/1/2020. Property was previously managed as a sole proprietorship so we are not making any change with feds or state other than establishing the new LLC this year. First tax filing for LLC will not be until April 2021. Seems we can just modify the articles of organization we just created and leave everything else the same. Just wondering if we need a new EIN documented as a partnership versus single member. Also still confused as to whether we qualify for qualified joint venture LLC since we live in Arizona but established LLC in PA where the business is located. Somethings I’ve read make it sound like a husband and wife can file taxes as a disregarded entity, which is our preference.

        • Hi Beth, Happy 2020! Again, there shouldn’t be a need to amend the PA Certificate of Organization as there is no place to list Members (owners). You’ll need to speak with a qualified accountant regarding the potential for a Qualified Joint Venture LLC. We’re not sure where the property (the PA LLC membership interest) is considered to be located and whether or not you can hold that property together as husband and wife or you need to hold it separately. If a Qualified Joint Venture is allowed, then you can mail a letter to the IRS requesting to be taxed as a Qualified Joint Venture. Alternatively, you can cancel the EIN and get a new one as a QJV. If the QJV isn’t allowed, then you can either file Form 8832 to change to Partnership taxation or cancel the current EIN and get a new one where “2” Members is entered (in the EIN Online Application), which defaults the LLC to Partnership taxation. Hope that helps.

  3. Ask again Matt. Read some comments on your site where a person had a problem applying for a new EIN using the same LLC name (had to wait until the old number was canceled to get a new one). To avoid that and any delay implementing our newly established LLC do you think it would be better to just submit form 8832 to change from single-member to partnership so we can proceed with deed change and opening bank account using the current EIN. Form 8832 is a little confusing but seems it would be more efficient for us to keep the same EIN. As a reminder this is a brand new LLC effective one 1/1/20.

    Thanks

    • Hi Beth, if partnership taxation is the route you are going, then yes, you can file Form 8832. You’ll list the LLC name, EIN, and address at the top. Under “Check if”, you’d leave that section blank. 1 would be B. 2a would be No. Skip 2b. 3 would be Yes. Skip 4. Skip 5. 6 would be B. Skip 7. 8 would be 1/1/20. 9 and 10 could be either you or your husband. You’d both sign and each use the title “Partner” (the IRS prefers that title instead of “Member” for Multi-Member LLCs). Part II Late Election Relief can be skipped. Hope that helps!

      • Matt I am so grateful for your assistance but I have to ask regarding your response above on form 8832. Thus is a new LLC effective 1/1/20 but we did already request and obtain an EIN at the end of December (which is why we are submitting the form) should we be selecting Yes for 2A and Yes for 2B rather than No for 2A as you advised? I feel like we did previously file an entity election that had an effective date within the last 60 months and we are now requesting to change the entity type from single-member to partnership. And for 2B it seems that our prior election was an initial classification by a newly formed entity that was effective on the date of formation (1/1/20).

        Thanks again

        • Hi Beth, great question. That language on 2A and 2B can be quite confusing. Applying for an EIN, either by mail, fax, or online is not considered an “entity election” (question 2A) or an “initial classification election” (question 2B). Rather, it is considered “establishing” the EIN. The only two forms that can make an “entity election”, “classification election” or “initial classification election” are IRS Form 8832 and IRS Form 2553. So because your LLC has never filed an 8832 or 2553, 2A would be No and you would skip 2B. Hope that helps clarify this confusing form ;)

  4. Matt thank you again. Hopefully this is my last question. We live in Arizona and use that as our mailing address for EIN but the physical address for business & registered agent (NW) is in Pennsylvania. Do I send our form to the treasury for PA or the treasury for AZ. Through this whole process I have struggled with knowing which address to use where.

    With gratitude for the amazing service you & your website provide!

    Beth

    • Hi Beth, you’ve very welcome. You can send Form 8832 to the address for AZ. Honestly, it would get processed either place you sent it. It’s just faster to send to the address specific for AZ.

  5. Hello and thank you for all of the helpful information.

    I am about to file for a mmllc in PA. One of the potential members has been and is currently working abroad in Singapore. He is a legal US citizen but has been working out of the country for 4 years. I would like to make sure that we are able to move forward with him listed as a partner, despite his current foreign address and location. Thanks in advance for your help!

    -Brad

    • Hi Brad, you’re very welcome. When forming a Pennsylvania LLC, there are no citizenship or residency requirements for LLC Members (owners), so yes, you can both be Members in your Pennsylvania LLC. His foreign address would really only appear in a private document; your PA LLC Operating Agreement. Hope that helps.

  6. Thank you for all this great information, Matt! It has been so helpful.
    I have 2 questions:
    1) applied for LLC and created Operating Agreement using your instruction. I am the only member of my LLC and I did not hire a registered agent. Is it a good idea for only my name and my home address to be listed?
    2) As of now it’s a regular LLC with 1 member. I heard that for tax purposes it’s best to classify it as “disregarded entity S-Corp and file form 2553”. What does that mean for me and how would I do that? Is it a good idea?
    Thank you very much!

    • Hi Angela, you’re very welcome!

      1. If you are the Registered Agent for your LLC, you can place your name and address in the LLC’s Operating Agreement as the Registered Agent. In the Pennsylvania Certificate of Organization, the form only asks for the Registered Office address (not the name of the Registered Agent). So I take it your address was used on the Certificate of Organization. That is totally okay. You are not required to hire a Commercial Registered Agent (aka Commercial Registered Office Provider).

      2. That is very over-simplified advice. An LLC can elect to be taxed as an S-Corporation, however, there are extra costs and administrative duties that need to be carried out to meet the S-Corp requirements. We typically recommend looking into S-Corp taxation once there is $50-$70k net income per LLC Member. We’ve covered this in more details here: LLC taxed as S-Corporation. If you’re just started out and establishing revenue/sales, we recommend leaving the LLC taxed in its default status. In your case with a Single-Member LLC, that means the LLC will be treated as a Disregarded Entity/Sole Proprietorship for tax purposes. Hope that helps!

  7. My wife and I own a number of properties and are in the process of paying off these mortgages, and once paid off, are transferring the ownership to an LLC (one LLC for each property). For estate planning purposes, we were encouraged to create an LLC (husband and wife) partnership, which itself owns each individual LLC (Sole proprietorship, “owned” by the overarching LLC.) The LLCs were created in PA.
    I had a few questions:
    (1) How does the Operating agreement language change if the member entity is another LLC? I described my wife and I as “members of the organizing entity: Overarching Company Name LLC” on the signature lines, and we both signed.
    (2) The overarching LLC has an EIN #, does each individual LLC need it’s own individual EIN, or can the overarching company’s EIN be used for all of them?

    • Hi Sean, one small clarification here. Your Child LLCs would not be taxed as Sole Proprietorships. Instead, they are taxed as Disregarded Entities, which are taxed as a branch/division of the Parent LLC.

      If the Child LLCs will be Member-managed (managed by the Parent LLC), the language can stay the same, because the Parent LLC is a Member.

      If the Child LLCs will be Manager-managed (lets say managed by you or you and your wife), you’d want to use a Manager-managed Operating Agreement.

      We have more infomration on mangement here: Member-managed LLC vs Manager-managed LLC.

      Because each LLC is its own separate entity, they should each have their own EIN and their own bank account. The Parent LLC will be the only entity filing a federal return, so there is “consolidation” there, but still; each LLC has their own EIN. One “exception” (but it’s not really an exception, it’s more so a quirk), if a Child LLC needs to submit a W9, the W9 will list the Parent LLC name and the Child LLC name, but it will only list the Parent LLC’s EIN. This is because it’s only the Parent LLC that files a federal return.

      Regarding the signature block, are you asking about the signature block in the Parent LLC’s Operating Agreement?

      • No Parent and child LLCs will all be Member-Managed.

        Thanks Matt for your quick response (and providing this website…it has been very helpful). –Sean

        • You’re very welcome Sean.

          In the Parent LLC Operating Agreement, you’d both sign as Members. For example:

          _______________________________
          Sean Smith, Member

          _______________________________
          Mary Smith, Member

          In the Child LLC Operating Agreement, one of you would be signing for the Parent LLC. For example:

          _______________________________
          Child Company, LLC
          By: Parent Company, LLC
          By: Sean Smith, its Member

Leave a comment or question

Comments are temporarily disabled.

×

How to form a US LLC

Non-US residents: If you want to form an LLC in the US, we recommend hiring doola.

doola specializes in forming US LLCs for international entrepreneurs.

They'll form your LLC, open your business bank account, and help with taxes. doola also has excellent customer service.

Hope that helps!

Matt Horwitz founder of LLC University
Matt Horwitz
Founder & Educator
LLC University®