The Best Business Structures for Startups in Philadelphia
If you feel you have an idea that can solve a specific problem, then you’ve probably thought about using that idea to initiate a startup of your own. We’ve previously written about how SEO is an important tool for startups aiming to succeed. There’s more that goes into a startup’s success, however, and today we’re going to talk about one of those factors — namely, location.
Places like Silicon Valley, which is rightly considered the home of startups, can be expensive, and the competition is fierce. Finding the right spot to launch your business is just as important as finding investors. In this case, the City of Philadelphia is in prime position to help you out.
Why the City of Brotherly Love, you ask? Well, there’s actually a ton of good reasons. A report by Forbes found that Philadelphia was comfortably located near top East Coast business hubs like Boston, New York, and Washington, while still providing more affordable business costs.
Inc also highlighted Philadelphia’s incredible homegrown talent, with over 100 degree-granting institutions that set the stage for a lively collaborative field. Plus, the city is booming with coworking spaces, incubators, and accelerators, so you’ll have all the infrastructure you need literally on your doorstep.
Here’s a brief look at a few popular business structures, and what they can do for your startup in Philadelphia.
Philadelphia is a great place for women-owned businesses to get a leg up, thanks to resources like Women’s Business Enterprise Center East. An example of a successful woman-owned business is workplace design firm CFI-Knoll, which pulled in over $50 million in revenue in 2019.
Many of these businesses start out as sole proprietorships, which is a business structure that allows you to have full control over your business. By definition operated by a single entity, sole proprietorships are easy to set up, making them one of the most popular business structures around. However, it should be noted that under this structure your business expenses and personal income aren’t separate, so make sure you keep things organized to avoid future crises.
Another popular business structure is the Limited Liability Company (LLC). LLCs are notable because they’re highly flexible, while affording liability protections to owners. The Benefits of an LLC in Pennsylvania include getting taxed either as an LLC or a corporation, allowing more freedom for business owners. Plus, in Philadelphia LLCs don’t have to worry about having to publish an advertisement about filing or intending to file an application for registration of a fictitious name. This frees up more resources for growing your business.
An example of a startup registered as an LLC that enjoys these benefits is Dwell City LLC. A social impact organization that aims to provide 10,000 safe and affordable dwellings to low- and middle-income Philadelphians by 2030, it purchases properties and rents them out at affordable prices. Founded by Temple University’s Fox School of Business graduate Izzy Jackson, it’s one of many startups that are shaking up the city.
Finally, another business structure that you might want to look into for your startup is the S corporation. S corporations offer liability protections just like LLCs, but require a more formal structure that has additional maintenance requirements. Business owners in Philadelphia using this structure can elect Subchapter-S status to avoid double taxation when it comes to company income, making it a boon for small businesses.
Neuroflow is a notable example of a startup with an S corporation structure. The company aims to support behavioral health integration across all types of care, from psychological to primary care. With an estimated annual revenue of $16.2 million per year, the company is certainly proving it’s got what it takes to succeed in a very competitive industry.