How to Start an LLC in Rhode Island (Step-by-Step Guide)

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.

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:

1. An LLC’s name must be distinguishable from the names of existing business entities on file with the Rhode Island Department of State.
2. 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.

Need help coming up with a business name? Check out our free business name generator.

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.

File a Reservation of Entity Name with the Department of State’s Corporations Division online or by postal mail to reserve a name for up to 120 days. The filing fee is $50.

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.

A business owner can, and often does, serve as the company’s registered agent. If you’d like to do so, you’ll simply list your name as the registered agent on your formation documents. You can hire one if you’d rather not take on the role and prefer to have a professional service collect notices for you. You’ll pay an annual fee for this service and receive notifications when documents arrive. For some, this type of service provides peace of mind.

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.

The Articles of Organization must provide the following information:

• LLC’s name and principal office address
• Resident agent’s 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

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.

By filing this paperwork, you’re asking the state to approve the establishment of your business. The state will review your documents and either approve your request or ask you to make updates to the forms. Usually, updates focus on missing information or suggesting a business name that’s already in use. Expect to hear from the state within three to five days.

4. Create 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:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. 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 legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements and setting up an LLC to run smoothly.

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.

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.

• Check with the state: 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.
• Check with the local government: For information on local licensing requirements, contact a city or county clerk in the city or county where your LLC is located.

Understand Rhode Island taxes

Taxes often feel complicated and overwhelming, and when you start a business, there are even more tax codes to follow. While you should speak with a small business tax accountant, how LLCs are taxed is (usually) common across each state.

• How LLCs are taxed in Rhode Island: LLCs are pass-through entities, meaning any business income is considered the owner’s income and is taxed. Corporations are taxed twice, once as a business and then again as personal income, but LLCs aren’t taxed like that. LLCs pay both federal taxes and state taxes on the income they generate from the business.
• Rhode Island tax rates: Rhode Island has a graduated individual income tax, with rates ranging from 3.75% to 5.99%. Rhode Island has a 7% state sales tax rate and does not levy local sales taxes.
• 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.

File a BOI report

Congress recently passed legislation that requires businesses to file a Beneficial Ownership Information Report with the Financial Crime Enforcement Network. The report asks businesses to supply contact information for all owners or controlling parties.

The intent of the report is to help authorities identify key players in financial crimes like money laundering. For new LLCs, the report must be filed within 90 days of registering your company.

Learn more about filing a BOI Report.

Post LLC tasks

Open business bank accounts

As the business owner, you’ll likely oversee the company’s finances. While some businesses hire an accountant or bookkeeper, the job usually starts off in the hands of the owner.

From the start, you want to keep your financial records as organized as possible, which means you’ll need business bank accounts. All business transactions, be it for sales or expenses, should go through business accounts. The goal is not to co-mingle your personal and business finances.

Look for business-friendly banks: Before you open a bank account at your local branch, consider your options. Did you know there are banks that cater specifically to small businesses? Many offer special introductory offers and integrate with common payment platforms like PayPal or accounting software like QuickBooks. Consider the following banks that cater to LLCs: Found, Relay, and Mercury.

Order a Certificate of Good Standing

Another administrative task to accomplish is requesting a Certificate of Good Standing. Once your business is registered with the state, you can request this certificate, which you may need when you apply for a loan, or you may be asked to present it during a contract negotiation with a new vendor.

You can also request other status certificates if needed. Rhode Island offers the following certificates:

• Good standing
• Legal existence
• Dissolved

To obtain these certificates, visit the Rhode Island Department of the State website.

Build a business website

A business website is the foundation of your online presence. Customers who learn about your company or product search for you online. They browse your site to see what your company is about. Yes, they want to know about your products, but they also want to know about your values and missions.

While every LLC owner knows a website is necessary, you might not know where to start. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Customize your site: Of course, you’ll need to add your marketing copy, pictures, and educational info. As you prepare these items, remember that your website should be customer-centric. Rather than writing sales-focused copy, write copy that focuses on solving problems for customers. How does your product help? Frame your website copy from a customer perspective.

Don’t forget to review your site: Once your site is up and running, have others review it. Ask them to read the copy, navigate the site, and even make a purchase. Get their feedback and make updates to your site. You want a clean site that’s easy to navigate and even easier to buy from.

Costs to set up an LLC in Rhode Island

Average cost to set up an LLC in Rhode Island: $250-$400

Every entrepreneur pays to set up an LLC. The cost is usually a few hundred dollars, but it’s best to know what these initial expenses are. Costs to set up an LLC in Rhode Island include:

• Incorporation fees: Establishing a business in Rhode Island means filing LLC formation documents with the state and paying a filing fee. The filing fee is $150.
• Filing fee for an Annual Report: Another administrative task you’ll have to do is file an Annual Report. When you file this report, you’ll also pay a filing fee of $50.
• Registered agent services (optional): For peace of mind or ease of operations, some business owners rely on a registered agent service to receive confidential business documents. If you choose this option, as opposed to appointing yourself, an employee, or a friend, you’ll pay an annual fee for their services. Depending on what kind of services you’d like, the cost will range between $50-$200 a year.

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:

1. 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.
2. Appoint a Rhode Island resident agent (AKA registered agent).
3. 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.