Scranton Business License and Taxes: Why the Mercantile Tax Is Gone and What Replaced It

If you read older guides about starting a business in Scranton, you probably saw the city's business privilege tax and mercantile tax listed as costs to budget for. Those taxes are no longer in effect. Scranton repealed both through File of the Council No. 95, adopted December 14, 2021. Starting January 1, 2022, the city levies a Payroll Preparation Tax instead, and the Scranton School District added its own payroll preparation tax in 2023. For most new businesses, the practical question is no longer what the city business tax is. It is whether you have payroll for work performed in Scranton and whether you are registered to file.

This guide covers what changed, what to gather, the steps to register and file, and the mistakes that cause problems. This is informational content, not legal or tax advice. Pennsylvania and Scranton rules change, so confirm every figure with the agency named before you file or pay. If your situation involves multiple locations, contractors, or a professional license, speak with a qualified attorney or CPA.

Scranton Business License: What Exists Today

Pennsylvania has no state general business license that every business must hold, and it has no county business licenses. The Bureau of Corporations and Charitable Organizations does not issue activity licenses. Whether Scranton requires a separate city permit depends on what your business does and where it operates, so ask the city about your specific activity before you open. Some activities need a state license outside the general rule. For example, home improvement contractors must register with the Pennsylvania Attorney General, and food businesses may need a Pennsylvania Department of Agriculture (PDA) license.

Materials and Information You Need

• Your business legal name and entity type (LLC, corporation, or other structure).
• A Pennsylvania street address for your registered office. A post office box alone is not accepted.
• Your federal Employer Identification Number (EIN).
• A myPATH account for state tax registration.
• Payroll records showing which employees perform work in Scranton and the pay for that work each quarter.
• A list of any subcontractors you pay, with proof of their business registration status.
• Written confirmation of the current Scranton and school district rates from Berkheimer.

What Was Repealed and What Replaced It

Tax	Status	Details
Business privilege tax	Repealed	Repealed by File of the Council No. 95, adopted December 14, 2021
Mercantile tax	Repealed	Repealed in the same ordinance
City Payroll Preparation Tax	In effect since January 1, 2022	0.2787% on payroll attributable to work performed in the city
School district payroll preparation tax	Added in 2023	Confirm the current rate with Berkheimer
Combined city and school district form rate	In use	Berkheimer's combined form rate is 1.034%. Confirm it is current before filing.

Two other local taxes apply to Scranton residents and employers. The city's earned income tax (EIT) is 2.4% on residents, according to the 2026 city budget, and the school district's EIT also applies. The EIT collector for the Lackawanna Tax Collection District is Berkheimer Tax Administrator. Confirm the combined withholding rate with Berkheimer, because the amount you withhold depends on which taxing bodies apply to each employee.

State taxes still apply to most businesses. The Pennsylvania Personal Income Tax is a flat 3.07% on taxable income, including income passed through from LLCs and S corporations that are not taxed federally as corporations. An LLC taxed as a corporation pays the Corporate Net Income Tax, which is 7.49% for tax years beginning in 2026. Pennsylvania has no LLC franchise tax and no separate LLC annual tax. The state sales tax rate is 6%.

Step-by-Step: Staying Compliant in Scranton

1. Confirm your state registration. Search your entity on the Department of State business search at https://file.dos.pa.gov/search/business. An LLC files a Certificate of Organization (Form DSCB:15-8821) with a Docketing Statement (DSCB:15-134A) and a $125 filing fee. A corporation files Articles of Incorporation for $125. A corporation must also advertise notice of the filing in two newspapers of general circulation, one preferably a legal journal, and keep proof in its minutes. LLCs have no publication requirement. Processing takes about 15 business days. Expedited options are available online or in person, not by mail: same day ($100, received before 10:00 a.m.), 3 hour ($300, received before 2:00 p.m.), and 1 hour ($1,000, received before 4:00 p.m.), all in addition to the $125 fee.
2. Set your registered office. Pennsylvania does not use registered agents. List a street address in Pennsylvania. If you have no Pennsylvania address, you may use a Commercial Registered Office Provider (CROP) under 15 Pa.C.S. section 109, but only with an actual contract. Listing a CROP without one can carry civil and criminal penalties.
3. Register for state tax accounts in myPATH. The PA-100 was retired in 2022, so do not look for it. Register through the Department of Revenue at https://www.pa.gov/services/revenue/register-my-business-for-taxes. Add withholding if you have employees and a Sales, Use and Hotel Occupancy Tax License if you sell taxable goods or services.
4. Register with Berkheimer for the payroll preparation tax. Berkheimer administers the city's payroll preparation tax returns and payments. Your first contact for payroll tax questions is Berkheimer, not a city counter. Confirm current contact details on the Berkheimer or City of Scranton website before you call.
5. Set up EIT withholding. If employees live in Scranton or work in taxing jurisdictions that apply, withhold the city and school district EIT as the collector directs. Confirm the combined withholding rate with Berkheimer before your first payroll run.
6. File quarterly returns on time. Payroll preparation tax returns and payments are due May 31, August 31, November 30, and February 28. Add each date to your calendar and pull your records about two weeks ahead.
7. Handle subcontractors correctly. Subcontractors must register their business with the city and file their own returns. Before you pay a subcontractor who works in Scranton, ask for proof of registration and confirm it with Berkheimer.
8. Check Scranton land use requirements. Zoning, building permits, and rental registration are handled through the city. This guide does not list their fees or processing times, so confirm each with the City of Scranton before you sign a lease, start work on a space, or rent out a property.
9. Confirm food licensing if it applies. Food businesses generally need a PDA license unless the PDA Food Safety Jurisdiction Search shows a local program that covers your location. Run that search on the PDA website before you open.
10. Calendar your state annual report. LLCs file a $7 Annual Report from January 1 through September 30 at https://file.dos.pa.gov/. Business corporations file the $7 Annual Report from January 1 through June 30. Nonprofit corporations pay no fee.

Common Mistakes to Avoid

• Looking for a general business license. Pennsylvania has none, and it has no county business licenses. Ask the city only about rules for your specific activity.
• Paying the repealed taxes. If an old business privilege or mercantile tax notice arrives, verify it with the City of Scranton or Berkheimer before you pay.
• Assuming the payroll tax follows where you live. The city tax applies to payroll attributable to work performed in the city, so the work location matters for that tax. Residence matters for the EIT.
• Using a post office box as your registered office. A street address is required.
• Listing a CROP without a signed contract. This can carry penalties.
• Not checking subcontractor registration. Subcontractors must register with the city and file their own returns. Verify their registration before you pay them.
• Registering a fictitious name at the county. Fictitious name registration is statewide through the Department of State (Form DSCB:54-311) for $70.

Expected Results

Following these steps should leave you with a current state registration, a valid Pennsylvania office address, a filing calendar for the city and school district, and a payroll setup that matches how those taxes apply to your work. The first quarter usually takes the longest because the accounts and records are new. After that, quarterly filings often become routine. Results depend on your entity type, employee locations, and activity, so treat this as a starting checklist and confirm the open items below.

Items to Confirm With Each Agency

• School district payroll preparation tax rate and combined EIT withholding rate: Berkheimer.
• Scranton zoning, building permit, and rental registration requirements, fees, and timelines: City of Scranton.
• Whether PDA food licensing applies to your location: PDA Food Safety Jurisdiction Search.
• Your annual report and filing status: Pennsylvania Department of State.

Official Resources

• Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations
• Business Filing Services (file.dos.pa.gov)
• Pennsylvania Department of Revenue
• Pennsylvania Small Business Development Centers