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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
The process of forming an LLC in Rhode Island more or less follows the same steps as in most other states and shouldn’t pose any significant difficulty. To avoid a misstep in the filing process, follow these steps to start an LLC in Rhode Island, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Rhode Island step-by-step
1. Select a name for your Rhode Island LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the State of Rhode Island:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the Rhode Island Department of State.
- An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, or “L.L.C.” Abbreviations may be either upper-case or lower-case.
Check LLC name availability
You can confirm that your chosen LLC name isn’t being used by another business in Rhode Island using the Rhode Island Department of State Business Entity Search.
Reserve your LLC name with the Department of State
After selecting a name for your LLC that is available, you can reserve it with the Rhode Island Department of State to prevent another business entity from using it before you can file your Articles of Organization.
2. Designate a resident agent (aka registered agent)
As in every U.S. state, forming an LLC in Rhode Island requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf. However, the state uses the term “resident agent.”
The resident agent must either be a state resident or business entity with a street address in Rhode Island OR if the individual or business is based out-of-state, they must have a business office in Rhode Island.
3. File Articles of Organization
An LLC is formed in Rhode Island through the filing of Articles of Organization with the Rhode Island Department of State.
You can file the articles online, in-person, or by postal mail. The filing fee is $150 and can be paid by check, cash, or credit card.
The Articles of Organization must provide the following information:
- LLC’s name and principal office address
- Resident agent name and address
- Whether the LLC is member-managed or manager-managed (along with managers’ names and addresses if manager-managed)
- The effective date of the Articles (if a later date than filing)
- LLC’s preferred treatment for tax purposes
- An authorized person’s signature
Foreign LLC registration
An LLC formed outside of Rhode Island that intends to do business in the state must register with the Rhode Island Department of State.
Follow these steps to do business in Rhode Island as a foreign LLC:
- Comply with Rhode Island LLC naming rules and confirm that the LLC name is available in the state using the Department of State Business Entity Search.
- Appoint a Rhode Island resident agent (AKA registered agent).
- File an Application for Registration for a Limited Liability Company (Form 450) with the Rhode Island Department of State by postal mail. The filing fee is $150.
- The application must include either a Certificate of Good Standing or Letter of Status from the LLC’s home state that is no more than 60 days old.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Rhode Island, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Rhode Island LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
File annual reports
All LLCs active in Rhode Island must file a Limited Liability Company Annual Report with the Department of State each year between September 1 and November 1. This includes foreign LLCs doing business in the state. The initial report is due the year following the year in which an LLC filed its Articles of Organization.
The annual report can be filed online or through the mail. The filing fee is $50.
Register with the Rhode Island Division of Taxation
All LLCs active in Rhode Island are required to register with the Rhode Island Division of Taxation. Additionally, all LLCs must pay a minimum annual tax of $400 without exception.
You can begin the state tax registration process by filing Form BAR online, although additional paperwork may need to be submitted through the mail.
Obtain business licenses and permits
LLCs doing business in Rhode Island may be required to obtain one or more state or local business licenses or permits depending on their type of business and location.
RI.gov provides a Licensing, Regulations, Permits, and Forms section (select from the dropdown menu) that can aid in determining which business licenses and permits are necessary for your LLC to operate in the state. For information on local licensing requirements, contact a city or county clerk in the city or county where your LLC is located.
Rhode Island LLC checklist
A Rhode Island LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the Rhode Island Department of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, or “L.L.C.” Abbreviations may be either upper-case or lower-case.
Formational documents and filing fees:
- Reservation of Entity Name – $50 filing fee (optional but recommended)
- Articles of Organization – $150 filing fee
- Application for Registration for a Limited Liability Company – $150 filing fee (foreign LLCs only)
- An LLC is formed in Rhode Island through the filing of Articles of Organization with the Rhode Island Department of State.
Additional legal obligations:
- File annual reports – Required for all LLCs doing business in Rhode Island
- Register with the Rhode Island Division of Taxation – Required for all LLCs doing business in Rhode Island
- Pay a minimum annual tax of $400 – Required for all LLCs doing business in Rhode Island
- Obtain business licenses and permits – Required for certain Rhode Island LLCs depending on business type and area