Franchise Taxes in Pennsylvania: Everything You Should Know



The Pennsylvania franchise tax return is required for every company doing business in Pennsylvania. This form is used to calculate the state corporate net worth, which determines how much taxes are due. The Pennsylvania franchise tax return is different from the federal 1040EZ form because it contains additional information about the company’s financial health.

A Pennsylvania franchise tax return is filed annually with the Pennsylvania Department of Revenue. If you’re filing a franchise tax return for the first time, you’ll want to make sure you know what records to keep and where to send them.

You’ll need to file a Pennsylvania franchise tax report if you have gross receipts or net earnings over $250,000 in a calendar year. Gross receipts are defined as the total amount of money paid out during the year. Net earnings are the profit left over after paying off debts and costs associated with running the business.

If your company earns more than $250,000 in net earnings or gross receipts, you’ll need to complete a Pennsylvania franchise tax return. Your company’s net worth is calculated by taking the total amount of money it receives each month and subtracting its monthly liabilities.

Your company’s net worth is one factor used to determine whether you owe Pennsylvania franchise taxes. Other factors include the number of employees, the type of business you conduct, and the location of your office.

To find out how much franchise taxes you owe, contact the Pennsylvania Department of Revenue at 800-732-8662.

What type of taxes will you have for PA business income?

Businesses generate income every day. This income can include things like sales, wages, interest, dividends, rents, royalties, partnerships, etc. In most cases, businesses must report this income to the IRS. Business owners often wonder how much they’ll owe in taxes. You might think that it depends on how much money you make, but that isn’t always true. Different types of businesses have different ways of reporting income. Some states even impose additional taxes on certain types of business income. For example, Pennsylvania imposes a franchise tax on corporations.

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What Is the Pennsylvania Capital Stock Tax & How Does it Work?

A company must pay capital stock tax if it has any assets located within the borders of Pennsylvania. The taxable value of the corporation’s assets is determined by multiplication of the total amount of its outstanding shares times the capital stock tax rates. The capital stock tax rate varies annually based on the number of shareholders and the type of business conducted by the corporation. For example, a corporation engaged in manufacturing, mining, or agriculture will have a lower capital stock tax rate than one involved in finance or insurance.

The capital stock tax is imposed at the following rates:

• $0.03 per share for corporations having fewer than 500 shareholders;

• $0.05 per share for corporations having 501 or more shareholders;

• $1.00 per share for corporations whose principal place of business is outside the Commonwealth of Pennsylvania.

What Is a Company’s Net Worth in PA?

Net worth is one of those terms that people hear about every day, but it doesn’t mean much unless you know how to calculate it properly. This article explains how to do just that.


Create your LLC Corporation with just 3 easy steps


Annual Registration

An LLC must register annually in Pennsylvania if it has members who reside outside of the state. This includes residents of another state, local government entities, or foreign countries. If you are considering forming an LLC in Pennsylvania, understand the registration requirements.

Foreign LLCs must register every three years. For example, suppose you form an LLC in Pennsylvania today. In that case, you must file a certificate of formation with the Secretary of State within 30 days of filing articles of organization with the county clerk. You must renew your annual registration yearly, even if no changes occur.

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State Business Tax

Delaware offers some advantages over states without corporate income tax such as Nevada and Wyoming. One reason is that Delaware corporations are not subject to personal income taxes.

There are three primary categories of corporations: Domestic Corporation, Foreign Corporation, and Limited Liability Company. They each have unique benefits but also trade off features based on what type of operation you want to run. For example, domestic corporations provide maximum protection for owners while foreign corporations offer full liability for owners. In many cases, LLCs can be organized to benefit from the best attributes of both.

State and Federal Employer Taxes

Businesses are required to pay state and federal employment taxes. In addition, businesses must register with the Division of Revenue (DOR) before they begin paying payroll taxes. Businesses must file quarterly reports with DOR showing how much money they paid into the Unemployment Insurance Fund and what percentage of those payments went toward benefits. They must also report how much they paid in Social Security and Medicare taxes.

The most common form of taxation is the income tax. A business pays income tax based on its profits. If it makes $10 million in profit, it owes $1 million in income tax. However, there are many different types of taxes that apply to businesses. These include sales tax, property tax, use tax, franchise tax, corporate net income tax, gross receipts tax, excise tax, and intangible personal property tax.

Sale and Use Taxes

A foreign corporation in Pennsylvania must register with the PA Department Of Revenue (DOR). In addition, a foreign corporation with no registered agent in Pennsylvania will not be able to do business in PA. Foreign corporations must also obtain a sales tax license.

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Frequently Asked Questions

What Is the PA Capital Stock Tax?

The Pennsylvania Capital Stock Tax is a type of property tax imposed on businesses operating within the state of Pennsylvania. This tax applies to domestic and foreign entities doing business within the state. A domestic entity is defined as an individual, partnership, corporation, limited liability company, trust, estate, or association organized under the laws of the United States or another jurisdiction recognized by the Internal Revenue Service. A foreign entity is a corporation, limited liability company, or other legal entity formed outside of the United States or one of its territories, possessions, commonwealths, dependencies, or protectorates.

What are the benefits of an LLC in PA?

The benefits of forming an LLC in Pennsylvania are many. First off, it provides protection from personal liability for owners. In addition, it gives you the opportunity to have a separate business bank account. You can also deduct expenses associated with running your company. Lastly, it offers tax advantages.

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