Find out how much it costs to get a business license in Philadelphia. A basic business license can start at $125 plus other fees depending on the type of business. Your business type may not require one at all depending on the structure and type of service.
Read more about requirements, costs, and processes to ensure your business can get off the ground running!
If you are considering opening a business in Philadelphia, you are probably wondering how much does a business license cost in Philadelphia and what are the steps to take. Owning a business in Philadelphia can be a lucrative venture as the city continues to prosper.
According to the Economy League of Greater Philadelphia, the city is approximately at the national average annual growth of 2.7%, falling just a bit short at 2.5%. This number measures the city’s ability to develop new businesses and grow existing ones, which means Philadelphia is a good place to open a new business.
When you are ready to start a business, the first step is to obtain a business license with the state of Pennsylvania. Registering the business is an important step in the start-up process of the entity and requires careful attention.
This quick guide will provide you with a general overview of the information you need to know and steps to take to get a business license in Philadelphia and how much it costs to get a business license to operate in this city.
How Much Is A Business License In Philadelphia?
No matter what type of business you are opening in Philadelphia, you are almost always likely to have to pay licensing and application fees with the state of Pennsylvania. You can expect to have to pay approximately $125 to receive a Pennsylvania LLC Certificate of Organization.
If you are registering a sole proprietorship, partnership, corporation, or other business structure, additional fees commonly apply.
What Information is Required to Register a Business in Philadelphia, Pennsylvania?
The first step to registering your Philadelphia business is to determine its structure. Is your business a sole proprietorship or corporation? Once you determine the structure, the next step is to obtain a Philadelphia Business Tax Account Number. Next, you must submit an application for a Commercial Activity License.
You will find a wealth of information in the city’s Business Services site. There are helpful resources for current business owners and newcomers.
Before obtaining a license, you must have a business plan in place. It will detail your financial assessment and opportunities. As each industry is different, along with your license you may also need permits, certificates, and zoning considerations.
Another important part is your financial planning and knowing your city business taxes. In Philadelphia, you will commonly be liable for these taxes:
- Business Income and Receipt Tax (BIRT): Currently, the rates for this tax is 1.415 mills or $1.415 per $1,000 on gross receipts. In addition, businesses have to pay taxable net income at 6.20%. The BIRT is measured according to net income and gross receipts, which must both be filed by the business.
- Net Profits Tax: The net tax is the amount a business has left over after taxes have been subtracted. The term “net of” is the value accounted for after all expenses are calculated.
- Wage Tax: This tax deals with payroll taxes that both the business owner and employee are responsible for. The employer pays half at 6.2% for social security for the first $118,500 in employee wages. The employee pays the other half at 6.2% for a total combined 12.4% collected for social security tax.
- Use and Occupancy Tax: If your entity is operating in Philadelphia or out of a Philadelphia residence you must pay this tax. This also applies to a Philadelphia property where you, your tenants, or sub-tenants use it for conducting business.
Depending on the type of business you have, you may only be liable for some or all of these taxes. The city of has published a guide that details tax types for businesses that operate in Philadelphia. A knowledgeable CPA that works with businesses in Philadelphia is a great source of information.
What is A Philadelphia Commercial Activity License (CAL)?
A Commercial Activity License (CAL) allows business owners to operate a business in Philadelphia. This type of license also applies to property owners of residential rental housing that have properties larger than five rental units or that have properties where they do not reside that are four rental units or fewer.
As a business owner, when you apply for a business license in Philadelphia, you will find out if your particular entity requires a Commercial Activity License (CAL). Before you can obtain a Commercial Activity License in Philadelphia, you must first have an active Philadelphia Business Tax Account Number or Business Income and Receipts Tax (BIRT).
You will also need a Federal Identification Number or a social security number in good standing if you are opening a sole proprietorship. One way to be sure your business is compliant is to check with your local City of Philadelphia business registration advisor for the latest requirements.
The city of Philadelphia makes it easier for business owners to obtain a Commercial Activity License by combining the application with the Philadelphia business tax account number application.
Your business will be required to have a Commercial Activity License even if it is located outside city limits. The City of Philadelphia has information about the areas where business licenses are required. If your business is outside of Philadelphia and its surrounding city limits, you must check with local municipalities and the state of Pennsylvania for the required business licenses, permits, certifications, and other documentation.
Does an LLC Need A Business License in Philadelphia?
Yes, an LLC needs a business license in Philadelphia. The state of Pennsylvania requires a business registration from all entities that fall under the category of limited partnerships, corporations, limited liability partnerships, or limited liability companies.
The only types of entities not required to file a registration are general partnerships and sole proprietors.
What is A Commercial Business License?
A commercial business license is a general term that refers to the licenses, certifications, permits, and other requirements required to sell goods or services. Local government, federal, and state agencies regulate the activities of businesses.
Not all types of business require a commercial business license. This depends on the location of the business, the legal structure, and the types of services provided.
Does a Landlord Need a Business License in Philadelphia?
If you are a landlord and have a property with four or fewer rental units, you don’t need a Commercial Activity License if you live in one of the units. You will need, however, an Activity License Number.
The state of Pennsylvania does not require landlord rental licenses, but Philadelphia’s local jurisdiction has its own regulations that may apply. The city of Philadelphia requires landlords to obtain an Activity License Number to help them regulate the quality of housing. Landlords must demonstrate that the rental units and the whole property are safe and suitable for occupation as well as managed to acceptable standards.
How Much Is A Seller’s Permit In Philadelphia?
Pennsylvania is among the many states that require individuals and enterprises to obtain a seller’s permit when doing business in their jurisdictions. Even though Pennsylvania doesn’t call this permit a “seller’s permit,” it is issued to allow permit holders to collect sales tax, which is ultimately paid to the state of Pennsylvania
There are no costs involved when applying to obtain a seller’s permit. However, there are some fees when you apply for corporate tax numbers. Some businesses are unique and have special considerations. Your city business advisor will help you determine what your business requires to operate under the law.
What Steps are Necessary to Obtain a Philadelphia Business Privilege License?
A Business Privilege License is another name for a regular business license in Philadelphia. Before opening your business, you must have a valid business license registered with the city and the state of Pennsylvania.
When looking to have a business license in Philadelphia, you can expect the following steps:
1. Choose the Appropriate License Application
Depending on the structure of your business and what you are providing customers, your entity will have a unique classification that follows specific requirements. The business location and service provided can also be influencing factors for different application requirements.
2. Include all the Required Documents in Your Application
On the Philadelphia city website, you will find all the necessary information to submit a complete application. You must include all requirements in your application to avoid delays. It is important to stay organized from the start, which is why having a concrete business plan will help you as you obtain your business license and register your company before starting operations.
3. Submit a Completed Philadelphia Business Privilege License Application
Once you have gathered all requirements, file your Philadelphia Business Privilege License Application making sure to follow all the instructions provided. Be sure your application includes any forms that may apply to your particular business. It is best to submit the application with all completed items instead of revising an incomplete application as it may create delays in the approval and registration process.
4. Your Philadelphia Business Privilege License Will be Issued to You
Once you have your Philadelphia Business Privilege License, you will be allowed to open your business and start operations.
5. Renew Your License On Time to Keep it Active
Business owners must stay current with the city’s and state’s requirements to keep their business license active. Since not all businesses have the same requirements, you can expect to have unique criteria for your particular entity.
How Much Does it Cost to Get a Business License in Pennsylvania?
All company owners that are required to obtain a business license from the state of Pennsylvania must pay licensing and application fees. It is generally $125 to obtain a business license, but additional fees may apply for businesses structured as partnerships, corporations, and sole proprietorships.
How Much is a Small Business License in Pennsylvania?
If your small business qualifies for a business license, you can expect to pay $125 to the state of Pennsylvania to obtain one. Certain fees and permits apply depending on the type of business you are opening. The state provides several resources to guide business owners as they fulfill the requirements that involve their particular entity.
How Do I Get a Business License in Philadelphia, PA?
There are simple steps you can take to get a business license in Philadelphia, PA. First, you have to determine which type of business structure you have. Depending on the structure, location, and services provided, certain requirements will apply.
Once you check with the state’s website, you will gather your business information and fill out an application including a tax registration number and other permits and certificates that may apply.
Do I Need a Business License in Pennsylvania?
You will need a business license in Pennsylvania depending on the type of business you have. General corporations and sole proprietorships as well as some types of landlords do not require a business license. It is important to check with the state and city’s websites for the latest conditions.
Does my Non-Profit Organization Need to Get a Philadelphia Activity License?
Yes, your non-profit organization will need to apply for an Activity License with the city of Philadelphia through their eClipse system. The organization will also need to apply for an EIN number and a State ID. In addition, non-profits organizations apply for the Pennsylvania Tax-Exempt Status.
What exactly is a Commercial Activity License (CAL) in Philadelphia?
In the city of Philadelphia and outside city limits, business owners are required to obtain a Commercial Activity License (CAL) to operate businesses that provide services or sell products. Obtaining a Commercial Activity License is also required from landlords who have properties with five or more rental units or have smaller rental properties in which they do not reside.
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