How to Start a Business in Rhode Island

Rhode Island may be the smallest U.S. state from a geographic standpoint, but it’s still large enough to hold a lot of small businesses. According to the U.S. Small Business Administration, approximately 104,000 small businesses called the Ocean State home in 2020, employing over 229,000 people.

We created this step-by-step guide to help you start a business in Rhode Island.

Step 1: Create a business plan

Writing a solid business plan is much more important than some new entrepreneurs may think. Not only does it help you get funding (either by attracting investors or helping you qualify for a business loan), it also helps you weigh whether or not your business is worth launching in the first place. 

Many businesses fail because there is no market need, but a business plan outlines your product, your market, and the process that happens between the pair. When you’re crafting a business plan, you may want to: Define your business idea: What do you aim to do? Are you solving a problem that actually needs solving?

What to Include in a Business Plan

  • Compile a list of “SMART” goals.
  • Consider financials: How much will your business cost to run, and when do you expect to turn a profit? Do you need outside funding?
  • Choose a location: Not all locations are ideal for your business.
  • Make a competitive analysis: Who are your competitors? How are you better, and where can you improve? 
  • Run a market analysis to determine how best to serve your ideal consumer.
  • Seek out tax breaks and local grants.

Step 2: Choose a business structure

Once you’ve created your business plan, the next step is to determine your business structure. In Rhode Island, a business can take several different forms, the most common being sole proprietorships, general partnerships, corporations, and limited liability companies (LLCs). 

Sole Proprietorships

The easiest simplest business structures to create are sole proprietorships and general partnerships. They aren’t registered with the state and are free to set up. However, they offer no liability protection for the owners. Someone suing the business can go after the personal assets of the owners, such as their savings or home.


Corporations are registered with the state, cost money (registration fees) to create, and offer liability protection. That safeguards the owner’s personal assets (like home and personal savings) if the company is sued or ends up in debt. The primary differences between LLCs and corporations are the way they are taxed and the formalities involved. 

Most corporations are C corporations, and their profits are taxed twice, once at the business level and again when they’re distributed to the shareholders (owners). This is referred to as “double taxation.” Corporations also require more paperwork and have less flexibility in management than other entity types.

A Rhode Island corporation also requires a fee and submitting paperwork to the state in the form of Articles of Incorporation.


An LLC, by default, avoids having its profits taxed at the business level before being distributed to the owners (who are called “members”), avoiding the double taxation issue. LLCs also require less paperwork and have a lot more flexibility in how they are set up and run.

To set up a Rhode Island LLC, you need to file Articles of Organization. These documents include things like the company name and address, creation date, and the name and address of the company’s resident agent.

The LLC organizer, who is often a company owner, must sign the document and submit it to the Rhode Island Department of State Business Services Division for approval. There’s a filing fee that must be paid, as well.

If you’d rather have an expert handle forming an LLC or corporation for you, we can file the paperwork to form an LLC or corporation for you with our business formation plans.

Step 3: Determine your business startup costs

Understanding how much it will cost to open your business is vital. This will help you set competitive prices and evaluate your need for funding. Remember: always add a six-month cushion in case of an emergency. Businesses are rocky in the beginning, especially before you’ve landed regular customers.

To figure out costs, add up:

  • Fixed expenses (like rent, employee salaries, and insurance premiums)
  • Variable expenses (like inventory costs)
  • One-time costs (like office furniture and other equipment)

Once you know the costs, you can consider funding options. Smaller, one-time business expenses are easily handled through a low or no-APR business credit card, but you must always be wary of interest. For everything else, business owners often opt for a business loan.

This can be done through the Small Business Administration (SBA) or a local bank that provides business services. Additionally, you may qualify for a grant or another type of government resource.

Step 4: Choose a business name

Two important rules need to be considered when naming your Rhode Island business. First, it should give at least a general idea of the products or services you offer. Second, it must be unique within the state of Rhode Island.

Conduct a Business Name Search

So, while Warwick Enterprises doesn’t say much about your offerings, Warwick Craft Supplies does. To ensure your choice of the business name isn’t already in use by another organization in the state, do a name search on the Rhode Island Secretary of State website. We walk you through the search process on our Rhode Island business entity search page. This will help prevent legal issues, confusion among customers, and ultimately wasted time and money.

Reserve a Business Name

Rhode Island also gives business owners the ability to reserve a name for 120 days before filing the paperwork to start an entity like an LLC or corporation. This isn’t required, but it can keep another business from snatching your desired name before you can get your paperwork together

Domain Name Registration

Once you’ve decided on your new business’s name, you can register a domain name for your business website and start creating social media profiles on Facebook, Twitter, LinkedIn, and other platforms. We have a tool to help you do a preliminary domain name search, and our domain name registration service can help you secure the online name that will best serve your business. 

Step 5: Register and open financial accounts

Once you’ve chosen your business structure and (if necessary for your entity type) filed the registration with the Rhode Island Department of State Business Services Division, you can apply for a federal employer identification number (EIN) with the IRS.

Business Bank Accounts

Having this tax ID number will allow you to open a business bank account and is legally required for many businesses. You can do this yourself or have a partner do it by using a banking resolution

Dedicated business bank accounts will keep the company’s finances separate from your personal funds. This not only helps you at tax time, but it can help protect your limited liability status if you have an entity like an LLC or corporation.

Permits and Licenses

The next step is to apply for any permits or licenses required for your business. Permits and licenses vary by industry, and they can be needed at the federal, state, and local levels. There’s no central authority to tell you every license and permit your business requires, so you’ll have to do some research or have someone like us do the research for you with a business license report.

Step 6: Market your business in Rhode Island

After determining your target market, write a marketing plan that includes the major social media platforms, online communities, and local or online directories. Claim a free business profile on Google My Business to engage with Rhode Island customers across Google Search and Maps.

Also, consider joining the Rhode Island Chamber of Commerce or a local chamber that refers prospective customers to members first.

Print material, such as brochures and business cards, can elevate your marketing at Rhode Island trade shows. Search engine optimization can help customers find your business website or blog when they use Google and other search engines.

Finally, customize your marketing approach. While it makes sense for a home-based web design company in Cranston to market globally, a florist in Bristol will want to limit marketing efforts to a smaller area.

Examples of Good Businesses to Start in Rhode Island

If you haven’t settled on the type of business you want to launch, ask yourself some questions. What are your strongest skills, and how could they contribute to a new enterprise? What existing businesses in your area seem to be the most successful, and why? Is there a need in your area that a new business could fill?

Also, think about the opportunities Rhode Island presents. It’s located on the ocean, and, though it’s geographically small, it’s among the most densely populated states in the U.S.

Here are some business ideas to consider:

  • Healthcare supplies
  • Jewelry making
  • Fishing business
  • Pharmacy
  • Specialty grocery store

Benefits of Opening a Business in Rhode Island

Although Rhode Island doesn’t have a stellar reputation for business friendliness — it finished last in CNBC’s 2019 “Top States for Business” rankings — it still has positives that are hard to ignore, such as its location. Its position on the East Coast is only 45 minutes from Boston, and New York City is less than three hours away.

The ocean access, shipping terminals, and nearby airports are ideal for access to Europe and other international markets.

When it comes to its workforce, Rhode Island has a lot to offer. In addition to an Ivy League university (Brown), there are 13 accredited, degree-granting institutions operating in the state. But in addition to the educated population within the state, Rhode Island employers can draw from a talent pool of nearby states, including Connecticut and Massachusetts.

According to the Rhode Island Commerce Corporation, as many as 4.7 million workers live within a one-hour commute of Providence. 

Bottom Line

With a strategic location and an enormous talent pool of potential employees to draw from, Rhode Island could be the right place for you to start your dream company. When you do, you may need help cutting through the red tape. That’s where we come in.

Our many services are designed to help you start, run, and expand your business, allowing you to focus more on the aspects of entrepreneurship you enjoy. Contact us today to get started.

Start a Business in Rhode Island

Ready to create a legal business entity? We can help you start, grow and run your company in Rhode Island. Simply choose one of these business entities, and we can get you started in minutes:

Top Rhode Island Cities to Form Businesses

Providence: State capital and largest city with a strong presence in healthcare, education, and the arts. Home to prestigious institutions like Brown University and Rhode Island School of Design. Growing technology sector supported by innovation hubs and startup accelerators.

Newport: Prime location for tourism-related businesses due to historic attractions and sailing culture. Strong maritime industry including boat building and nautical services. Opportunities for high-end retail and hospitality businesses.

Warwick: Home to Rhode Island’s main airport, T.F. Green Airport. Strong in retail, services, and manufacturing. Central location makes it suitable for distribution and logistics businesses.

Pawtucket: Known for industrial history and undergoing revitalization to attract arts and creative sectors. Offers affordable space for startups. Supportive initiatives for small businesses in manufacturing and design.

Cranston: Diverse economy with a mix of residential, commercial, and industrial areas. Strong sectors in manufacturing and retail. Proximity to Providence enhances access to metropolitan markets.

These cities offer a blend of economic strengths, strategic locations, and supportive business environments, making them suitable for various types of business ventures in Rhode Island.

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.

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Written by Team ZenBusiness

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