In Rhode Island, forming an LLC is one of the first and most important stages in establishing, owning, and operating a business. You can learn exactly what actions to take to make it happen in this detailed how-to guide.
This article covers the necessary documentation, expenses and taxes, legal jargon, and other useful information. By the end, you will have gained all of the knowledge required to incorporate an LLC in Rhode Island.
|State||Rhode Island||Connecticut||Massachusetts||New York||US Average|
|LLC Filing Fee||$150||$120||$500||$200||$130.38|
|LLC Annual/Biennial Fee||$50 (every year)||$80 (every year)||$500 (every year)||$9 (every 2 years)||$89.34 (every year)|
|Corporate Tax Rate||7.00%||7.50%||8.00%||6.50-7.25%||5.60%|
|Nominal GDP per capita||$60,185||$82,233||$91,129||$93,463||$64, 773.08|
Before You Set Up An LLC In Rhode Island
Here are a few useful things to know and prepare before getting started:
- You can apply online, by mail, or in person. Decide what route you wish to take and plan accordingly.
- The application (called the Articles of Organization) has a starting fee of $150 and should be submitted to the Rhode Island Secretary of State.
- A Rhode Island LLC must have one or more named members or managers. There are no specific requirements for where those members or managers should reside, nor are their age limitations. You must, however, specify if your LLC is to be member-managed or manager-managed.
- The waiting period varies depending on how you apply. Online applications can take as little as one or two days (business days) to complete, while mail applications may take up to two weeks.
How Much Does It Cost To Start An LLC In Rhode Island?
Now, let’s look at the costs. Here, you can find an overview of the various set fees involved with applying for and creating an LLC in Rhode Island.
- Registration Cost – $150: This is the set online filing fee for opening a Rhode Island LLC. It is payable to the Rhode Island Department of State.
- Annual Report Fee – $50: Every Rhode Island LLC must submit an annual report fee. It is payable when opening and is then due each year between September 1st and November 1st.
- Resident Agent Fee – Variable: If you hire a resident agent (you can be your own, but most people choose to pay a professional – see more information below), there is a cost. Each agent sets their fee, ranging from around $50 to $150 per year.
- Minimal Annual Tax – $400: Newly opened LLCs in Rhode Island are subject to the minimum tax requirement regardless of when they open.
- LLC Name Reservations – $50 (optional): This charge reserves your chosen company name for up to 120 days.
- Certificate of Good Standing – $22 (optional): Required for banks and lending institutions when securing funds for your LLC.
The mandatory set fees for creating an LLC in Rhode Island total $200 plus a $400 minimum tax. If you bring in a resident agent and opt for some extra services, factor in an additional $50 to $250.
Steps To Start An LLC In Rhode Island
Anyone interested in learning how to form an LLC in Rhode Island can do so by following these six simple steps. They cover preparation, filing, and finishing, as well as the specifics of what you need and where to get it.
Step One: Pick A Name For Your LLC
It all begins with a name. Every business – LLC or otherwise – must have a unique name before starting the application process. Picking the perfect name for your Rhode Island LLC can be tricky, but there are plenty of helpful tools to make it easier.
There are some specifications and rules about how an LLC should be named, for example:
- LLC or Limited Liability Company must be included.
- It must not overlap with any governmental entity.
- The name should be unique and free from copyright infringement.
You can find a detailed list of all legal LLC naming requirements for Rhode Island here.
If you are struggling to think of a name, here are a few tips:
- Make the name relevant to your brand. Obscure names can be difficult to market.
- Look at companies in your niche that you deem successful and take inspiration from their naming structures. Do not copy them but think about what you think works well.
- Consider your website domain name as well as your LLC title. Make sure both are available by running an online check.
- Avoid using any controversial or restricted words. Some names may require a license. Otherwise, the company could face trouble further down the line.
Remember, you can reserve an LLC for up to 120 before registering your application. It costs $50 and gives you peace of mind that the perfect name won’t be taken by the time you are ready to launch your LLC.
Step Two: Find A Resident Agent In Rhode Island
A resident agent is a person who acts as the responsible party for receiving all legal documents, tax papers, and other official correspondence for your LLC. They must be registered as a Rhode Island resident as an individual or as a company. Most other states refer to this position as a registered agent.
All new LLCs must nominate their resident or registered agent before applying.
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In Rhode Island, a person is permitted to act as their own resident agent, provided they meet the criteria. If you or someone within your company feels confident to act in this role, it can save a fee. That said, it is advisable to select a professional representation.
Step Three: Articles Of Organization
Information to prepare before completing the form includes:
- The name and type of the applying entity (your LLC)
- An EIN (see step six)
- Details of your registered agent (name and office address)
- The proposed purpose of your business
- Duration of business (optional)
- Governing authority type (is the LLC member-managed or manager-managed)
- Date of effect for your LLC (date of filing or a later date of your choosing)
- Disclosure of any other relevant information
You can find instructions for filling and filing the Articles of Organization on the Secretary of State for Rhode Island website.
Once complete, it must be submitted (after you obtain all other necessary documents and details). There are three options:
1. Make an appointment to appear in person – location determined upon application.
2. Mail the form to the Division of Business Services, 148 W. River Street, Providence, RI 02904
3. Submit online to the Secretary of State, Rhode Island
Submitting online is the fastest and most convenient option. You can complete the form digitally, submit the payment and send the application easily and the processing time tends to be much shorter.
Step Four: Other Required Documents
Depending on the nature of your business, you may need to provide additional documentation with your application. These may include:
- Proof of name reservation and ownership
- Proof of residence if nominating yourself as the resident agent
- Naming permissions
- Loan or income details
If you hire a resident or registering agent, assisting with these additional documents is often part of the service – especially if you opt for a high-end package deal.
Step Five: Operating Agreement
Although an operating agreement is not a specific requirement in Rhode Island, it is generally advisable to have one as a good business practice.
An Operating Agreement is a legal document that outlines and confirms the arrangements and procedures involved in the ownership and operation of an LLC.
Despite being unnecessary to obtain an LLC license in Rhode Island, it is worthwhile if looking to the future. Because of its comprehensive legal nature, it helps detail agreements between the owners and members of the business to aid in future conflicts.
If you were wondering how to start an LLC in Rhode Island for free and are concerned about costs, the operating agreement does not need to add to the burden. You can create one at no cost using online templates.
Step Six: Get An EIN
Your Employer Identification Number (EIN) acts as a social security number for your Limited Liability Company. It may also be referred to as a FEIN (Federal Employer Identification Number). The nine-digit number is assigned to your company by the IRS for tax purposes and acts as your LLC’s identity.
Without one, you can’t open a company bank account, hire employees, or compliantly handle and manage the taxes. Don’t worry- getting one is easy. The process is simple and costs nothing. You can obtain an EIN directly through the IRS website.
Even if you already have an EIN as a sole proprietor, you need to apply for a new one when changing to an LLC.
The Forms You Need To Register An LLC In Rhode Island
- Employer Identification Number
- Articles of Organization
- Name Reservation Application
- Operating Agreement
- Seller’s Permit
- Annual Report (where applicable)
|Did You Know?|
The first ever LLC was launched in 1977 in Wyoming. It wasn’t until 14 years later, in 1991, that Rhode Island got its first LLC. An LLC can do business in multiple states but must apply for a Foreign LLC license before crossing the state lines. You don’t need to live in Rhode Island to open a Rhode Island LLC.
LLC Taxes In Rhode Island
Every Rhode Island LLC must pay a minimum of $400 State Business Corporation tax regardless of income or structure. Your company is still liable for this amount even if you register and make zero profits.
Additional considerations may include
- Local taxes
- Fuel and property tax
- Employer’s withholding tax
- Sales and use tax
In Rhode Island, LLCs are not subject to any Federal Tax. Federal tax differs from state tax because it goes directly to the country’s government – not Rhode Island.
Is Rhode Island A Good Place To Start An LLC?
Rhode Island is not known as a top state for opening a business. It ranked last out of all US states several years running. Opening an LLC is an alternative way to launch a business while protecting yourself from excessive tax burdens.
How Much To Start An LLC In Rhode Island?
Creating an LLC in Rhode Island costs as little as a $150 filing fee. The full price depends on the exact type of business you’re running.
How Much To Run An LLC In Rhode Island?
Every company is different, but LLCs in Rhode Islands have some annual costs in common to consider:
- Minimum $400 tax
- $40-$200 Resident Agent fees
- Employee salaries
- Cost of renting physical work premises
As you see, the price depends on the business you’re running.
What To Do After Formation?
Creating your LLC is only the beginning. A world of business opportunities awaits, but there are still a few things to think about before going live:
- Organize all necessary insurance policies for business and employees
- Create a logo and begin building your brand
- Open a business bank account
- Create a professional website to add credibility to your company
- Think about bringing in valuable employees
- Start networking to establish industry connections
Take your time to take care of the steps above, and don’t be afraid to seek expert help. Your LLC is a ball of possibility at this point, and it is in your court!
Resources To Start A Successful LLC In Rhode Island
Start Marketing Your LLC In Rhode Island
Marketing is an essential step for all businesses. You have to make sure people can find you if you want to make your newly found Rhode Island LLC a success.
You can refer to our ultimate guide to business marketing for step-by-step instructions on how to successfully market your small business.
How To Dissolve An LLC In Rhode Island
You can find all you need to know about dissolving a Rhode Island LLC through the Secretary of State’s website.
You will have to file Articles of Dissolution for a domestic LLC to dissolve your Rhode Island LLC.
Starting an LLC in Rhode Island is relatively easy when you follow the steps. All you need to do is:
- Obtain the relevant tax identification numbers, and legal documentation
- Pay the fees
- Choose and reserve a name
- Submit the Article of Organization online or by mail
- Wait for confirmation
Once you have your LLC approved, the sky is the limit. Make the most of the excellent resources available and strive towards your business goals.