Having a Rhode Island LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Rhode Island.
On this page, you’ll learn about the following:
- How to Start an LLC in Rhode Island
- After Starting your Rhode Island LLC
- Rhode Island Foreign LLC
- Why an LLC in Rhode Island
- Best Businesses in Rhode Island
- Rhode Island LLC Formation Review
How to Start an LLC in Rhode Island
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in Rhode Island.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Rhode Island, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Rhode Island business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Rhode Island. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Rhode Island. The cost of a name reservation is $52.5 (online) and $50 (by mail).
Important Quick Links:
Office of the Secretary of State
148 W. River Street
Providence, Rhode Island 02904-2615
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Step 2: Assign a Registered Agent in Rhode Island
A registered agent for service is a person or business entity that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in Rhode Island. Choosing a Rhode Island registered agent for your LLC is required.
Make sure your registered agent service providers are residents of Alabama. It could also be a business. Here are the recommended agents and employees for you:
Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Rhode Island. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Articles of Organization in Rhode Island
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Rhode Island Secretary of State, with a starting fee of $150 to file. LLC cost in Rhode Island includes other taxes and fees. You may file them online or by mail.
This Rhode Island Certificate of Formation is a primary document, among the many legal forms, needed to form your business officially. It will indicate details about your LLC in Rhode Island, like if it is a member-managed or managers-managed. This is among the vital formation documents you must accomplish.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Rhode Island LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county. To know more about online filing, visit the Rhode Island Certificate of Formation.
How to File by Mail
If you prefer filing real-life forms for your Rhode Island LLC registration, then you can download the Rhode Island Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature. You may also submit in person during business days.
Mail To: Division of Business Services
148 W. River Street
Providence, RI 02904
Step 4: Create Your Rhode Island LLC Operating Agreement
An operating agreement is an internal document that serves as your limited liability company agreement that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to an LLC operating agreement Rhode Island does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Rhode Island LLC later.
Step 5: Filing a Rhode Island LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
EIN is needed when the LLC hires employees. Hiring employees in Rhode Island LLC requires specific rules and regulations. One should know about them before hiring employees. EIN for Rhode Island foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Rhode Island LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Rhode Island LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Rhode Island business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Rhode Island LLC annual report or biennial report
- Already existing LLCs that wish to operate in Rhode Island must register as Rhode Island foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Rhode Island Foreign LLC
To register a Rhode Island foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Rhode Island. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Rhode Island Foreign LLC to know more about having a foreign LLC.
Why an LLC in Rhode Island
If you look at Rhode Island’s insights, it is one of the smallest states in the USA but has large opportunities for businesses. Industries are established in the state and are thriving well due to the business environment and incentives offered. So, if you are also willing to start a Rhode Island LLC, here are some of the benefits the state government offers to their LLC start-ups.
Incentives for Small Businesses
Any new Rhode Island LLC that is starting up as a small business will be eligible for plenty of incentives and tax benefits provided by various government entities. A glimpse of some of them is shown below.
- Any capital gained by the small business will be excluded from the taxation list for some time to invest more in strengthening their foundation. Also, many modifications are to be made in the company’s structuring, for which some amount is to be paid to the government. A business is also exempted from these taxes. Read more on Rhode Island’s classification of LLC tax.
- Some specific activities are listed by the Rhode Island state government and clarify that if the LLCs follow these activities, they will enjoy some tax credit.
Small Business Loan program
In Rhode Island, small businesses are liable for 98.9% of the state’s income. That is why the government started a special loan program named Small Business Loan Fund Program. It ensures that any small business looking to level up should not miss an opportunity due to a money crisis. The maximum capital one can derive from the loan is $500,000, which is more than sufficient for carrying forward any expansion-related activity.
Innovation Network Matching Grant
The INMG program is designed for LLCs in Rhode Island that is medium to small in size. The key industries to whom these grants are provided the healthcare, food and agriculture, life sciences, etc. These businesses are considered essential for running human life, and that is why the incentives are provided to such businesses on the tax they file with the state government.
Best Businesses in Rhode Island
To form an LLC in Rhode Island, you need to gain complete knowledge of the smallest state’s businesses. Several businesses are well flourishing in the state, but only a few have contributed hugely to its GDP. Here is the list of those top 3 businesses
One of Rhode Island’s most prominent players, tourism, provides jobs to 50,000 people of such a small state. The state’s total contribution to the country is around $5.75 billion, and the reason behind this is the top-class tourism spots in the state. There are many historical monuments in the state with a long 400 miles of seashore.
There is a place named Benefit Street, which is most popular in the state, and people love to stay around that place due to its artistic and intellectual centers.
The textile mills and jewelry businesses of the state are very famous around the country. For a very extended period of time, the jewelry businesses of the state are also known as the world’s jewelry capital. The jewelry is focused on the inexpensive yet beautiful stones that are procured from the seashore easily.
Other than jewelry, there are some production houses for electrical appliances also in the state. All of these businesses have combined contributed an amount of $4.65 billion to the state’s GDP.
Fishing and Agriculture
Due to the long seashore present in the state, the businesses related to fishing activities are thriving well. A vast mackerel market, cod, striped bass, etc., fishes due to its commercial demand. The state is also dependent on its agriculture sector for milk, sweet corn, and potato. The overall contribution of both these sectors is around $.12 billion.
Some small businesses that are working goof in the state are:-
- Special cultural food businesses
- Custom jewelry shop
- Fabricated metal products business
Rhode Island LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming an LLC in Rhode Island. Click on the steps in this list to read the full detail.
- Name your Rhode Island LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
In Rhode Island, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in Rhode Island
If you’re wondering “How fast can I form an LLC in Rhode Island?”, you’re not alone. Thousands of entrepreneurs have been facing the same question. Despite the state’s favorable business environment, forming a company in Rhode Island can still take several months. Here are some of the tips to keep in mind to form a successful LLC in Rhode Island. A good way to start is to create a website. This will draw potential customers to your business. Many people research businesses online before buying products or services, so a website will help you to attract customers.
First, you must choose a name for your business. It must be unique and not be in use by another business. If you’re unsure of what to name your company, try Incfile’s Business Name Generator to help you come up with a catchy and appropriate name for your new business. You can also follow all the rules regarding the name of an LLC in Rhode Island. Once you’ve selected a name, you can then file the Articles of Organization with the Secretary of State.
Once your documents are approved by the state, your LLC is ready to open a business bank account and obtain a tax ID number. The next step is to sign an operating agreement, which outlines the financial and legal rights of each member. The operating agreement also details how members may leave the company, what capital they have to contribute, and other pertinent information regarding the business. This document can be filed in a matter of minutes.
If you are a resident of Rhode Island, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $150 (domestic LLC) and $150 (foreign LLC), LLC costs in Rhode Island include $50 for Annual Reports every year. LLCs are liable to pay sales tax of 7% every year
It takes 5 to 7 business days to get a Rhode Island LLC if you file it online or by mail.
Every year all the LLC have to submit an Annual Report and pay $50 to the Rhode Island Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Rhode Island at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.