A Rhode Island LLC (Limited Liability Company) is a way to legally structure your business. This structure provides the business a limited liability enjoyed by corporations, while still maintaining the lack of formalities as with a sole proprietorship.
This guide on how to form an LLC in Rhode Island will take you through the necessary aspects. We’ll also touch on some things to do to ensure that your LLC keeps running smoothly. It’s worth noting that apart from running a business, you might also use an LLC to hold assets like real estate, vehicles, etc.
While the process is straightforward, it is useful to carefully complete the requirements before you file the Articles of Organization with the RI Secretary of State.
1. Choosing A Name For The LLC In RI
Naming is a seemingly simple requirement, yet it can be deceptively troublesome. Even though you have a good name in mind, take some time to ensure that it’s acceptable and in line with the guidelines.
Your chosen name should be unique and distinguishable, compared to other entity names registered with the state. Therefore, the name shouldn’t be the same or very similar to the names of other entities.
Moreover, the chosen name shouldn’t seem misrepresenting or confusing to the public. That means words like bank, corporation, etc. shouldn’t be a part of the name. It shouldn’t have words that confuse it with government departments or agencies either. Additionally, the state may restrict/block some words from use in naming.
A quick way to check for name availability is to search the Rhode Island Secretary of State’s business name database. This should give you a good idea of business name availability.
Name Designators For RI LLC
Every Rhode Island LLC must end its name with a proper designator. As is evident, LLC is the most commonly used designator. However, you can choose any of the approved designators. These include:
- Limited Liability Company
Note, that RI allows using upper or lower case letters, as per your preference. So, the designator could be llc or l.l.c. too.
Name Reservation Requests (Optional)
It’s possible to reserve a name for your LLC by filing Form 620 titled Reservation of Entity Name with the Business Services Division of the office of the Secretary of State. The form can be filed via mail or online.
The filing fee for limited liability companies is $50.
2. Rhode Island LLC Resident Agent
Every LLC in RI must maintain a Resident Agent for service of process. This agent is responsible for receiving legal documents like lawsuits, summons, subpoenas, etc. on behalf of your LLC.
Rhode Island requires that the Resident Agent have a physical street address in the state. PO Box addresses are not accepted. Additionally, it’s useful for the agent to maintain normal working hours in case the service of process arrives.
Considering these requirements, your Resident Agent can be:
- Any individual who is a resident of the state
- A business entity that is allowed to do business in the state
The latter includes commercial resident agents, which is a very popular option for most people.
3. Articles Of Organization For Rhode Island LLC
Filing the Articles of Organization with the Rhode Island Department of State is the biggest step towards forming an LLC in RI. The LLC can come into existence once the Secretary of State approves its Articles of Organization.
There are three ways to go about filing the Articles of Organization:
- Postal mail
Choosing online filing will let you complete the process at your convenience. The filing fee is $150, but there’s also an additional cost of a $6 online fee. You can complete the payment using credit cards. The processing time is 1-2 business days.
When filing online, the $150 filing fee can be paid via check or money order made payable to “Rhode Island Department of State”. Once ready, the documents and payment can be mailed to:
Division of Business Services
148 W. River Street
Providence, RI 02904-2615
The processing time for filings via mail is usually 2-3 business days after the receipt of the documents.
For walk-in filing, you can pay the filing fee via check, money order, or cash. Once you’ve completed Form 400, you can walk-in to the above address with the articles and the required payment. Processing for walk-in filings is usually quick and can be completed in a few hours.
4. Get An Operating Agreement
RI doesn’t legally mandate an operating agreement, but it remains highly advisable. This is an important document that establishes the powers, roles, rights, responsibilities, and expectations from the LLC members.
You may also include policies on management, dispute resolution, and more in the operating agreement. This agreement is an internal document of the LLC and each member should have a copy. However, it isn’t filed with the Department of State or any other government agency.
5. Federal Tax ID (EIN)
Once your LLC has been approved by the RI Secretary of State, you should consider filing for an EIN with the IRS. The Employer Identification Number (EIN) is a 9-digit ID issued by the IRS. It’s useful for not just taxation, but also other aspects of running and maintaining your company.
There is no filing fee for getting an EIN. The easiest and quickest way to get one is to file online with the IRS.
Filing online might not be possible in some circumstances. These include if the LLC is owned by someone without an SSN (non-US citizen) or if the LLC is owned by another business entity. In such cases, you’ll have to file Form SS-4. It’s possible to file this form via fax or postal mail.
6. Rhode Island LLC Annual Reports
All LLCs in RI, irrespective of their income and revenue, must file annual reports with the Secretary of State. Reports are filed between September 1 and November 1 each year. The state will usually send a reminder mail to the Resident Agent about 60 days in advance.
Filing annual reports can be completed online or via postal mail. To file via mail, you’ll need to use Form 632 (Limited Liability Company Annual Report) from the Document Library on the SoS website. The filing fee for annual reports is $50.
Note, that while annual reports are filed each calendar year, you don’t need to file any for the year your RI LLC was formed. For example, if your Rhode Island LLC is formed on April 21, 2021, the first annual report will be due between September 1 and November 1, 2022. Reports will have to be filed each year after that.
7. Business Licenses, Permits, And Taxation
The requirement of business licenses and permits generally depends on two factors:
- The policy of the city/county where your LLC is based
- The industry of your LLC
Each of these may affect the requirement of the licenses, permits, and taxation required for your Rhode Island LLC. It might be a good idea to contact your city or local officials for more details. RI maintains a business resources webpage that might be helpful with some specifics.
For federal taxation, the LLCs are pass-through entities by default. This means you can report the income from the LLC as part of your personal return with the IRS. However, specific forms might be required depending on how your RI LLC is structured.
In some cases, it might be wiser to have your Rhode Island LLC taxed as an S-corp or C-corp. You’ll have to be careful how you structure taxation for your business.