How to Start an LLC in Rhode Island

Even if you know it’s a good idea, starting a Rhode Island limited liability company (LLC) can be intimidating. That’s why we’ve put together this guide to help new business owners learn how to start an LLC in Rhode Island.

This article will teach you:

• The steps for creating an LLC in Rhode Island
• Other tasks you should take care of once you start your LLC
• The cost and length of time it takes to create a Rhode Island LLC

Keep reading to find out more about Rhode Island LLC formation!

Last updated: Dec 2024

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Step 1: Name your Rhode Island LLC

To start a Rhode Island LLC, you’ll need to choose a business name for your company. There are certain legal restrictions on LLC names. For instance, some words are required, while others are banned.

We’ve explained these rules in more detail in the sections below.

Words You Have to Use

Rhode Island General Laws Section 7-16-9 says that LLC names must end with one of the following designations:

• “limited-liability company”
• “L.L.C”
• “LLC”
• “l.l.c.”
• “llc”

Words You Can’t Use

An LLC name should not include words that might make it seem like another type of business entity. It also can’t imply that your company is part of the government.

You also can’t suggest that your business provides illegal services. For instance, if you don’t have the license you need to offer a particular service, your LLC name can’t imply that you provide those services.

In addition, Section 7-16-9 says that a new LLC name must be “distinguishable” from all other registered Rhode Island business names. This rule exists to prevent consumer confusion between two companies with the same name.

Check out the Secretary of State’s Name Availability Guidelines to learn more about when a name is considered to be distinguishable.

Research the LLC Name You Want

After you’ve chosen a name for your LLC, you can check the Rhode Island Secretary of State’s Entity Search to find out if it is available.

If the name you want is already in use, you can’t use it without a court order that says you have the right to do so.

If the name you’ve selected is available, Rhode Island General Laws Section 7-16-10 lets you reserve it for 120 days. You can reserve a name by submitting an Application for Reservation of Entity Name to the Secretary of State. There is a $50 filing fee.

You can reserve your name online using the Rhode Islands Secretary of State’s Business Services Online Filing System. You can also fill out the form and mail it to the following address:

Rhode Island DBA: Using a Fictitious Business Name

If you have an LLC, you can use a “doing business as” or “DBA” name rather than your company’s full name. This allows you to refer to your business with a different name than what it’s legally registered as.

LLC owners often prefer to use DBAs because they are typically more informal than a legal name. Plus, if your business grows and you want to get into other areas, you can change your DBA.

Rhode Island calls DBAs “fictitious business names.” If you want to use a DBA for your LLC, Rhode Island General Laws Section 7-16-9 requires you to submit a Fictitious Business Name Statement and a $50 filing fee to the Secretary of State. You can register your DBA online or by mail.

Step 2: Appoint a Resident Agent for your LLC

A registered agent, known in Rhode Island as a “resident agent,” is an individual or business that receives important papers on behalf of an LLC.

Rhode Island General Laws Section 7-16-11 requires that every LLC appoint a resident agent. Your Rhode Island registered agent must have an office in the state and be able to accept service of process during business hours.

Picking the right resident agent for your LLC is essential because of the responsibility that comes with it. One option is to name yourself as the agent. And this choice has its benefits:

• It’s cheap: You’re not paying someone else to do it for you.
• It’s easy: The only address and contact information you have to keep current is your own.
• It’s reliable: You will receive all important documents personally.

Unfortunately, many first-time business owners find out too late that serving as their own LLC’s registered agent can lead to big trouble.

Some of the problems you might encounter include:

• No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information.
• Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
• No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
• Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
• It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.

You can avoid these issues by hiring a professional registered agent company to serve as your LLC’s Rhode Island resident agent. These services only cost about $100 each year, and they’ll immediately notify you if they receive any documents for your business.

If you want to do business outside Rhode Island, you’ll need to register as a foreign LLC and maintain a registered agent in each state you expand to. In these situations, we recommend choosing a nationwide registered agent service. You’ll only have to hire one business, and they can provide you with an agent in every state where you need one.

Step 3: File Your Rhode Island LLC Articles of Organization

Articles of organization are a legal document that outlines basic information about your business. You’ll have to file them with the Secretary of State to officially start your Rhode Island LLC.

What to include in my Rhode Island Articles of Organization?

Rhode Island General Laws Section 7-16-6 says that your articles of organization must include:

• The LLC’s name.
• The name and address of the resident agent.
• Whether the LLC will be treated as a partnership, corporation, or a disregarded entity.
• The address of the LLC’s principal office.
• Whether the LLC will be managed by its members or by managers.
• The name and address of each manager.
• The name and address of the signer.

You can submit an articles of organization form by mail or file online.

Rhode Island LLC Filing Fee

According to the Secretary of State’s Document Library, the filing fee for Rhode Island LLC articles of organization is $150.

Read More: How Much Does It Cost to Form an LLC in Rhode Island

Rhode Island LLC Processing Time

Generally, your filing will take between 1 to 3 business days to process.

Step 4: Draft your Rhode Island LLC Operating Agreement

An operating agreement is a legal contract between all of the members of an LLC. It outlines each member’s rights and their responsibilities towards the company.

Rhode Island does not have a law that requires an LLC to have an operating agreement. However, writing one can help make it easier to run the company, answer questions, and avoid future disputes.

For example, if a member wants to sell their ownership interest in the LLC, they would look to the operating agreement to tell them the process. The contract might also outline how the remaining members should divvy up the exiting member’s duties.

Other advantages of LLC operating agreements include:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
• They say what the manager has the right to do. Managers also have special duties to the company and the members. The LLC operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business entity now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

When drafting your Rhode Island LLC operating agreement, make sure all the members are involved. Answering these critical questions about how the business can function ahead of time will help things go more smoothly.

Step 5: Get an EIN (Employer Identification Number) for Your Rhode Island LLC

An Employer Identification Number (EIN) is an ID number that the IRS assigns to businesses. Just like you use your SSN to identify yourself, you can use your EIN to identify your company.

Here are the most common times when you need an EIN:

• Does your LLC have more than one member?
• Does your LLC have any employees?
• Is your LLC taxed as a C corporation or S corporation?

If the answer to any of these questions is yes, your LLC must get an EIN.

Single-member LLCs can file tax returns using the owner’s SSN, but a better option is to get an EIN. This will make it easier for you to open up a business bank account. An EIN also helps protect you against identity theft and simplifies some admin processes.

You can apply for an EIN on the IRS website, or you can mail in a Form SS-4. If you choose to get your EIN online, you will receive your new EIN immediately.

Also, keep in mind that there is no cost to get an EIN. This means you can handle it on your own, and there’s no need to pay a company to get you one.

Read More: How to Get an Employer Identification Number in Rhode Island

First Tasks After Registering your Rhode Island LLC

Forming a Rhode Island LLC is a great start. However, there are other steps you might want to take to ensure your business is adequately protected.

Open a Business Bank Account

Your LLC does not legally need a bank account of its own, but it is a good idea for you to open one. Doing so will allow you to manage the company’s finances separately from your own personal funds.

Some of the advantages of opening an LLC bank account include:

• Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
• More business opportunities: Your LLC can only receive credit card payments through a business bank account. You can also do business with people who won’t take personal payments.
• Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts.

Of the three, personal asset protection is the most vital.

Because of a legal concept known as the “corporate veil,” you and your LLC are separate legal entities. This means that business creditors can’t demand payment from your personal funds. For this reason, LLCs are a popular legal entity for entrepreneurs who have assets to protect.

Opening up a bank account for your LLC can help you keep personal and business funds from mixing. It is important to note that if you don’t keep these two pools of money separate, it could expose you in the event of a lawsuit. That could undermine or “pierce” the corporate veil and allow someone to sue you personally.

This is why separating your business and personal funds should be a top priority. Opening a business account can ensure you maintain this separation and keep your personal assets safe.

Get Business Insurance For Your Rhode Island LLC

When you start an LLC in Rhode Island, it’s important to consider buying business insurance. There are many types of insurance to choose from, and by looking at all of your options, you will be able to find the best coverage for your business.

Common business insurance policies include:

• General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
• Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
• Workers’ compensation insurance: Rhode Island law requires most employers to obtain workers’ compensation insurance coverage. You can choose to buy a policy from a private insurance company or get approved to self-insure.
• Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
• Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
• Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.

Keep Your Rhode Island Company Compliant

Once your LLC is up and running, it’s essential for you to remain aware of your continuing legal obligations. For instance, certain types of businesses may be required to get a business license or pay taxes.

It’s also important to stay informed about the laws that apply to your business. Be sure to stay up to date with any recent changes in the law. This will help you avoid any future legal issues.

Rhode Island Business Permits and Licenses

Each locality has different requirements for business licenses and permits, so reach out to the city where your business is located to make sure you comply. Depending on your industry, you may also need to get a state license. Check the Department of Business Regulation’s website for more details.

Rhode Island Tax Requirements

You will need to register your new LLC with the Rhode Island Division of Taxation. If you do not plan to either have employees or make retail sales, you can call the Division of Taxation hotline at (401) 574-8484 to register. Otherwise, you can submit a Business Application and Registration form online to open your business tax account.

Federal LLC Tax Filing Requirements

As “pass-through” business entities, LLCs don’t pay federal income taxes. Instead, you’ll report your share of your LLC’s profits on Schedule C of your personal tax return.

However, you will need to pay Social Security and Medicare taxes, even if you don’t hire any workers. If you do have employees, you must also deduct payroll taxes from their wages.

Annual Report and other Filing Requirements

Rhode Island General Laws Section 7-16-66 says that all LLCs must file an annual report with the Secretary of State. You can submit your annual report by mail or file online. There is a $50 filing fee.

Rhode Island Business Formation Quick Links

• Internal Revenue Service — apply for an EIN online
• IRS information regarding the federal tax treatment of LLCs
• Business Services Online Filing System (SOS)
• Entity Search (SOS)
• Document Library (SOS)
• Name Availability Guidelines (SOS)
• Start Your Rhode Island Business (SOS)
• Business Basics (SOS)

Statutes:

• Name Requirements: Rhode Island General Laws Section 7-16-9
• Name Reservation: Rhode Island General Laws Section 7-16-10
• Resident Agent: Rhode Island General Laws Section 7-16-11
• Articles of Organization: Rhode Island General Laws Section 7-16-6 
• Annual Report: Rhode Island General Laws Section 7-16-66