Last Updated on September 13, 2020
Cost to form an LLC in Rhode Island - $150
Recurring Fees - $50 Annual Report Fee
Filing Time - It normally takes a two days for the LLC paperwork to be approved in Rhode Island, however processing can take as just a few hours when filing in-person.
Don’t want to form an LLC by yourself? - Let IncFile guide you through the LLC formation process so you know everything was done right. Only pay state fees!
The Limited Liability Company (LLC) is a popular business entity choice structure for many businesses starting in Rhode Island. The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Rhode Island without an attorney.
Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting for the business owner’s personal assets.
Related: How Does an LLC Protect You?
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration and management flexibility.
Forming an LLC in Rhode Island is fairly straightforward, but it’s nice to have some support in case you have questions or get stuck. IncFile and Inc Authority provide LLC formation guidance for only the cost of the state fees!
To form a Limited Liability Company in Rhode Island, file the Articles of Organization with the Rhode Island Secretary of State. The LLC filing fee is $150.
Approval for the LLC is typically just a few business days when filing by mail or online while walk-in applications are approved in a few hours.
If you have questions, contact the Rhode Island Secretary of State at 401-222-3040
HOW TO FILE THE ARTICLES OF ORGANIZATION AND FORM A RHODE ISLAND LLC
The steps for filing online or by mail are largely the same. The screenshots show how to file online.
- Begin by visiting the Rhode Island Secretary of State’s website and select “File New Business Entity”. If you prefer to fill out and mail the application, download the Articles of Organization (Form 400).
- On the next page, under “Domestic Limited Liability Company”, select “Articles of Organization”
Article I – LLC Name
Enter the name you want for the Limited Liability Company. The name of the LLC also has to differ from other entity names registered with the Secretary of State. Before filing check on available LLC names in Rhode Island to be sure the one you want is available.
The name of the LLC must also include a designator at the end of the business name. A designator describes the type of business entity. Available designators include:
- Limited Liability Company
A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
Before settling on a name, you may want to see if a domain name is also available in order to match your business name and website address.
Article II – Resident Agent
To have an LLC in Rhode Island, a Resident Agent (called a Registered Agent in most states) must be identified. The Resident Agent can either be a resident of Rhode Island or a Resident Agent service. The Registered Agent must have a physical address in the state (PO Boxes are not allowed) and act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc on behalf of the LLC.
Even though the business owner can be the registered agent, their name and address become public record and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home.
Article III – LLC Tax Status
In this article, you will declare the tax status of the LLC. Here there are options for partnership, corporation or disregarded and is a confusing point. One of the great benefits to 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 Article doesn’t actually make the election. That will 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.
Take note that for single-member LLCs, the IRS will automatically select the disregarded entity status and a multi-member LLC will automatically be taxed as a partnership.
Article IV – 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 physical address of the LLC 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 PO Box.
Article V – LLC Purpose & Duration
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.
Article VI -Additional Provisions
This is an optional section and not used by most LLCs. Here you would include additional rules for the operation of the LLC.
Article VII – 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 members to run the LLC, similar to a CEO of a corporation.
Most LLCs are member-managed.
Select the way your LLC is managed and enter the names and address for any managers of the LLC. Member’s names do not go in this section.
Article VIII – Effective Date
If you want the LLC to start immediately, leave the field blank. If you want to LLC to start later, 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. By delaying until the following year they will reduce the number of end-of-year filings.
Filer’s Contact Information
Wrapping up the filing, enter the filer’s contact information and their electronic signature.
Review that all the information is correct. If there are no corrections, click “Accept”
Pay and File
Pay and file the Articles of Organization.
If you are filing online, expect the LLC to be approved in about 2 days.
Professional services like IncFile and IncAuthority help guide you to make sure it’s done right and you only pay the normal state fees.
Check out our reviews of popular LLC formation services to learn more.
Tasks After Forming Your 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 an 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 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 have a full understanding of their roles and responsibilities which could lead to costly disputes in the future
Obtain an EIN
The EIN or Employer Identification Number is a unique 9-digit number for a business. Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.
The EIN will be needed in order to open a bank account, register for business licenses and permits, file tax returns, pay payroll taxes and more.
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.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be a variety of business licenses and permits to register for before starting. Some common registrations include:
- Business License – Some cities require businesses to obtain licensing before they can start. In some cases, even home-based businesses must have licensing in order to legally operate.
- 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, registration with the Rhode Island Division of Taxation will be necessary.
File Annual Reports
LLCs are required to file an annual report with the Rhode Island Department of State. The annual report updates ownership information and other details.