How to File an LLC in Rhode Island

Rhode Island entrepreneurs still sorting through the difference between an LLC, S corp, and C corp will find all the information they need to decide on the best structure for them in this article. We’ll help you determine what business structure makes sense for your type of business and show you the whole filing process to turn your small business into a Rhode Island LLC.

Key Takeaways

• Limited liability companies have pass-through taxation and limited liability combined with a simple and inexpensive management structure.

• In Rhode Island, it costs $150 to start an LLC. 

• To start your LLC, you need a unique business name, a Rhode Island registered agent, and a signed Articles of Organization, which you can file online or in person.

• After your LLC formation, your annual report is due between February 1st and May 1st each year, with a filing fee of $50.

What Is an LLC Formation?

LLC is an abbreviation for limited liability company, a legal business structure granted by the Rhode Island Secretary of State and recognized by the Federal government. It’s a powerful way to access the liability protections of a larger company while preserving the tax advantages and simplicity of a small one. 

These are the defining attributes of an LLC formation:

• Liability protection: LLC owners (they’re called members) have “limited liability” for the financial fate of their company. If the company goes bankrupt, the LLC’s members can only lose their initial investment, provided they’ve followed the law.

  • Before the LLC business structure, entrepreneurs had to form C corps to access these liability protections, a more expensive and administratively complex burden. 

  • Sole proprietorships have no legal separation between the personal assets of the business owner and those of their business. This means that a sole proprietor’s car, house, or savings would be vulnerable to a lawsuit or severe debt.

• Pass-through taxation: For tax purposes, LLCs are similar to sole proprietorships. Their tax obligations pass through the entity itself and are paid by the members (the LLC owners) on their personal tax returns.

  • The LLC tax status makes it a powerful alternative to C corps, which must file for S corp status to receive pass-through taxation. Mostly, C corporations are “double-taxed.” First, they pay corporate tax, and then shareholders pay their own income tax on their earnings.

• Simple management: The LLC formation provides a flexible management structure grounded in an agreement between its members. Members can run their company on their own terms rather than a required board of directors, shareholders, and mandated meetings.

The LLC provides a favorable combination of advantages for entrepreneurs that most new businesses, especially those held by one or a few people with a modest amount of capital.

Step-By-Step Guide to Starting Your Rhode Island LLC

Now we’ll take you step-by-step through incorporating your LLC in Rhode Island. Every state manages its business environment and registers new businesses slightly differently. The Rhode Island secretary of state charges a $150 filing fee to form an LLC.

Step 1: Choose a Business Name for Your Rhode Island LLC

This step is vital to get right because a rejected business name will require you to re-file your LLC formation documents all over again. Here’s how to make sure your Rhode Island LLC name will get approved:[1][2]

• Your name must have the words “limited liability company,” “L.L.C.,” or “LLC.”

• Conduct a business name search in the secretary of state’s corporate database to check name availability. Your LLC name is too similar to an existing registered name if the only difference is:

  • The entity status (such as LLC versus Corp)

  • “A,” “an,” or “the”

  • A plural version, abbreviation, capitalization, or different spelling of the same word

  • Adding a numeral or swapping an Arabic numeral for a Roman numeral

  • Different punctuation or spacing between the same words, letters, or numbers

  • A variation on the same word (e.g., Providence Attorneys vs. Providential Attorneys)

If your favorite name seems to be available in the corporate database, put it through these paces:

• Web domain and social media handles: Every business needs to be online; it’s non-negotiable. So don’t choose a name unless you can use it to reach customers or partners via the web, and reserve a domain name that would do the job. That goes for social media accounts, too.

• Trade names: If you incorporate the name “Charlie’s Haircuts LLC” but want to drop the “LLC” from the window of your barbershop, buy up the trade name “Charlie’s Haircuts,” and you’ll be free to do so. Trade names are also called “DBAs,” meaning “doing business as.”

• Trademarks: Registering a business name doesn’t grant you the exclusive right to use that name. To protect your intellectual property, your business will need a trademark at the state or Federal level.

If your LLC name is perfect, but you’re not ready to form your LLC, file a name reservation form to keep your name yours for 120 days. The filing fee is $50.

Step 2: Fill Out Rhode Island Articles of Organization

The Articles of Organization register your LLC officially with the Rhode Island Department of State. You can file Rhode Island Articles of Organization online or mail this form to the office in Providence. You’ll need the following information (and the $150 filing fee) to complete it correctly:

1. The LLC name.

2. Your registered agent’s name and Rhode Island street address (no PO boxes). Your registered agent receives legal documents on your behalf. A Rhode Island resident in your company can serve as the registered agent, but using a professional service is wise. Pricing is reasonable, and the benefits in a crisis could be incalculable.

3. Choose how you’d like to be taxed. You have three choices:

   1. Partnership: This is what to choose if you want pass-through taxation and your business has multiple members.

   2. Corporation: Most LLC owners would form a corporation if they wanted to be taxed like one. Few will choose this.

   3. Disregarded entity: This option is for single-member LLCs who wish to pass through taxation.

4. The address of the principal business office: If you don’t have one yet, you can write “not yet determined.”

5. Check if the company is member-managed or manager-managed. If you have hired managers to oversee the business, you should say so and provide the names and addresses of your managers.

6. Decide the effective date of your incorporation. You can push the moment your business becomes official up to 90 days from filing your Articles of Organization.

7. Contact information for the filer. You’ll need the business address, name, email, and signature of the authorized person filing the company.

After Articles of Organization

Now that you’ve made your LLC official, you must pay state fees and taxes to keep your business in good standing. Here are some of your immediate obligations:

• You owe an annual report the following year between February 1st and May 1st with a $50 filing fee. 

• State corporate taxes will be a minimum of $400.[3]

• It wouldn’t hurt to order a Certificate of Good Standing to have on hand to prove your legitimacy to potential investors and partners.

Foreign LLCs

If you already have an LLC formation in another state and you’re either expanding into or moving to Rhode Island, don’t file your Articles of Organization from scratch. Instead, complete the application for registration for a foreign LLC. In this case, “foreign” means out of state; it doesn’t mean out of the country.

Step 3: Hire a Rhode Island Registered Agent

The Articles of Organization require you to secure a Rhode Island registered agent, sometimes called a resident agent. But what do these terms mean?

A registered agent is a person or business with a Rhode Island street address (no P.O. boxes allowed) keeping standard business hours who consents to receive legal documents or any official correspondence from a court of law directed to your company.

Those documents could be a service of process, a subpoena, or a summons or communication from a court of some other nature.

Because your registered agent is only essential to your business in a dire situation, many advisors recommend that companies retain a professional registered agent service. You don’t want to get served in person during a business meeting. Swyft Filings offers your LLC a secure, reliable, affordable registered agent service.

Step 4: Create an LLC Operating Agreement

The details in your LLC operating agreement are the laws of the land regarding the business entity’s operations. This is not a legally mandated step, but it is imperative. All business owners must sign a written operating agreement to make it valid.

No matter what kind of company you’re building, an operating agreement has a critical role to play. Below, we get into why.

What an Operating Agreement Does For Your LLC

Step 5: File for an Employer Identification Number and Business Licenses

Your Rhode Island business will rely on its Employer Identification Number (EIN) for nearly every aspect of its administration. When you set up your LLC, you should apply for an EIN on the IRS website.

The Internal Revenue Service issues every business an EIN. Similar to a social security number, it’s used to file tax returns, but you won’t just need it for Federal tax. An EIN is also required to register your business with the Rhode Island Division of Taxation. All your income and employment taxes at the state and Federal levels need an EIN.

Furthermore, your EIN is required to open a business bank account, apply for credit cards and loans, and obtain specific business licenses and permits with state and Federal agencies.

Let Us Handle Your LLC Paperwork

Entrepreneurs have a lot on their plate; every decision makes a difference. So while considering your filing options for your new small business, make the easy choice now to save time, energy, and filing fees lost to rejection by letting Swyft Filings form your LLC.

We’re more than a best-in-class formation service that will get your paperwork done perfectly and in record time. We also have some business services to help your Rhode Island LLC thrive with as little stress on your part, including a tremendous registered agent service. 

FAQs:

How much does it cost to set up an LLC in Rhode Island?

The filing fee for a Rhode Island LLC is $150.

How is an LLC taxed in Rhode Island?

LLCs are taxed as pass-through entities in Rhode Island, meaning they pay income tax via their members’ personal tax returns.

What are the benefits of a Rhode Island LLC?

Rhode Island LLCs can leverage the simplicity and tax advantages of a sole proprietorship while still accessing the liability protections of a corporation.

How do you dissolve an LLC in Rhode Island?

Pay down your tax obligations, follow the dissolution procedure in your operating agreement, and then file Articles of Dissolution to the Rhode Island secretary of state with a $50 filing fee.

Bibliography:

1. State of Rhode Island Department of State Business Services Division. “Instructions for Filing Articles of Organization for a Domestic Limited Liability Company.” Accessed April 20, 2023.

2. Rhode Island Department of State. “Name Availability Guidelines.” Accessed April 20, 2023.

3. State of Rhode Island Division of Taxation. “Pass-Through Entities.” Accessed April 20, 2023.