There are several tasks to consider when starting a Rhode Island LLC, and it can be hard to know where to start. Our guide simplifies the process and walks you through each step, from choosing a unique name for your business to filing the necessary paperwork so you get started correctly.
Related: Starting A Business In Rhode Island Checklist
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Steps to Form a Rhode Island LLC
Step 1: Choose a Name for the LLC
The first step in forming a Rhode Island Limited Liability Company is to make sure the name you want is available. In Rhode Island, the name of each LLC must be distinguishable from other entity names registered in the state. The Rhode Island Secretary of State makes it easy to do a Rhode Island LLC name search to verify if your name is available.
In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
- Limited Liability Company
- L.L.C.
- LLC
A comma may be used after the business name and before the designator. “Ocean State Innovations LLC” and “Ocean State Innovations, LLC” are both acceptable.
If there is a name you want to use, but you are not ready to register the LLC, the Application for Reservation of Entity Name can be filed with the Rhode Island Department of State – Business Services Division and will hold a name for up to 120 days.
Step 2: Appoint a Rhode Island Resident Agent
Every LLC in Rhode Island is required to have a resident agent (called a registered agent in many states), who is simply someone with a Rhode Island street address who will be responsible for any legal correspondence, such as if the business is served papers in the event of a lawsuit.
LLC owners in Rhode Island have two primary options for fulfilling this requirement. Many choose to act as their own registered agents, particularly if they reside in the state. However, some opt to hire a professional registered agent service. This choice is often preferred in two scenarios: when the LLC owner lives out of state or wants to keep their personal address off public records. Professional services offer the added benefits of ensuring compliance with state regulations and managing important legal correspondence, making them an attractive option for those seeking convenience and privacy in their business operations.
Related: How To Appoint A Rhode Island Registered Agent
Step 3: File the Rhode Island Articles of Organization
The paperwork to officially create an LLC in Rhode Island is called the Articles of Organization. To submit the paperwork, either file online through the Rhode Island Secretary of State’s website or download and mail the Articles of Organization (Form 400).
Related: How To Fill Out The Rhode Island Articles Of Organization
There are a few sections of the Articles of Organization that can be confusing to complete, so I’ll explain the more challenging ones.
LLC tax status: In this article, you will declare the tax status of the LLC. There are options for partnership, corporation, or disregarded, and it can be confusing to answer. One of the great benefits of having an LLC is the tax flexibility, and you can elect to have it taxed like a partnership, corporation, or disregarded entity (sole proprietorship). You are still filing as an LLC but electing how the entity is taxed.
This section doesn’t actually make the election. That will officially be done when filing the EIN with the Internal Revenue Service (IRS). We have a guide to filing an EIN, which only takes about 5 minutes and doesn’t cost you anything.
Note that the IRS will automatically select the disregarded entity status for single-member LLCs, and a multi-member LLC will automatically be taxed as a partnership.
Principal office address: In this section, enter the street address, city, state, and zip code of the initial principal office. This address can be the LLC’s physical address or the address where the business records are stored. This address can be anywhere worldwide; however, you may not use a Post Office Box.
Purpose: You can elect to have the business purpose of the LLC be open-ended with the generic text of “The limited liability company has the purpose of engaging in any lawful business.” The business purpose just refers to the business activities of the LLC. If a more specified purpose is desired, it can be entered in Article VI.
Duration: In this section, you can indicate how long the LLC will remain in operation. Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date. If you have a specific end date in mind (typically used for investment-related businesses), choose a dissolution date.
LLC management: This section asks if the LLC is Member-Managed or Manager-Managed.
- Member-Managed LLCs have an active involvement in the management of the LLC.
- Manager-Managed LLCs are hired by the LLC members to run the LLC, similar to a CEO of a corporation.
Most LLCs are member-managed.
Effective date: If you want the LLC to start immediately, leave the field blank. If you want to start the LLC at a later date, enter a date less than 30 days in the future to start. The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business isn’t going to have any activity until the start of the year. You can eliminate the need to file a partial-year business tax return by delaying the start date until the following year.
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What To Do After Forming A Rhode Island LLC
Once the LLC has been formed, there are a few additional steps to take. Below is a list of the most common tasks.
Prepare a Rhode Island LLC Operating Agreement
The LLC operating agreement is a document that governs the framework of an LLC. It covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.
Most states (including Rhode Island) do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
- Member’s personal liability protection may be diminished.
- Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.
Obtain an EIN
If the LLC will hire employees or is owned by more than one member, an EIN is required.
The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Like an individual’s social security number, the EIN identifies business entities for tax purposes.
Related: How To Register For An EIN
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account, such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original formation paperwork from the state showing the official creation of the LLC.
- Driver’s licenses of the members.
- Depending on the LLC’s age, a Rhode Island Certificate of Good Standing may be needed to prove that the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, various business licenses and permits will likely be needed before starting the business. Some common registrations include:
- Business license: Some cities require businesses to obtain licensing before they can start.
- Professional license: Certain services, such as barbershops, accountants, salons, and others, must be licensed.
- Sales tax permit: A Rhode Island sales tax permit from the Rhode Island Division of Taxation is necessary to sell products and certain services.
Related: How To Register A Business In Rhode Island
File the Rhode Island LLC Annual Report
Every Limited Liability Company must file the Rhode Island LLC Annual Report with the Rhode Island Department of State each year. The filing fee is $50 and is due between September 1 and November 1.
Rhode Island LLC FAQs
What is an LLC?
An LLC, or Limited Liability Company, is a business structure (also called a business entity) that offers owners legal protection by separating personal assets from the business’s debts and liabilities. It’s a popular choice because it combines the flexibility and ease of a sole proprietorship or general partnership with the asset protection usually given to corporations. This means if the business runs into financial trouble, the personal belongings of the owners (like their homes and savings) are generally safe.
How much does it cost to form an LLC in Rhode Island?
To start an LLC in Rhode Island, the state fee to file the Articles of Organization with the Secretary of State is $150.
How long does it take to get an LLC approved in Rhode Island?
It normally takes 1-3 business days to set up an LLC in Rhode Island when filing online or 5-10 business days when filing by mail for the state to process the LLC paperwork.
Alternatively, you can hand-deliver the paperwork to the Rhode Island Department of State office in Providence, and the LLC will be processed in 1-3 hours.
Is there a yearly fee for an LLC in Rhode Island?
An annual report must be filed and the $50 annual report fee paid each year.
What is a Foreign Limited Liability Company?
A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC formed in another state that wants to operate physically in Rhode Island. Physically operating means having a presence, such as having an office or hiring an employee.
What is a Professional Limited Liability Company?
The Rhode Island Secretary of State requires certain businesses that need licensing to operate to form a Professional Limited Liability Company (PLLC) instead of an LLC. A few of these occupations include accountants, architects, veterinarians, etc.
