How to Form an LLC in Rhode Island
Limited liability companies (LLCs) are a type of legal structure for businesses. Many small business owners choose the LLC structure because of its flexibility and liability protection. Limited liability protection helps to shield your personal assets from your business liabilities.
LLC members are only on the hook for the company's liabilities up to the amount of money they invested in the business. This means that your personal bank account, vehicles, real estate, and other personal property are not at risk if someone sues your LLC. You can create a Rhode Island LLC for your existing or new business by following along with the six easy steps below.
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Step One: Name Your LLC
Your LLC needs to have a unique name that follows Rhode Island's LLC naming rules. To find out if your desired name is available, you should check the Rhode Island Department of State's Business Name Database. There, you can search by business entity name. If there are any matches, you will need to choose a new name. If there are no results, you should continue by performing an internet screening search. To do this, simply type your name into your favorite search engine.
If you still have no matches, you should complete your search by checking the U.S. Patent and Trademark Office (USPTO) database. This will help you to avoid infringing on another company's trademark.
Once you are satisfied that your name is unique, you can move on to Rhode Island's other naming requirement. According to the Rhode Island Limited-Liability Company Act, your LLC name must end with the words "Limited Liability Company" or the abbreviations "LLC" or "L.L.C." The only exception to this would be if you are starting a low-profit LLC.
Low-Profit LLC Naming Requirement
If you are starting a low-profit LLC, there will be a special naming requirement in Rhode Island. A low-profit LLC is formed under Rhode Island law for charitable or educational purposes. Unlike most businesses, a low-profit LLC's main goal is to work toward the public good, not to generate profits. In this way, it's similar to a nonprofit corporation.
A low-profit LLC's name must end with the words “low-profit limited liability company." Or it can contain the abbreviations “l3c," or “L3C."
Step Two: Choose a Resident Agent
Your Rhode Island LLC must have a resident agent. You may hear people refer to this as a “registered agent," too. A resident agent is a person or business who agrees to accept legal papers on behalf of your LLC. This includes service of process in the event that someone sues your business.
According to Rhode Island statutes, your resident agent must either be an individual who is a state resident, or a business that is authorized to operate in the state. You should choose a business or person that is available at their physical address during business hours. You will need to list this authorized person or entity's physical street address in your articles of organization.
If you and your other LLC members are unable to act as a resident agent, you could consider using a professional service. With a registered agent service, you pay a yearly fee to an individual or business who agrees to accept your legal papers on your behalf. You can easily find many options for Rhode Island registered agent services by searching online.
Step Three: File Your Rhode Island Articles of Organization
To formally start an LLC in Rhode Island, you will need to file your articles of organization with the Secretary of State.
Articles of organization establish basic identifying information about your LLC. You can think of your articles of organization as your LLC's charter. It's not a complex document, but it contains all of the fundamental information about your business. The Rhode Island Secretary of State provides a fill-in-the-blank articles of organization form. This should make the process easy.
To complete this document, you will need to provide:
- The name and address of your LLC's principal office
- The name and address of your resident agent
- How the LLC will be treated for federal tax purposes
- Whether the LLC is member-managed or manager-managed. If manager-managed, you must provide the managers' names and addresses.
- The name and address of the person who is authorized to sign the articles of organization document
You can find out how to submit your completed articles of organization at the Rhode Island Secretary of State website. There, you will find instructions to file online or by mail.
Step Four: Create an Operating Agreement
Although Rhode Island doesn't require it by law, it's a good idea to create an LLC operating agreement.
An LLC operating agreement should not be confused with the articles of organization. The operating agreement forms an agreement among members on key business issues. It is an internal company document that you do not need to file with the state. However, other professionals may insist on seeing this document before doing business with your company.
In your operating agreement, you should cover issues such as:
- Management structure
- Voting Rights
- Buyout procedures
- Percentage ownerships
- Member rights and responsibilities
- A plan for dissolving the LLC
- Any other issues that are important to your LLC
Step Five: Comply with Tax and Licensing Requirements
You will need to follow licensing and tax rules carefully to keep your business in good standing. Your requirements will vary depending on the location and nature of your business. You can find out about your obligations by contacting your local officials and by using the state and federal resources discussed below.
If you think your company may be subject to federal licensing requirements, you should visit the U.S. Small Business Administration (SBA) website for more information.
You can learn about state business license requirements at the RI.gov website.
To find out whether local licensing requirements will apply to you, you should contact your city clerk.
Every Rhode Island LLC must register for state taxes with the Rhode Island Division of Taxation (DOT).
You can learn more about your federal tax requirements by visiting the Internal Revenue Service (IRS) website.
Unless you have a single-member LLC with no employees, you will need to apply for an Employer Identification Number (EIN). An EIN is a unique number that the IRS uses to identify your company for tax purposes. You can think of it as a Social Security Number for businesses. You may need an EIN for employee payroll, to open a business bank account, or to get a business credit card. You can apply for an EIN by fax, mail, or online at the IRS website.
Step Six: File Annual Reports
To keep your LLC in good standing, you will need to file annual reports with the Rhode Island Division of Business Services. The annual report is a simple form. You will have to enter some basic information about your company to complete it, and you will need to include a $50 state fee. You can file online or by mail.
Rhode Island LLC FAQs
How can I find out if my LLC name is available?
Your LLC's name must be different from all other registered Rhode Island business names. To find out whether your business name is available, you can run a name search at the Rhode Island Secretary of State website.
It's a good idea to make sure that your domain name is available too. This is important even if you don't start your website immediately. With a reserved domain name, you will have a memorable web address at hand when you're ready to start your website.
Can I register my foreign LLC in Rhode Island?
Yes, you can register a foreign LLC business structure for use in Rhode Island. To operate your LLC in Rhode Island, you will need to file an Application for Registration for a Foreign Limited Liability Company. Along with this form, you must submit a $150 filing fee and a certificate of good standing. A certificate of good standing is a document that you can request from the state or country where you originally formed your LLC.
You will also need to make sure that your business name is unique in Rhode Island. If another Rhode Island business is already using your name, you will need to pick a new one.
How much does it cost to start a Rhode Island LLC?
You will need to pay a filing fee of $150 to file your articles of organization with the Rhode Island Secretary of State. If you need to reserve your name prior to filing, there will be an additional $50 charge.
Can I reserve my LLC Name?
Yes. If you would like to reserve your LLC name before registering it, you can do so by filing a form online. Along with the form, you will need to submit a $50 filing fee. This will reserve your Rhode Island LLC name for a period of 120 days.
Want Help Forming a Rhode Island LLC?
Fortunately, forming an LLC can be a straightforward process with FindLaw’s Business Formation Service.. However, you might also need assistance with creating an operating agreement and other start-up issues. Contact a skilled Rhode Island attorney for help with these and other business formation issues.
How to Form a Rhode Island LLC: Related Resources
Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.
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