Do you want to expand an existing LLC into Rhode Island with a foreign qualification, but you’re not familiar with the process?
This guide will outline important details when expanding your business and explain how to foreign qualify an LLC in Rhode Island.
Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!
But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.
It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.
For example, if your LLC is registered in Connecticut and you are looking to open a second location in Rhode Island, you may need to complete a foreign qualification in Rhode Island before you can expand there.
Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, many of the best LLC services can handle this task for you.
Foreign qualifying is essentially asking permission to do business in the state of Rhode Island. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Rhode Island yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business will be banned from commencing or maintaining any lawsuits in state courts. Plus, the Attorney General can restrain your LLC from conducting any business in the state until it has properly registered.
This means that you risk losing not only some of your company’s legal rights in Rhode Island but also its stream of income, which could paralyze your LLC.
Even so, conducting business without foreign qualifying will not invalidate your existing contracts, and it won’t stop you from defending any lawsuits in Rhode Island.
See Rhode Island’s LLC Act, § 7-16-54 and § 7-16-55, the read more about these penalties.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Rhode Island? The state’s LLC Act does little to shed light on this question, but according to other state and tax laws, you are considered to be “doing business” and required to foreign qualify if:
Or, you can think of it this way: if your LLC is profiting off of Rhode Island’s economy, you are doing business there.
Another important factor is LLC taxes. Rhode Island imposes certain taxes on entities doing business there, and foreign qualification lets the state know you’ll be filing these taxes. You may be tempted to fly under the radar so you can avoid these taxes, but resist the urge! This will lead to greater penalties in the future. It’s important to always stay on top of your LLC’s taxation requirements to avoid any unwelcome surprises.
If you’re unsure whether or not you need to file for a foreign qualification in Rhode Island, we suggest seeking legal counsel.
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Rhode Island. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
Check out Rhode Island’s LLC Act, Section 7-16-54 for a more detailed list. If all of your business activities in Rhode Island are present, you’re likely exempt from foreign qualification. But again, it’s best to seek legal advice if you’re unsure.
Foreign qualification in Rhode Island is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in Rhode Island, you will need to download, complete, and mail (or hand-deliver) an “Application for Registration” to the Secretary of State.
There is no online filing option for this particular form, so download a paper copy here. If you’re navigating from the S.O.S. Business Forms page, click “Foreign Limited Liability Company,” and then, next to “Application for Registration,” click Download. Pages one and two of the form contain specific, step-by-step instructions for its completion.
Gather your information ahead of time so that you can finish your form in one brief sitting. Here’s what you’ll need:
Additionally, Rhode Island requires that you include a Certificate of Good Standing from your home state with the filing. And don’t forget that registration isn’t free! The filing fee is $150, which can be paid by check, made out to the “Rhode Island Department of State.”
All finished? Send your form, Certificate of Good Standing, and payment to:
Division of Business Services
148 W. River Street
Providence, Rhode Island 02904-2615
If you happen to live near Providence, you can also drop these documents off in person at the same address. You may pay via card or cash when walking in a document.
After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is on its way to foreign qualification, and you’re embarking on another chapter in the life of your business.
When completing the necessary paperwork for this filing, check to confirm that your LLC name is in compliance with Rhode Island’s specific business name requirements. Otherwise, your application could be rejected. Your name must:
You can also reserve your Rhode Island business name if you’re not quite ready to foreign qualify your LLC. For a full list of naming requirements, see the Rhode Island LLC Act, Section 7-16-9.
We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a jurisdiction where you don’t have permission to do so.
Unfortunately, Rhode Island does not offer online filing for foreign qualifications, and we couldn’t find any official statement about estimated turnaround times either. In general, we would advise filing your documents several weeks before you need your LLC to be foreign qualified.
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Rhode Island state law. For more information about business licenses and more in this state, check out the Rhode Island Department of Business Regulation website.
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Rhode Island LLC Annual Report.
The overall costs of operating a Rhode Island LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.
The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.
Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.
Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your Rhode Island resident agent.
The service then files your Application for Registration with the state to qualify your LLC to do business in Rhode Island.
Disclaimer: The content on this page is for informational purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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