Pennsylvania annual business reporting change does have benefits

The requirement used to be only once every 10 years, but starting this year the Pennsylvania Department of State is requiring businesses to file a report with the department annually. 

And while it may seem like extra work, Thomas Reilly, Jr., a partner at Gross McGinley and chair of its Business Services Group, said in some ways it’s going to help alleviate a great deal of frustration for businesses. 

“Most states have already gone to annual filing,” Reilly said. 

He said improvements in computer technology, including the ability to file online, make it easier to keep track of the reports and keeping them current is a benefit to both the state and businesses – especially new businesses. 

“It’s basically putting the Department of State on notice that you still exist,” he said. 

When the filings were only being made once every 10 years, he said the list of businesses operating in the state was often out of date. 

“What this is going to do is clear out companies that are registered, but are no longer in business,” Reilly said. 

That way if someone is looking to start up a new business, he or she can more easily see if the name they’ve chosen for the business is already taken or not. 

“One of the things that we’re going to see is that there are going to be a lot more names available,” Reilly said. 

As a lawyer, he’s often found clients that wanted a certain business name, but it was listed as taken even though the business had ceased to exist, creating a complicated path to obtaining the name. 

“Sometimes instead of going by ABC Company they’d just decide to go as XYZ Doing Business as ABC Company to avoid the headache,” he said. 

Of course, naming a business is an important and exciting part of starting a business and not getting the chosen name is a big disappointment for a business owner. 

Michael Horvath, a business attorney at Gross McGinley, pointed out that different types of corporate entities have different deadlines to file. 

Corporate entities must file before June 30.  The more common business entity, the LLC, has until Sept. 30. LPs LLPs, trusts and professional business associations have until Dec. 31. 

General partnerships and sole proprietors do not need to file the report with the state. 

Any business can file at any time up to their deadline, and the attorneys are recommending that they file in advance of the deadline. 

Horvath recommended filing by March 15, to keep it in line with a company’s normal tax-filing schedule, which will make it easier to remember. 

A business can file themselves online at file.dos.pa.gov  or have their attorney do it for them. 

The cost to file is $7, which is one tenth of the $70 fee that was charged when the reports were filed every 10 years. There is no fee for nonprofits. 

Horvath said that while the state won’t begin enforcing the annual report filing until 2027, the firm still recommends to its clients that they begin filing now to get used to the process. 

The penalties could be severe – up to the administrative dissolution of the business, so it is important that businesses comply. 

“It’s just another step like filing taxes that’s part of the responsibility of being a part of the Pennsylvania business community,” Reilly said.