Follow our free guide to form an LLC in Rhode Island
- Pros and Cons of Forming an LLC in Rhode Island
- Starting Your Rhode Island LLC
- Maintaining Your Rhode Island LLC
- Additional Rhode Island Resources
Starting an LLC in Rhode Island is a detailed process, but this comprehensive guide from Swyft Filings will help you navigate every part of the Rhode Island LLC formation journey.
Pros and Cons of Forming an LLC in Rhode Island
Privacy for Owners
Rhode Island does not require the LLC members to be listed in the Articles of Organization. An organizer can submit the official documents to the state. Only the manager of the LLC must be disclosed (if applicable).
Low-Income Tax Rates
Rhode Island’s recently updated state income tax rates are actually fairly low, with the majority of the residents likely to only pay between 3.75% and 4.75%; the highest tax rate is only 5.99%.
Among Worst States for Business
For the past few years, Rhode Island has consistently ranked as one of the worst states for new businesses. The reasons for the negative ratings include poor infrastructure and a high cost of living.
High Corporate Tax Rate
Rhode Island’s 7% corporate income tax rate may not seem that high in comparison to other states, but given the struggling economy and high cost of running a business, the 7% tax rate is added stress to small businesses.
Cost of Doing Business
- $150 Filing Fee
- $50 Annual Report
- $450 Business Corporation Tax
Phase One: Starting Your Rhode Island LLC
Starting an LLC in Rhode Island may seem difficult, but the steps involved in the initial set-up process do not have to be difficult. Phase The following steps are listed below:
- Step 1: Name your LLC
- Step 2: Establish Ownership of your LLC
- Step 3: Decide on a Registered Agent
- Step 4: File the Articles of Organization
- Step 5: Create your Operating Agreement
- Step 6: Register for an EIN
Step 1: Name Your Rhode Island LLC
When forming your Rhode Island LLC, you first have to name your business. The state and federal government both have guidelines concerning words that can and cannot be used in business names.
Business Name Guidelines
- The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
- Your business name cannot be intentionally misleading to consumers
- The name of your new LLC must not be similar to another organization’s name/trademark
- “Lottery” and “Bank” are ineligible for use (any state)
- Terms that represent educational or Veterans’ organizations are restricted
- Terms related to the Armed Forces or civil servants (police, EMT, fire)
LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.
Create an online presence for your LLC by building a website — you can check the availability of domain names at a number of online web hosting services.
Step 2: Establish Ownership
LLC owners an LLC are actually called members and managers. All LLCs will have members, but not every LLC will have managers — the difference depends on the management structure of the business.
LLC Management Structures:
- Member-managed: All members participate in operating and making decisions for the LLC
- Manager-managed: An appointed manager oversees the daily operations of the LLC and the members are not actively involved.
Rhode Island LLC Member Guidelines
Required Number of Members
There must be at least one member or manager to form an LLC in Rhode Island.
Member Disclosure Requirements
An organizer/authorized representative may sign and file the Articles of Organization in place of the LLC members.
Please Note: The manager(s) must be listed in the Articles of Organization
LLC members in Rhode Island may be of any age.
There are no residency restrictions imposed on LLC members in Rhode Island.
Step 3: Find a Registered Agent in Rhode Island
The registered agent is a necessary role for all Rhode Island LLCs. Your business is not considered official without this position.
What is a registered agent?
A registered agent is a person or business who receives all official mail on behalf of the LLC.
Why do you need a registered agent?
You must appoint a registered agent for your LLC so that the government has a consistent contact person for your business.
What are the main requirements for a registered agent?
- The registered agent must have a physical address — not a P.O. Box
- The registered agent must be available during business hours
Who can be a registered agent in Rhode Island?
- A state resident with a physical address in Rhode Island
- An LLC or corporation that is licensed to conduct business in Rhode Island
Is the registered agent’s contact information publicly accessible?
The name and contact information of the LLC’s registered agent is a matter of public record.
Can I be my own registered agent for my business?
You are legally allowed to be your own registered agent as long as you have a physical address in Rhode Island.
Is being my own registered agent discouraged?
Business owners who choose to be their own registered agent risk compromising their personal information.
Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in Rhode Island. Find more information here.
Step 4: File the Articles of Organization
The most important step in creating your Rhode Island LLC is filing the Articles of Organization with the Secretary of State.
What is the Articles of Organization?
The Articles of Organization is a legally binding document that is filed with the state government to officially and legally form your LLC.
Why do I need the Articles of Organization?
Your LLC business in Rhode Island will not be legally recognized by the Secretary of State without filing this document.
What is the cost of filing the Articles of Organization?
The filing fee for Rhode Island is $150.
What information is included in the Articles of Organization?
- The name and address of the LLC
- The name of the organizer filing the paperwork
- The name of the LLC manager(s) — if applicable
- The name and location of the registered agent
- The chosen LLC management structure
- The duration of the LLC (perpetual or not)
- The statement of purpose
Additional Rhode Island Filing Information — Professional LLCs
Rhode Island allows professional service businesses to form an LLC. These businesses must still adhere to the state regulations for LLCs.
Example professions that may form LLCs:
- Physicians/Medical Professionals
- Professional Counselors and Psychologists
- Architects and Engineers
- Social Workers
A few points to consider:
- All members of the LLC must be licensed in the profession of the business.
- The LLC is only allowed to provide services for which the business was formed.
- The members are still subject to whichever licensing boards govern the LLC’s profession.
Step 5: Create an LLC Operating Agreement
Having an LLC Operating Agreement in place is a necessity for the continued success of your LLC in Rhode Island.
What is an LLC Operating Agreement?
The LLC Operating Agreement is a legal document that defines the rights and responsibilities of each member and explains the business’s operating procedures.
Why do I need an LLC Operating Agreement?
The LLC Operating Agreement is necessary because it provides structure for the members, protects business assets, and reduces disputes and lawsuits.
Do I need to file the LLC Operating Agreement?
You do not need to file the Operating Agreement with the state; it is for the benefit of your LLC and remains in-house.
What goes into an LLC Operating Agreement?
There is not a set rule for the content of your LLC Operating Agreement, but most documents include the following:
- List of the members/managers and their roles
- Designation of authority in the LLC
- Initial capital contributions of the members
- Voting designations and percentages of the members
- Member transfer/addition rules and restrictions
- Distribution of profits
- Meeting schedule
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
Step 6: Register for an EIN
The majority of Rhode Island businesses must register for an EIN. Your Rhode Island LLC will not be able to conduct business without an EIN.
What is an EIN?
The EIN is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS); it uniquely identifies your business much like a Social Security number.
What does EIN stand for?
EIN is an acronym for Employer Identification Number. It is also known as a Federal Tax ID.
Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:
- Any business with employees (even if owned by one person)
- Any business with more than one member
- A partnership (LLC or C-corp)
Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.
Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:
- To hire employees
- To open a bank account in the U.S.
- To file your company’s taxes
- To pay independent contractors
In short, if you make money through your business and it has employees, you must have an EIN.
Is the EIN publicly listed?
The EIN for your LLC will be part of public record.
Can I use my Social Security Number as the EIN?
You can use your social security number, but this information is part of public record.
Swyft Filings offers EIN services for small businesses in Rhode Island. Find more information here.
Phase Two: Maintaining Your Rhode Island LLC
The next phase of setting up your Rhode Island LLC includes steps that will ready your business for daily operations:
- Step 1: Register for Taxes in Rhode Island
- Step 2: Apply for Permits and Licenses
- Step 3: File the Annual Report
- Step 4: Request a Certificate of Good Standing
Step 1: Register for Rhode Island State Taxes
Rhode Island charges LLCs with an annual $450 business corporation tax. LLC members are also required to pay state and federal income taxes on earnings.
State Income Taxes
Rhode Island’s state income tax rates are listed in the table below:
Corporate Tax Information
You can also choose to have your LLC taxed as a corporation; if so, you will be responsible for paying the 7% corporate income tax rate on your business’s net income.
Additional Tax Information
Other taxes your LLC may need to pay:
- Sales and Use Tax at 7%
- Employee Withholding Tax
- Unemployment Tax
Step 2: Obtain Business Licenses and Permits
The licenses and permits required for an LLC in Rhode Island can vary, depending on a number of variables:
- Location (city and county)
- Type of Business
Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Step 3: File an Annual Report
All Rhode Island businesses are required to file an annual report with the Secretary of State.
What is an annual report?
An annual report is a legal form designed to keep your business’s information current with the state. It is filed with the Secretary of State.
What kind of information is in the annual report?
The information requested in the annual report is similar to what is in the Articles of Organization:
- The name and address of the business
- The name and address of the registered agent
- The business’s EIN
Is the annual report part of public record?
The annual report filed on behalf of your LLC is a matter of public record.
Fees and Due Date
Due Date: September 1 - November 1
Frequency: Every year
Implications of Late Filings: $25 late fee
Swyft Filings helps you stay compliant by providing stress-free solutions. File your annual report with us today.
Step 4: Request a Certificate of Good Standing
Once your Rhode Island LLC is ready for business, your final step is to secure a Certificate of Good Standing.
What is a Certificate of Good Standing?
The Certificate of Good Standing is a certification that confirms your business is compliant with all state regulations.
Who issues the Certificate of Good Standing?
The Certificate of Good Standing is generally issued by the Secretary of State.
When can I request a Certificate of Good Standing for my business?
Request a Certificate of Good Standing after your LLC is formed through the Secretary of State.
Why do I need a Certificate of Good Standing?
The Certificate of Good Standing gives your LLC credibility when dealing with banks, financial institutions, and other businesses.
Does the Certificate of Good Standing have an expiration date?
The Certificate of Good Standing does not expire/does not need to be renewed.
Swyft Filings can create a Certificate of Good Standing for your Rhode Island LLC. Click here for more information.