Do You Need a PA Business License? The Berks County Answer

If you're starting a business in Berks County, somebody has probably already asked you for your Pennsylvania business license, and you have probably spent an evening looking for where to get one. I can save you the rest of the evening. Pennsylvania has no general business license. There's no application to fill out, no fee to pay, and nothing to frame on the wall behind the counter.

So what does the state want from you instead? It wants a short set of registrations, and which ones apply depends on what you do and where you do it. After that, the state hands the rest to your municipality, and that's where the Berks County answer gets its own shape, because Berks has 72 municipalities and the rules change at the township line.

If you'd rather hand the whole pile to someone else, a Berks County accountant does this for a living and can get through it in an afternoon.

What to put in the License Number box

The question usually shows up on a form. The bank's account application or a wholesaler's credit form has a box labeled License Number, you have an LLC in the works, and you have no idea what goes in it.

Since there's no statewide number to give, you use one of the numbers you're going to register anyway: your EIN, your sales tax license number, or your Reading Business Privilege License number if you work in the city. Ask whoever owns the form which one they mean. If none of them applies to you yet, write that Pennsylvania issues no general business license, and say why: the state has none to issue.

What you register instead of a PA business license

The list is short, and I'd rather you see the costs side by side than read them one at a time. Here's each registration, when it applies to you, and what it costs.

Two of the six lines are free, and the order matters. The entity comes first, because the EIN is issued to it, and the withholding account wants your EIN before it will open.

The EIN deserves a word of its own. It's your primary identification number with state agencies, so guard it the way you guard your Social Security number. And pay nothing for it. An EIN never costs money, and anyone charging you for one is charging you for typing.

Do you need a sales tax license if you only sell services? You might. The tax reaches certain services on tangible property and some named business services, not only what sits on a shelf. There's one exemption worth knowing about. If you sell only through a marketplace that collects the tax for you, you can skip the license altogether.

The Annual Report is the one people miss. It replaced the old ten-year report, and a company that keeps skipping it can eventually be dissolved. Put the seven dollars on the calendar.

What if you're one person working under your own name? Then the first three lines in the table aren't yours. You open the tax accounts that apply and go to work. The post on Berks County small business resources covers the local people who will walk you through all of it for free.

The Reading Business Privilege License

Reading does issue a license, and if you work inside the city line you'll run into it. It costs $55 a year, and you get it from Room I-27 at 815 Washington Street, or by calling 1-877-727-3234. Zoning approval comes first, and nearly every business needs it. Three kinds of work also need a health sign-off before the license issues: food, waste hauling, and exterminating.

Now for the part that catches people who don't live in Reading. The trigger is 15 days. Work in the city on 15 or more calendar days in a year, partial days included, and you file the Business Privilege Tax whether you live in Reading or not. The tax is on gross receipts, meaning the money that comes in rather than the profit left over, and Reading sets it in mills, which is dollars per thousand. Services, commissions and rentals pay 2.25 mills, which is $2.25 per $1,000. Retail pays 1.5 mills, or $1.50 per $1,000. Wholesale pays 1.0 mill, or $1.00 per $1,000.

What if you live in Spring Township and only take the occasional job in the city? Count the days. Fifteen is a low bar, and a contractor with two long jobs in the city crosses it without noticing. If Reading is any part of your territory, I'd budget the $55 and the yearly return from the start and stop counting.

Which Berks County townships and boroughs charge a business tax

Most of them don't. Twelve of Berks County's 72 municipalities levy a business privilege or mercantile tax on gross receipts. The twelve are:

• the City of Reading,
• Exeter Township,
• Laureldale Borough,
• Lower Heidelberg Township,
• Mount Penn Borough,
• Muhlenberg Township,
• Shillington Borough,
• Sinking Spring Borough,
• Spring Township,
• St. Lawrence Borough,
• West Reading Borough,
• and Wyomissing Borough.

In most of the twelve the rate is 1.5 mills on retail and 1 mill on wholesale, the same $1.50 and $1.00 per $1,000 that Reading charges.

If your town isn't on that list, there's no business tax to file in your town. Your township office is still the place to ask about zoning and permits, and I'd call before signing a lease, not after.

Some of the twelve also sell a yearly Business Privilege License on top of the tax. Here's who charges what.

None of these will change your business plan, but it's better to know the fee exists before the letter shows up. Once you hire, your municipality's local services tax and earned income tax come off payroll where your municipality levies them. Your accountant handles both, which is one more reason to have one.

State licenses by trade

There's no general license, but there are plenty of specific ones, and if your trade is on this list the license is part of opening day, not something to sort out after.

• Food. You need a retail food facility license. A new facility is $241, or $103 if it seats under 50 and you run it yourself. Renewals are $82, and the paperwork goes in at least 60 days before you sell your first plate.
• Liquor. You need a state liquor license, retail or wholesale. A new one may be limited by quota, so start early.
• Salons. You need a state license, with an inspection before you open. The application is $142.
• Home improvement. Do $5,000 or more of home improvements a year and you register as a home improvement contractor, which is $100 every two years. The post on how to become a licensed contractor in PA walks through the whole thing.
• Child care. You need a certificate of compliance from the state, and the categories start at four unrelated children in a family home.
• Car dealers. New, used or motorcycle, you hold a state dealer license.

Does a state license get you out of the city one? No. A paid state license doesn't excuse you from Reading's Business Privilege Tax.

Home occupation permits in Berks County

A home business is still a business, and zoning still comes first. What does that cost? In Reading there are two permits. A no-impact home based business permit is $75, and it covers work that brings no traffic, no parking and no in-person transactions. A home occupation permit is $150, and it covers everything else, where the zoning allows the use.

Bring three things when you apply: the application, a copy of your deed or lease plus a notarized letter from the landlord if you rent, and your PA photo ID. Then expect the $55 Business Privilege License to follow.

Outside the city, townships and boroughs write their own home occupation rules. Call yours before you print the business cards.

Frequently asked questions

Is there a Pennsylvania business license?

No. Pennsylvania has no general business license. What you register instead is a business structure or a fictitious name, an EIN, the state tax accounts that apply to you, and whatever your municipality requires.

What does an LLC cost in Pennsylvania?

It costs $125 to file the Certificate of Organization, then $7 a year for the Annual Report. Add $70 if you trade under a fictitious name.

Do I need a Reading Business Privilege License if I don't live in Reading?

Yes, once you work in the city on 15 or more calendar days in a year. The tax applies whether or not you're a resident, so that means the $55 license and the yearly return.

Nobody in Pennsylvania is going to hand you a business license, so stop looking for one, register the handful of things that apply to you, and make one phone call to your municipality. Then get back to the part of the business you started it for, and while the paperwork is fresh, add your business to BerksConnect so the people around here can find it.