For most entities, Pennsylvania has a simple, $125.00 filing fee to form an entity, and no annual fee thereafter for its operation. Many other states charge annual fees from $50.00 to over $100.00 to continue the registration of entities in the state. The fact that Pennsylvania does not have an annual charge means that over time, a large number of inactive entities, corporations, LLC’s, limited partnerships remain on Pennsylvania’s business records.
Once a decade, Pennsylvania goes through a process to require active entities which have not filed other paperwork with the Department of State in the last ten (10) years to file a decennial report to let the state know that they remain in existence. What that means is that if your entity has filed something with a $70.00 fee, such as a change of address or more expensive filing like a change in entity type within the past decade, you will not be asked to file a decennial report of continued existence. However, even if you have filed all your tax returns every year, the Department of State wants to know that you still there without looking at your tax returns filed with the Department of Revenue.
Therefore, many of you will be receiving for your entities the same red, white and blue postcard I have received for a number of my entities, indicating that you must file a decennial report by December 31, 2021. The form is simple, and you can get it online at www.dos.pa.gov/decennialreport. Once you file that report, the Department of State will not bother you again until 2031, to see if you are still out there and doing business. If you do not file the report, however, the Department of State will mark your entity inactive sometime in 2022.
This has caused problems for some of my clients in the past when they went to sell properties and found their entity had been inactivated by the state. Inactivation also means you will lose the exclusive right to the name of your entity, so someone else can come along and use your entity’s name for their entity. This is a real problem when you entity has property deeded in its name. Failure to file can delay or close the termination of agreements of sale in the future, so make sure everyone of your entities files a report by the end of the year. For those of you with further questions, or who would like us to file your report, our firm provides that service for an additional $50.00 fee over and above the state filing fee.