Have you ever thought of creating a limited liability company (LLC)? If you’re a first-time entrepreneur in the Ocean State, then consider starting a Rhode Island LLC. Business is booming in Rhode Island, especially in industries like healthcare, financial services, and data analytics. New incentives launched by the state make now a particularly attractive time to form a business in Rhode Island. And doing business as an LLC in Rhode Island can offer you a variety of advantages that we’ll discuss below.
Forming a Rhode Island LLC can be as straightforward as a drive down Millionaire Row as long as you have the right guide. If you want to ensure that you get the full tax and personal liability protection of an LLC, you’ll need to form your business correctly. Trying to make sense of complicated rules and legal documents on your own can be like trying to get home from Block Island after you’ve missed the last ferry. Read on to find out how we can help you register an LLC in Rhode Island.
A lot of the work that goes into starting a Rhode Island LLC happens before you even upload a single document. Once you file your paperwork with the Rhode Island Secretary of State, your new company becomes a legal entity. Even after your filing is complete, you’ll still have some work to do. Drafting an operating agreement and getting an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) are just a couple of other things you should do.
These steps are for starting a domestic, for-profit LLC in Rhode Island. If you want to start a foreign LLC (formed outside of Rhode Island) or a professional limited liability company (PLLC), then you’ll need to follow different steps. Do some research to learn how to start a foreign LLC or PLLC.
Once you’ve decided on starting an LLC, Rhode Island has some basic filing rules you’ll need to follow. Before you do anything, you’ll want to collect all the required information so you won’t be scrambling as you start the process. Since LLCs need to register with the Rhode Island Secretary of State, you’ll first want to know some essential business formation steps. We’ll discuss all five below.
Choose a name for your LLC in Rhode Island. As you begin forming an LLC, think carefully about what your name will be. This name will be your business’s identity, so it should be unique and memorable. If you need some inspiration, we have an article that can help you come up with a great business name.
The Secretary of State has some basic rules for naming your business:
Review the Secretary of State’s “Name Availability Guidelines” page before coming up with a list of names. Being well-informed and well-prepared is the best way to start an LLC in RI.
Before you choose a name, perform a Rhode Island business entity search. This way, you can make sure that the name you want isn’t taken. When you start a Rhode Island LLC, your business has to have a name that is unique from all others; otherwise, your formation documents will be rejected. The Secretary of State’s website has a search tool that you can use, or you can use our Rhode Island business search page.
To reserve your business name so that no one else claims it while you’re getting your LLC set up, you’ll need to file an Application for Reservation of Entity Name (Form 620). Submitting this form online reserves your chosen Rhode Island LLC name for 120 days for a filing fee. You can only refile once after the original reservation expires.
If you plan on running an online business, then you’ll definitely need a domain name. Even if you’ll own a physical location, having an online presence via a business website is important to grow your brand in the digital age. As you come up with a business name, be sure to get a domain name that’s identical or as close as possible. If you look up your first choice for a business name and find that a matching domain name isn’t available, then you can move down your list until both are free to claim.
Virtually every business today needs to have an internet presence. Don’t let your Rhode Island LLC get left behind without a web domain. When you’re coming up with a business name, be sure to check that a matching domain name is available.
Our domain name registration service can help you secure the online name that will best serve your company. We also have a domain name privacy service that you should consider. If you’re looking to create a business website to attract potential customers, you’ll find that information in “Creating a Business Website” further down in our guide.
Your LLC in RI’s intellectual property is one of your business’s most valuable assets — and you may not even realize it! Before settling on a business name, check to see if it has a trademark. It would be a punch in the gut if you chose a name and later received a trademark infringement notice. Trademark infringement can be a long and costly headache, and it can harm your brand.
The state doesn’t check for trademarks during formations, so you’ll have to do this yourself. Visit the United States Patent and Trademark Office’s (USPTO) website to see if your business name or logo is federally trademarked. You can also check the Rhode Island Department of State’s Business Services Division’s website for trademarks at the state level. The Secretary of State’s website has a trademark search engine you can use.
Some businesses operate under a name different from their legal one. They may even operate under more than one name. If you plan to offer different services or operate in many locations throughout the state, then consider getting a “fictitious business name.”Getting this name, also known as a “doing business as” (DBA) name, is not mandatory for your LLC. Rhode Island makes it possible for business owners to get one if they want to, anyway, with Form 624B – Limited Liability Company Fictitious Business Name Statement. You can use our fictitious business name service to file as well.
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Name a resident agent for your LLC. This person or entity is more commonly referred to as a “registered agent.” They can also be referred to as a “statutory agent” or “agent for service of process.” This agent’s responsibility is to receive legal notices and other official forms on behalf of a business. Rhode Island requires all LLCs to have a resident agent.
As we mentioned above, a Rhode Island resident agent can be a person or an entity. Here are the state’s requirements:
While there’s no law against being your own resident agent, this can be a very inconvenient option because:
It may be best if you use a registered agent service.
If you’re your own resident agent or appointed a friend or family member instead of a resident agent service, then you may run into trouble if a process server can’t find this agent. This can happen if your agent happens to leave the office for vacation or miss a few days due to being ill. It can also happen if your resident agent retires, quits, or moves and you forget or neglect to inform the state.
If you fail to either update the state with your new resident agent’s information or appoint a new one, then you could have some problems. The business can be fined, you could lose your personal liability protection, or the state could dissolve the LLC. One other scary possibility is a lawsuit against your company moving forward without you knowing because you had no resident agent to inform you of the service of process.
Using a registered agent service like ours to get a resident agent can be a great benefit. First, it allows you to avoid any of the scenarios previously mentioned. Second, maintaining a resident agent at all times will keep your business in compliance with the state. Third, using this service also means not having to change your resident agent’s address with the state. If you serve as your LLC’s resident agent and move your business to another part of the state, then you’ll need to update Rhode Island with your new physical address.
If you Googled “Rhode Island registered agent LLC” and other similar terms but found nothing worthwhile, then we can help. We can help keep your Rhode Island LLC compliant by setting you up with a resident agent. Our resident agent service ensures that you’ll always have an agent available to receive important legal, tax, and other notices from the state.
This service also helps to keep you organized. Whenever your agent receives a notice addressed to your business, you’ll know right away. These forms will go straight to your online dashboard where you can view, download, and print them. You won’t have to worry about keeping them organized yourself.
Complete and file your Articles of Organization (Form 400) with the Secretary of State. We know that filing any sort of government paperwork or legal forms can be a bit intimidating. That’s why we offer business formation plans to help you get your paperwork done correctly.
We can also serve as your LLC’s organizer. The organizer is the person responsible for completing and signing the form, whether it’s you, an attorney, a business formation service, etc. Although we can handle your formation for you, let’s go over the process below.
It’s important to have all the necessary information in your Articles of Organization. If anything is incorrect or missing, then the Secretary of State will reject the documents. You’ll need to include the following information:
When you fill out your Articles of Organization, you’ll have to decide if your LLC will be member-managed or manager-managed. Most LLCs choose member management because they have only a few owners. In those cases, this option may be more appropriate.
Some LLCs, however, prefer to appoint or hire a manager instead to oversee the company. This person can be one of the members or an outside party. This type of management is helpful when some LLC members prefer to be passive investors only. Regardless of which you choose, you’ll need to state this in your Articles of Organization.
Rhode Island offers pretty straightforward methods for filing your Articles of Organization. You can do it online by going to the “Start Your Rhode Island Business” page on the Secretary of State’s website. You’ll see a list of different formation documents. Choose the LLC, click to file online, and follow the instructions.
To file by mail, you’ll go to that same webpage. Instead of filing online, you’ll choose the filing by paper option. You can print the Articles of Organization, fill them out, and mail them to the Secretary of State. For both methods, you’ll have to pay a fee. The processing time is about one to three business days. You can also use our expedited filing service. While this doesn’t impact how quickly the state will process your documents, it helps us prioritize your Rhode Island LLC.
If you’re starting your new company toward the end of the year, you may want to consider setting your LLC filing date on or after January 1 of the coming year. This can spare your business the hassle of filing taxes for only a short period of the current year, particularly if you don’t anticipate sales or other business activity.
Ordinarily, an LLC, if approved, becomes effective on the date of submission. This is true even if the Rhode Island Secretary of State doesn’t stamp it “approved” until later. However, you have the option to tell the state that you want your effective date to be at a later time. You can choose to have your LLC’s effective date be up to 90 days past the date you submit the filing.
We can help you with this. When forming your LLC with us, you’ll have the option of having your business’s effective date delayed for a fee. Know that this service is only available from October to January.
Keep in mind that you only have to file your Articles of Organization once. If you make any changes to the business later on, like changing your resident agent or adding a new member, then you’ll need to file Articles of Amendment (Form 401). If you need help amending your Articles of Organization, then check out our amendment filing service. It can take care of the hassle for you. Be sure to also look into our Worry-Free Compliance service. With it, you’ll get two amendment filings each year.
If you choose to have us file your Articles of Organization, then all your paperwork will be readily available from your ZenBusiness dashboard when approved by the state. You can keep all your important documents digitally organized and ready to view whenever you need to.
Along with your digital documentation, you should also keep your physical paperwork organized. This includes your operating agreement, business contracts, licenses and permits, etc. We have a customized business kit to keep everything organized for you.
Draft a Rhode Island operating agreement for your LLC. An operating agreement spells out your LLC’s rules for operation and ownership details. While this agreement isn’t required by law, nor do you need to file it with the state, it’s a terrific governance tool for your small business. Without an operating agreement, your LLC will be subject to the state’s default LLC rules.
Perhaps the largest benefit of an operating agreement is customizing your business’s rules and procedures to serve your LLC’s interests, requirements, and expectations. What other benefits are there to having one? Let’s go over a few:
This isn’t an exhaustive list of all the benefits of having an operating agreement in place. As you prepare your LLC, you’ll surely find other items that you’ll want to include in your company’s governance materials. An operating agreement is a terrific tool to do that.
You might be thinking that you won’t need an operating agreement as your LLC’s only owner. After all, these agreements are mostly used for avoiding disputes between members and explaining each’s role in the company, right? Not always.
As we went over before, an operating agreement can detail what will happen to the company if a member dies or becomes incapacitated. As the sole owner, this can really come in handy. You can choose to have the LLC dissolved or handed over to someone else.
Future business partners, banks, investors, and others may want to see your operating agreement, too. In fact, some financial institutions require business owners to have an operating agreement to open a business bank account. Also, if your business is ever taken to court, you can use your operating agreement to further show that you and the LLC are separate entities.
If you aren’t sure what to add to your operating agreement, don’t worry. Here are some basic items you may want to include:
If you’re unsure of how to create an operating agreement, we offer a guided customizable template to help you. A chatbot will be available to walk you through the process of creating the agreement. An e-signature is also available for the document.
Get an Employer Identification Number (EIN) with the IRS. This number is also known as a Federal Employer Identification Number (FEIN) and a Federal Tax Identification Number. An EIN is like a Social Security number for your business, allowing your LLC to hire employees, apply for a business bank account, and pay taxes. And, like a Social Security number, it helps the government identify your business during tax time.
Most LLCs need an EIN, especially those with multiple members or employees. You can get your LLC’s EIN through the IRS website, by mail, or by fax. We can also get one for you with our EIN Service.
You’ll need to register your business with the state’s Division of Taxation website. Once you do this, you should be able to see which classifications and forms may apply to you. As an employer, you’ll need to register for employer tax.
You’ll also need to register for sales and excise taxes, payroll taxes, and withholding taxes. Visit the Division of Taxation’s “Resources for Businesses” page for more info on business taxes in Rhode Island.
LLCs are very flexible business entities, both in their management and taxes. They’re taxed as a sole proprietorship if there’s only a single member and a partnership if there are two or more. A first-time entrepreneur may find this appealing since it avoids “double taxation.” This is where a business pays taxes when its income is paid to the owners and again at the business level.
Sometimes, LLCs choose to pay their taxes as a C or S corporation. As a C corp, the LLC will have to pay taxes at both levels, but this option comes with some appealing tax deductions for some businesses. For example, the company can write off its insurance premiums as a business expense.
As an S corp, your company will enjoy the pass-through taxation that LLCs have by default. Another advantage is potentially saving money on self-employment taxes. An S corp designation allows the owners to be “employee-owners.” Your income splits into your salary and your share of the LLC’s profits. This way, you’ll pay employment taxes only on your salary. Other taxes may apply to your profits, however.
Applying for S corp status might be very appealing, but keep in mind that the IRS keeps a closer eye on businesses with this designation. This means that your risk of getting audited is higher. S corp status is also more difficult to get. No matter if you choose the LLC’s default tax status or decide to go with a C or S corp designation, it’s best to first speak with a tax professional to learn more about tax designations and tax liabilities for LLCs.
After you’ve secured your LLC’s EIN, consider opening a business bank account. You may think that using your personal bank account should suffice in handling your business finances, but reconsider. Having accounts that separate your personal and business banking is important for sorting your finances come tax season. It can additionally protect you from liability since you won’t have to worry about mixing your personal and business funds.
When you’re ready, we offer a discounted bank account service. You’ll get unlimited transactions, a debit card, online banking features, and more. If you’d like to authorize someone else in the business to use the bank account, then look into our banking resolution template.
For more help managing your business’s finances, check out ZenBusiness Money. This tool helps you receive payments, track expenses and revenue, create custom invoices, and more, all in one place.
After you’ve submitted your formation documents, there’ll likely be a few more things to do to ensure your business runs smoothly. Here are a few to consider.
Keeping track of your business’s finances is a big priority. You may very well need help managing this oftentimes difficult task. As we detailed above, you can rule your finances with ZenBusiness Money.
Although the LLC model offers limited liability, your business may need additional forms of coverage. Where should you start and which types of business insurance should you look for? There are countless insurance companies out there with competitive rates and plans, so you’ll need to do some research to find what you need. You can start looking at general liability insurance and go from there. Don’t be afraid to get quotes and ask questions about what exactly you’ll get with coverage.
We discussed getting a domain name earlier, which you’ll do in order to have a business website. This website can help you grow your online identity. People will more than likely look up your business address, hours of operation, phone number, and more online. A website can also help you market your brand and conduct business online. We offer a business website service so you can give your business a digital identity.
In Rhode Island, you must file an annual report for your LLC with the Secretary of State. You can do so through the Secretary’s website or by mail. You’ll need to file this report between February 1 and May 1 for a fee. There’s also a fee for late filings. We offer an annual report service so you won’t have to worry about late filings.
The following is some additional information to consider regarding your Rhode Island LLC.
There may come a day when your LLC grows large enough to hire employees to join the company’s team of members/managers. Deciding the qualifications and experience needed for a position within the company is essential to creating a candidate pool.
Get with the other members of the LLC, if any, to decide which type of employees you’ll need and how to go about finding them. There are many websites out there to help you find candidates, so check them out. The Secretary of State’s “Business Basics” page has a section on employee information that can also help you.
A Certificate of Good Standing, also known as a Certificate of Legal Existence or Certificate of Status, verifies that your LLC is in good standing with the state. It isn’t necessary to conduct business or form your LLC, but it may come in handy to do the following and more:
In order to get one, your LLC first has to be officially recognized as a legal business entity in the state and, of course, be in good standing. You can request one online, by phone or mail, and in person. Go to the Secretary of State’s “Order Certificates” page to get one. You can get one for Rhode Island with us, too. Learn more about Certificates of Good Standing.
We can help
Hopefully, you have a much better understanding of how to create a Rhode Island LLC and the formation process that goes with it. If you still have a few questions, we want to hear from you. Feel free to ask us for more information about LLC formations or our many professional services. We’ll do what we can to help you start, run, and grow your business.
It doesn’t matter if you plan to own a food truck in Newport or a boutique in Little Compton. We want to see your business dream become a reality, and our services are geared toward making that happen.
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Rhode Island doesn’t issue a general business license, but your industry, certain laws, and location will determine which types of licenses and permits you’ll need. Your employees may need to apply for certain licenses as well. The Department of State doesn’t issue licenses, so you’ll need to do some research.
Check out the Rhode Island Business Portal’s Business Assistant tool. The last step will give you an overview of which licenses you may need along with where to get them. You can cut through the hassle with our business license report service.
The fee for forming an LLC in Rhode Island starts at $150 for filing the Articles of Organization. This total can be higher if you decide to use other services like reserving a business name. Keep in mind that state fees can change, so always check the Rhode Island Secretary of State’s website for fee schedules.
One of the LLC model’s most appealing features is “pass-through” taxation. This means that the business itself doesn’t pay federal income taxes. Rather, the business income passes through to the owners.
Each person then pays taxes on the earnings as income. This is different from corporate profits, which are taxed twice: at the business level and again at the individual level.
LLCs can also choose to be taxed as a C corporation or S corporation. As a C corp, the LLC will deal with double taxation. As an S corp, your LLC avoids double taxation. However, applying for S corp status comes with greater scrutiny from the IRS, more restrictions, and is difficult to get.
We have an S corp service that can help your LLC apply for this status. You should know that this service is only available during the formation period. If you already own an LLC, then you’ll need to apply for S corp status on your own with the IRS.
Further, the Rhode Island Department of Revenue’s Division of Taxation has this to say about LLC taxes, “Any limited liability company (LLC) not treated as a corporation for federal tax purposes shall pay an annual charge equal to the minimum business corporation tax, which is $400 for tax years beginning on or after January 1, 2017.”
Speak with a tax professional before deciding on tax classification options for your LLC. And be sure to learn more about Rhode Island small business taxes.
When transferring ownership of your Rhode Island LLC, you should refer to your operating agreement. Typically, you’ll draft a purchase agreement where the owner formally sells their ownership portion to someone else.
Next, you should amend your operating agreement to reflect the change in ownership. From there, you’ll also need to inform the state about this change. You can do so by filing Articles of Amendment (Form 401) with the Secretary of State. Here, you’ll include the name of the new owner.
No, a business plan isn’t a requirement for an LLC in Rhode Island. However, having one has benefits. A business plan allows you to outline your company’s structure, plans, business goals, and more.
You can also include information about your market, the LLC’s founders, and how you plan to get funding for the business. Additionally, a business plan can make it easier to find investors and lenders since it shows that you’re serious about running the business. Learn more about planning your business.
LLCs are one of the more popular business entities since they offer the best of both worlds: the personal liability protection of a corporation and the tax benefits of a sole proprietorship. Their flexible management structure is also very appealing to entrepreneurs.
LLCs can additionally:
In Rhode Island, the processing time to form an LLC usually takes between one and three business days according to the Secretary of State’s website. This may take longer if any issues come up with your Articles of Organization, such as missing or incorrect information.
No, you aren’t legally required to file your operating agreement with the state. However, this shouldn’t dissuade you from drafting one. Refer to “Benefits of RI LLC Operating Agreements” in Step 4 to learn why.
You can choose your LLC’s tax structure to be whatever you want. Most entrepreneurs prefer the pass-through taxation that LLCs enjoy by default. This way, they only pay state and federal taxes on the income they earn from the LLC. The company itself, though, doesn’t pay federal income taxes.
Other LLCs find it beneficial to file their taxes as a C or S corp. We went into detail about these designations in the “How are LLCs taxed in Rhode Island?” FAQ. Your best bet would be to reach out to a licensed accountant to learn more about LLC taxes.
Rhode Island doesn’t permit the creation of series LLCs. This type of business structure involves several separate LLCs (“child” LLCs) operating under a “parent” LLC. This model helps to shield the parent and child LLCs from each other’s liabilities.
If the time comes to dissolve your LLC, then you’ll need to submit Articles of Dissolution (Form 404) to the Secretary of State. You’ll also need to take care of any outstanding business debts, assets, and remaining profits. Be sure to refer to your operating agreement to make sure that you follow the rules you established for dissolving your LLC.
Check out our Rhode Island business dissolution page for more information.
Yes, as we went over in Step 1, you can get a fictitious business name for your LLC. You’ll file with the Secretary of State. You can submit Form 624B either online or by mail for a fee.
When removing a member from your LLC, refer to the reasons and procedures for doing so in your operating agreement. You’ll also need to address what will happen to that member’s ownership portion. Will you sell it to a third party or will you and the other members absorb it?
After the member leaves, you’ll need to update the state by filing Rhode Island Articles of Amendment (Form 401). Be sure to also update your operating agreement with this new information.
As we went over previously, you’re required to file your LLC’s annual report with the Secretary of State. Go to the Secretary’s “File Your Annual Report” page. Here, you’ll have the option of filing your annual report online or by mail for your LLC. The filing window is between February 1 and May 1. There’s a fee for both methods.
If you own a business outside of Rhode Island but wish to operate within its borders, then you’ll need to register as a “foreign business.” As we mentioned early in our guide, we don’t help with foreign business registrations. However, the Rhode Island Secretary of State has tools available to help you. Visit the Secretary’s “Information for Foreign Businesses” page to learn more.
Disclaimer: The content on this page is for information 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.
Written by Team ZenBusiness
Rhode Island Business Resources
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