A Rhode Island LLC operating agreement is a document that lets business owners dictate their company’s operating standards, regulations, and ownership percentages. Managing members can decide on the terms of this agreement together and make amendments as the company’s needs change.
Upon creating an LLC operating agreement, business members don’t file it with the Rhode Island Secretary of State. Instead, they each receive a copy to store in their records.
Is an LLC Operating Agreement Required in Rhode Island?
No, an LLC operating agreement isn’t required in Rhode Island. However, LLCs without written agreements are subject to the state’s default LLC statutes. For this reason and others, having an operating agreement can protect your business.
General laws and regulations for Rhode Island LLCs are present in the Rhode Island Limited-Liability Company Act.
Every state has its laws and regulations for LLC operating agreements. Operating agreements aren’t required in Rhode Island and are an internal business document.
However, an operating agreement can provide your business with legal protection. It allows you to create rules for your business, which can help prevent future disputes. § 7-16-22 (Records and information) discusses the information Rhode Island LLCs can include in their operating agreements.
Costs and Fees
Some of the costs and fees to budget for when starting and organizing an LLC in Rhode Island are:
- Domestic LLC filing fee: $150
- Certificate of good standing (for operating somewhere outside of Rhode Island): $30
- Annual report filing fee: $50
- Business name reservation: $50
How to Form an LLC in Rhode Island
Starting a Rhode Island LLC doesn’t have to be difficult, but you must take the proper steps. This simple step-by-step guide will tell you precisely what you must do to form an LLC in this state:
Step 1 – Name the LLC
Rhode Island has strict requirements for naming LLCs. The chosen name must end with the words LLC, L.L.C., or Limited Liability Company. This way, you can designate your business entity appropriately.
The name you register for the business must be unique. You can check the availability of a name by using the Department of State Corporate Database. The name must also be “distinguishable upon the record” from registered names.
The state also restricts words businesses can use in their names. Words that could potentially cause your LLC to be confused with a government entity, such as “State Department” or “Treasury,” cannot be used. Some words, like “university” and “bank,” are restricted and may require additional paperwork.
Step 2 – Choose a Resident Agent
Most states require LLCs to name a resident agent or registered agent to accept service of process on behalf of the business. A resident agent must be a legal resident of Rhode Island or a business entity with authorization to do business within the state.
Whether your resident agent is a person or a business, they must have a physical address, not a P.O. box, in Rhode Island.
Step 3 – File Articles of Organization with the Department of State
You can start officially forming your LLC by filing your articles of organization with the Department of State. You can file online or fill out a paper application and mail it to the Secretary of State’s Business Services Division.
To receive recognition from the state, your articles of organization must include the following:
- The LLC’s name
- The address of the LLC’s principal office
- The name and address of the resident agent
- The date when the articles become effective
- The signature of an authorized party
Step 4 – Create an LLC Operating Agreement
Even though Rhode Island doesn’t require LLCs to have operating agreements, creating a contract can benefit your business in various ways. With a detailed operating agreement, you can outline rules to help improve operational efficiency and prevent future legal disputes.
Step 5 – Obtain an Employer Identification Number for Your LLC
In Rhode Island, any LLC with more than one member has to have its own Employer Identification Number (EIN). Single-member LLCs must also have EINs if the LLC will have employees or if it will be structured as a corporation for tax purposes. You can obtain a free EIN by completing the EIN application form on the IRS’s website.
Step 6 – File Annual Reports
To maintain your LLC status, you must file an LLC annual report every calendar year after you formed the LLC. You must file the form between February 1 and May 1 each year. If you fail to file this report on time, you may have to pay a $25 penalty fee.