What are the steps a small business owner in Pennsylvania should take in order to become an LLC and protect themselves from personal liability?

As a lawyer, I would advise a small business owner in Pennsylvania to follow the steps outlined below to become an LLC and protect themselves from personal liability.

Step 1: Choose a Name for the LLC

The first step is to choose a name for the LLC that complies with Pennsylvania's naming requirements. The name must be unique and should not be confusingly similar to the name of another business operating in Pennsylvania. The name must also include one of the following terms: "Limited Liability Company," "L.L.C.," "LLC," or "Ltd. Liability Co."

Step 2: File the Articles of Organization

Once you have chosen a name for the LLC, you will need to file the Articles of Organization with the Pennsylvania Department of State. This form can be filed online or by mail. The form requires the following information:

• The name and address of the LLC
• The name and address of the LLC's registered agent
• The LLC's purpose
• The name and address of each LLC member

The filing fee for the Articles of Organization is $125.

Step 3: Obtain an EIN from the IRS

Next, the LLC will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This is a unique identifier assigned to the LLC for tax purposes. You can apply for an EIN online through the IRS website.

Step 4: File the Annual Report

Every LLC in Pennsylvania is required to file an annual report with the Department of State. This report must be filed by April 15th of each year and includes basic information about the LLC, such as the name and address of the registered agent.

Step 5: Take Steps to Protect Yourself from Personal Liability

While forming an LLC provides some protection from personal liability, there are additional steps you can take to further protect yourself. These steps include:

• Obtain adequate insurance coverage, such as liability insurance or errors and omissions insurance, to protect the LLC from liability for any damages, losses or legal fees.
• Create an operating agreement, outlining the terms of the LLC's operation, including each members’ rights and responsibilities.
• Avoid personal guarantees with business transactions. This means not agreeing to personally pay for business-related expenses or debts.
• Keep accurate records and separate personal and business finances.

In conclusion, as a lawyer, I would advise a small business owner in Pennsylvania to follow the above steps to become an LLC and protect themselves from personal liability. While forming an LLC will provide some protection, it is important to take additional steps, such as obtaining insurance coverage and creating an operating agreement, to fully protect themselves. It is always recommended that you consult with a licensed attorney to ensure your specific needs are met.