Have you stayed up late pondering how to make your cool idea for a new business in Rhode Island into a workable reality? The legal paperwork alone has probably given you pause.
No one can fault a person for feeling overwhelmed when trying to start a small business. It can be hard to know where to start or who to ask for reliable advice. This is where ZenBusiness can truly help you navigate the fog. We are here to help you throughout every step of forming a limited liability company (LLC) in Rhode Island, and we do it affordably.
This comprehensive guide will lay out the big picture while helping you understand the details of starting an LLC in Rhode Island. We offer straightforward and state-specific approaches to LLC formation that will see your business dreams come to fruition with minimal headaches.
The 5 steps to form an LLC in Rhode Island:
So much of forming an LLC in Rhode Island occurs before you ever file the first piece of paper. Deciding on your business name, your choice of the resident agent, outlining your Operating Agreement, and getting set up to pay taxes are all vital components that should be addressed early. This segment simplifies the Rhode Island LLC formation steps into an organized list. The following step-by-step guide will help you launch your business confidently, knowing you have not forgotten anything.
Step 1: Name Your Rhode Island LLC
As you prepare to register a Rhode Island LLC, give some serious thought to your business name. Your company will require a name that stands out and announces your services or goods in some way. Your LLC name should simultaneously promote curiosity and understanding.
The first step in picking a name involves determining which business names are already taken. Come up with a list of potential favorites and then use the Rhode Island business name search to make sure they aren’t taken.
A few basic rules apply to the naming process. You cannot form an LLC in Rhode Island that does not include the phrase “Limited Liability Company” or one of its abbreviations (“LLC” or “L.L.C.”) in the actual name. You also cannot use any terminology that may contribute to your LLC being confused with a government agency, such as “FBI” or “Treasury.” Review Rhode Island’s naming guidelines before planning potential names.
If you are not quite ready to file your Rhode Island Articles of Organization but want to make sure that your chosen business name does not get taken by someone else, you can file an Application for Reservation of Entity Name. This form reserves your chosen LLC name for 120 days for the cost of $50. You can fill the application online.
Perhaps you are planning to install your LLC with multiple services or want to receive payments and mail under a name other than the LLC’s official name. You will need to file a Fictitious Business Name Statement ($50) that lets the Secretary of State know what name you will be utilizing for those matters. This step, also called “Doing Business As” (DBA), is not mandatory but can be beneficial to certain companies.
Another aspect of naming your LLC is the availability of website domains. A website has become a requirement for many businesses, and the last thing a new business owner wants is to settle on a great name only to find that related web domains have been taken.
One last item to contemplate in the naming portion of your Rhode Island LLC is whether you want to trademark. It’s often easier and quicker to register a trademark at the state level. If you choose to trademark any part of your LLC, you will need to file the Application for the Registration of a Service Mark with Rhode Island, which costs $50 to file. If you’d like broader protections — for example, if you plan on doing business outside of Rhode Island — you could register your trademark with the United States Patent and Trademark Office. While you’re there, you can search their trademark database to make sure the name you want isn’t already federally trademarked.
Step 2: Appoint a Resident Agent in Rhode Island
The second step to forming an LLC in Rhode Island is designating an appropriate resident agent (referred to as a “registered agent” in most states). A resident agent is an entity or individual who is authorized to receive legal documentation on behalf of your business. Rhode Island mandates that all LLCs must nominate a resident agent, and this person or business entity must be a Rhode Island resident and/or qualified to conduct business within the state.
All resident agents in Rhode Island must have a valid street address within the state and certify that they are available during normal business hours to accept service of process. No P.O. boxes are acceptable. Check out Rhode Island’s guidelines on maintaining a registered agent to be sure that you make the most responsible choice for your business.
While there is no law against being your own resident agent, this option tends to be discouraged for several reasons. You don’t want to be served legal paperwork in front of employees or clients, and you may not always be available during regular business hours.
Hiring an outside resident agent ensures you never find out too late about legal developments surrounding your company. It also allows you to focus on your company’s growth rather than having to utilize your time in managing legal correspondence.
Step 3: File Rhode Island Articles of Organization
To officially form an LLC in Rhode Island, you must submit completed and accurate Articles of Organization to the Secretary of State. You can file online through the Rhode Island Secretary of State business portal or submit the paper application by mail:
Division of Business Services
148 W. River Street
Providence, Rhode Island 02904-2615
The fee is $150 for new entity formation. You will need the following information handy to complete the application:
- Your business name and type of industry
- Contact information and address for your resident agent
- Names and addresses for each manager
- Additional provisions
- Management designation
- Effective date
The application will ask you to specify whether you wish your new Rhode Island LLC to be treated as a partnership, corporation, or “disregarded as an entity separate from its member(s)” for federal tax purposes. The “disregarded entity” category refers to being taxed as a sole proprietorship, meaning you’re the only owner of the LLC. If your corporation is going to be a nonprofit, a separate form is necessary, and the fee is only $35.
Step 4: Create an Operating Agreement
While launching an LLC in Rhode Island does not mandate an Operating Agreement, this step is arguably one of the most important. Operating Agreements are the written, agreed-upon rules and goals of your company.
An Operating Agreement outlines acceptable practices for admitting new LLC members, letting members go, and even the rules of engagement should your LLC need to dissolve.
Step 5: Apply for an EIN
Unless you are forming a Rhode Island LLC that will only have one member and no employees, you will probably need to obtain an Internal Revenue Service (IRS) Employer Identification Number (EIN). This number operates much like a Social Security number for your company and represents how federal and state governments can discern your business taxes from those of your personal finances.
Filling out the EIN application on the IRS website can be done quickly and is free. Rhode Island participates in a dual sales permit and business registration system wherein you can set up your company to pay the correct state taxes using the same form it takes to make retail sales.
You can visit the Rhode Island Division of Taxation page to learn more about which taxes might apply to your new business.
How much does it cost to start an LLC in Rhode Island?
The total cost to form a Rhode Island LLC will vary depending on the type of business that you are launching. Some companies require additional professional and state licensing to operate legally. Every new business except nonprofits will pay the $150 filing fee, whether they file online or by mail. Nonprofits will pay $35.
- Extra fees that may or may not apply to your particular LLC formation include:
- Name reservation: $50
- Retail sales and other industry-specific licenses: $10 to $25
- Fees associated with resident agent services
- Notary or apostille fees
Note that beginning one year from your initial filing date, a $50 annual report fee will be imposed on all LLCs to keep them in good standing with the Rhode Island Secretary of State. This annual report and the accompanying fee will remain a part of your yearly business expenses for as long as your LLC is active.
What are the benefits of an LLC in Rhode Island?
Starting a business in Rhode Island means you will enjoy all of the tax benefits granted by the LLC status. Because Rhode Island is home to a wealth of small businesses, it also has some innovative incentive programs, such as Innovation Network Matching Grants and the Small Business Loan Fund Program.
Learn more about the benefits of the LLC business structure and how you can best utilize it to your advantage when launching a new company in Rhode Island.
How is a Rhode Island LLC taxed?
There is a wide variety of business taxes that your Rhode Island LLC will need to pay. These include taxes payable to the Rhode Island government, like Rhode Island sales taxes and Rhode Island state tax. You will also need to pay federal, self-employment, and possibly payroll tax to the IRS.
A great deal regarding the federal and state taxes you will owe will be determined by how you set it up in your Articles of Organization. All LLCs are required to pay a minimum of $400 in taxes annually to the Rhode Island Division of Taxation.