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: How to start a business in Rhode Island
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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.
Before settling on a name, you may want to also see if a domain name is also available in order to match your business name and website address.
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), which is simply someone with a Rhode Island street address who will be responsible for any legal correspondence, for example, if the business is served papers in the event of a lawsuit.
Many LLC owners are their own resident agent, but it is possible to hire a resident agent service like Northwest Registered Agent. The reasons why someone would hire a registered agent service include when the owner lives in another state or if the owner prefers that their personal address not be on public record.
Related: What is 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
When filling out the Articles of Organization, there are a few sections that can be confusing to fill out, 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 for a Rhode Island LLC. It 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 it can be the address where the business records are stored. This address can be anywhere in the world; 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 existence. 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 care of. Below is a list of the most common tasks.
Prepare a Rhode Island LLC Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document 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.
Related: Rhode Island operating agreement template
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). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.
Related: How to apply 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 creation of the LLC.
- Driver’s licenses of the members.
- Depending on the age of the LLC, a Rhode Island Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.
Related: How to open a business bank account for your LLC
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be various business licenses and permits 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: In order to sell products and certain services, a sales tax permit from the Rhode Island Division of Taxation will be necessary.
Related: What business licenses are needed in Rhode Island?
File the Rhode Island LLC Annual Report
Each year, LLCs are required to file the Limited Liability Company Annual Report with the Rhode Island Department of State. The filing fee for the annual report is $50 and is due each year between September 1 and November 1.
Related: How to File a Rhode Island LLC Annual Report
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?
Each year, an annual report must be filed, along with paying the $50 annual report fee.
What is a Foreign Limited Liability Company?
A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was 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.
Related: What is the difference between a domestic Rhode Island LLC and a foreign LLC?
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.
