Business Formation and Governance

Pittsburgh Business Law Attorney

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Choosing the right business structure and putting proper governance in place from the start
protects owners, limits liability, and reduces the risk of disputes down the road.
Lebovitz & Lebovitz, P.A. advises entrepreneurs, founders, and closely held
businesses in Pittsburgh and across Pennsylvania on entity selection,
formation documents, ownership structure, and
ongoing governance.

Most business disputes trace back to informal arrangements or documents that never addressed
voting rights, distributions, transfer restrictions, deadlock, or what happens when an owner
dies, becomes disabled, or wants out. Getting the structure right at formation — or correcting
it before a problem surfaces — is almost always less costly than litigation after the fact.

Speak with a Pittsburgh business formation attorney

Entity Selection

The choice of entity affects liability protection, taxation, governance flexibility, and the
ability to bring in investors or transfer ownership. Common structures for Pennsylvania businesses include:

• Limited Liability Company (LLC) — flexible governance, pass-through taxation, strong liability protection. The most common structure for closely held businesses in Pennsylvania.
• S Corporation — pass-through taxation with certain payroll tax advantages, but ownership and shareholder restrictions apply.
• C Corporation — suited for businesses anticipating outside investment or eventual sale. Subject to corporate income tax.
• Partnership — general and limited partnership structures for multi-owner arrangements, including family limited partnerships for estate planning purposes.
• Sole Proprietorship — simplest structure but provides no liability protection. Appropriate only in limited circumstances.

Entity selection should account for your industry, ownership composition, tax situation, and
long-term plans. We work with your accountant or tax advisor to ensure the legal structure
and tax treatment are properly aligned.

Formation Documents and Operating Agreements

Filing with the Pennsylvania Department of State creates the entity — but it does not create
the governance structure that protects owners and keeps the business operating through disputes,
transitions, and unexpected events. That requires properly drafted formation documents.

We draft and review LLC operating agreements, corporate bylaws,
shareholder agreements, and partnership agreements that address:

• Ownership percentages, capital contributions, and distribution rights
• Voting rights, decision-making authority, and deadlock resolution
• Transfer restrictions and right of first refusal provisions
• Buy-sell triggers for death, disability, divorce, and voluntary exit
• Manager or officer roles, compensation, and removal procedures
• Admission of new members or partners

See our dedicated pages on LLC Operating Agreements and
Buy-Sell Agreements for more detail on those specific documents.

Ongoing Governance and Outside Counsel Support

Closely held businesses benefit from ongoing legal counsel that understands the business,
the ownership structure, and the family dynamics involved. We provide outside general counsel
support for Pennsylvania businesses, including:

• Annual compliance and recordkeeping requirements under Pennsylvania law
• Contract review and commercial agreement drafting
• Employment and independent contractor documentation
• Ownership changes, membership transfers, and restructuring
• Coordination with estate planning when business interests are part of an owner’s overall plan

When business matters intersect with estate planning,
real estate ownership, or
succession planning,
we coordinate strategy across those areas so the legal structure remains consistent.

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Frequently Asked Questions

What is the best business structure for a small business in Pennsylvania?

For most small and closely held businesses in Pennsylvania, an LLC provides the best combination of liability protection, governance flexibility, and tax treatment. It avoids the formality requirements of a corporation while still separating personal and business liability. However, the right structure depends on your specific situation — ownership composition, industry, tax considerations, and long-term plans all affect the analysis. An S-Corp election may be appropriate in certain circumstances for payroll tax savings.

How do I form an LLC in Pennsylvania?

To form an LLC in Pennsylvania, you file a Certificate of Organization with the Pennsylvania Department of State and pay the filing fee. You must have a registered agent with a Pennsylvania address. Filing creates the legal entity — but it does not create the governance structure. A properly drafted operating agreement is essential and should be in place before the business begins operating or taking on owners.

Do I need an operating agreement if I am the only member of my LLC?

Yes. Pennsylvania does not legally require a single-member LLC to have an operating agreement, but having one is strongly advisable. It reinforces the separation between personal and business assets — which matters if your liability protection is ever challenged — and documents how the business is managed, how profits are handled, and what happens to the LLC if you die or become incapacitated. Without one, Pennsylvania’s default LLC rules apply, which may not reflect your intentions.

What happens if my LLC has no operating agreement and a dispute arises?

Pennsylvania’s Uniform Partnership Act and LLC Act provide default rules that govern in the absence of an operating agreement. Those defaults may not reflect what the owners intended — for example, default rules may require unanimous consent for certain decisions, allocate profits equally regardless of contribution, or fail to restrict transfers of membership interests. Disputes that could have been resolved by a clear agreement instead become expensive litigation.

How should business formation connect to estate planning?

Business interests are often a significant part of an owner’s estate and should be addressed in both the operating agreement and the estate plan. The operating agreement should specify what happens to a deceased member’s interest — whether it passes to heirs, triggers a buyout, or requires consent of remaining members. The estate plan should address how the business interest is held, whether a trust is appropriate, and how the interest will be valued and transferred at death. Misalignment between these documents is a common source of family disputes. See our business succession planning page for more detail.