Pennsylvania prices a fund launch in three numbers: $125 to organize each LLC, $525 for the state Form D notice filing, and $7 a year for each LLC's annual report. A standard two LLC structure, a management company plus the fund itself, costs $775 in state filing fees to stand up.
The legal framework is the Pennsylvania Securities Act of 1972, administered by the Department of Banking and Securities. For a Rule 506 offering the state's role is limited by federal law: it collects a notice and a fee, and it cannot impose registration or merit review on the offering. On the adviser side, Pennsylvania adopted a private fund adviser exemption in 2018, so a manager who advises only private funds can usually file exempt reporting adviser reports instead of registering.
The tax layer is where Pennsylvania differs most from its neighbors. A flat 3.07% personal income tax sounds simple, but income splits into eight classes with no netting across them and no carryforward, and a partnership taxed fund owes the state its own K-1 equivalents. Each requirement below comes with the statute behind it.
Five steps to launch in Pennsylvania
Generate Documents
FreeFund documents generate free on Hedgia whether or not you launch with the platform. The legal work that historically cost tens of thousands is the part with no state fee at all.
Create LLCs
Two Pennsylvania LLCs, filed with the Department of State's Bureau of Corporations and Charitable Organizations. Hedgia forms both and obtains the EINs.
Create Accounts
Banking for both entities, then the offering filings. Hedgia prepares and submits the Form D and the Pennsylvania notice filing at your direction.
Invite Investors
Investor onboarding runs in the portal: accreditation checks, subscription signing, and funding instructions.
Start Your Fund
Operations from day one: NAV, fee calculations, K-1 prep, and investor reporting. $0 upfront and no fund minimum.
* $89/month includes 3 manager seats. Additional seats $30/month each. Plus 0.2% of AUM above $1 million, capped.
Pennsylvania requirements at a glance
The law behind each requirement
Rule 506(b): the federal exemption most private funds use
Rule 506(b) of Regulation D exempts the offering from Securities Act registration. It allows unlimited accredited investors and a limited number of non-accredited purchasers, with no general solicitation.
- •Up to 35 non-accredited purchasers per offering, each of whom, alone or with a purchaser representative, must have the knowledge and experience to evaluate the investment
- •No general solicitation or advertising; purchasers come from preexisting relationships
- •Securities sold under Rule 506 are covered securities, so a state may require a notice filing, a fee, and consent to service of process, but not registration or merit review
The Pennsylvania Form D notice filing: $525 within 15 days
Section 211(b) of the Pennsylvania Securities Act of 1972 requires the issuer of a Rule 506 offering to file a notice with the Department of Banking and Securities on SEC Form D not later than 15 calendar days after the first sale of the security in Pennsylvania. This is a notice for a federally covered security, not a state registration and not state approval of the offering.
- •The fee is $525, set by statute and nonrefundable (sections 602(b.1)(vii) and 602(b.2))
- •File through the NASAA Electronic Filing Depository, the Department's DoBS Portal, or on paper to the Corporation Finance Office in Harrisburg
- •Pennsylvania has no separate state form; the filing is the federal Form D itself
- •A drafting quirk: the statute still cites Securities Act section 18(b)(4)(E), the pre FAST Act designation of the Rule 506 clause now found at 18(b)(4)(F)
Adviser registration: section 301(c) is the default
Section 301(c) makes it unlawful to transact business in Pennsylvania as an investment adviser unless registered under the act or exempt; the section opens "Unless exempted under section 302 hereof." State registration runs through IARD with Form ADV Parts 1A, 1B, 2A, and 2B.
- •Fees total $400 for an investment adviser ($275 filing fee under section 602(d.1) plus a $125 compliance assessment under section 602.1(a)) and $135 per representative ($80 plus $55)
- •The definition has its own exclusions: section 102(j)(vii) excludes a person with a Pennsylvania place of business who had not more than 5 clients, in or out of Pennsylvania, in the preceding 12 months and does not hold himself out generally to the public as an investment adviser
- •The Department's review includes an examiner conference call; advisers to pooled investment vehicles also submit the fund's offering and governing documents and meet the capital and custody requirements of 10 Pa. Code 303.042
- •An adviser registered with the SEC does not register with the state; it makes a notice filing with a $350 annual fee (section 602(d.1))
The private fund adviser exemption: 10 Pa. Code 302.070
Pennsylvania adopted a version of the NASAA model private fund adviser exemption, effective January 13, 2018. An adviser who provides advice solely to one or more qualifying private funds is exempt from section 301(c) registration if the rule's conditions hold. Federal exempt reporting adviser status under Advisers Act Rule 203(m)-1 does not by itself excuse Pennsylvania registration; this rule is the state exemption that does.
- •Neither the adviser nor its advisory affiliates may be subject to disqualification under SEC Regulation A Rule 262, and the adviser files with the Department, through IARD, each report an SEC exempt reporting adviser files under SEC Rule 204-4
- •For a 3(c)(1) fund that is not a venture capital fund: every beneficial owner must meet the qualified client definition in SEC Rule 205-3, receive written disclosure of services and duties, and receive annual audited financial statements
- •An adviser registered with the SEC is not eligible and instead follows the federally covered adviser notice filing rules in section 303(a)(iii); an adviser who loses eligibility has 90 days to register or make notice filings
- •Neither the rule nor the Department's Registration Guide states a fee for these filings; confirm current charges, including IARD system fees, with the Department
Section 3(c)(1): staying outside the Investment Company Act
A private fund avoids Investment Company Act registration through section 3(c)(1), an exclusion from the definition of investment company, not an exemption. The fund's outstanding securities must be beneficially owned by not more than 100 persons, and the fund must not make or propose a public offering.
- •Not more than 100 beneficial owners
- •No public offering, which pairs naturally with Rule 506(b)'s ban on general solicitation
- •Section 3(c)(7) is the alternative for funds sold solely to qualified purchasers, with no 100 owner cap
- •Under 10 Pa. Code 302.070, a 3(c)(1) fund that is not a venture capital fund carries the extra qualified client, disclosure, and audit conditions described above
What is different about Pennsylvania
Flat 3.07% income tax with eight classes and no netting
Pennsylvania taxes personal income at a flat 3.07%, applied to income passed through from a partnership taxed LLC. Income falls into eight separate classes, and per the Department of Revenue a loss in one class may not offset income in another, nor may gains or losses be carried backward or forward between years. A losing year gives a Pennsylvania investor no carryforward. Local taxes, such as Philadelphia's business taxes, are separate; a fund based there should get local tax advice.
No entity level franchise tax
The capital stock and foreign franchise taxes that once reached LLCs, including those taxed as partnerships, were eliminated for tax years beginning January 1, 2016 and after. A fund LLC and its management company owe no Pennsylvania franchise or capital stock tax; corporate net income tax applies only to entities federally taxed as corporations.
State K-1 equivalents: RK-1 and NRK-1
A partnership taxed LLC files the PA-20S/PA-65 information return and furnishes PA Schedule RK-1 to resident owners and NRK-1 to nonresident owners, on top of the federal Schedule K-1. Copies of the schedules and the complete federal return go in with the PA-20S/PA-65.
The $7 annual report is new
Starting in 2025, every Pennsylvania LLC files a $7 annual report (form DSCB:15-146) between January 1 and September 30, with the first report due the calendar year after formation. The Department of State applies a transition period for 2025 and 2026 reports; beginning with 2027 reports, failing to file leads to administrative dissolution six months after the due date (Act 122 of 2022; 15 Pa.C.S. 146).
Pennsylvania is inexpensive to enter and specific about advisers
The offering side asks little. A $525 notice on the federal Form D within 15 calendar days of the first Pennsylvania sale, filed through EFD, the DoBS Portal, or on paper, and formation at $125 per LLC with a $7 annual report. Nothing in the state process approves or reviews a Rule 506 offering; the paperwork is the whole requirement.
The adviser side deserves the most attention. Registration under section 301(c) is the default, and the way out for a fund manager is 10 Pa. Code 302.070: advice solely to qualifying private funds, a clean Rule 262 record, and exempt reporting adviser filings with the Department through IARD. For a 3(c)(1) fund that is not a venture capital fund, the exemption adds qualified client, disclosure, and audit conditions that shape who the fund can admit. That choice, exemption or registration, belongs to the manager and counsel.
Hedgia handles the mechanics: document generation is free, and the platform forms both LLCs, obtains EINs, prepares and submits the Form D and the Pennsylvania notice filing at your direction, sets up banking through Axos Bank, and runs investor onboarding, NAV, fees, K-1 prep, and reporting for $89 a month plus 0.2% of AUM above $1 million, capped. In Pennsylvania the filings are cheap and mechanical; the decisions that matter are which investors the fund admits and which adviser path the manager takes.
Pennsylvania Department of Banking and Securities