Even though Rhode Island is the smallest state in the U.S., it’s home to hundreds of thousands of businesses, with thousands of new businesses forming each year. Now is an ideal time to form an LLC in Rhode Island.
An LLC is a business structure that offers many benefits to small businesses, including tax advantages and protections. Forming an LLC can also be a simple process if you know what to do.
If you’re interested in starting a Rhode Island LLC, you can find out what you need to do below. Read on to learn more about state requirements.
Is an LLC Operating Agreement Required in Rhode Island?
No, an LLC operating agreement is not required in Rhode Island. However, LLCs that do not have written agreements are subject to the state’s default LLC statutes. For this reason and others, having an operating agreement can protect businesses in Rhode Island.
Rhode Island Operating Agreement Laws
Every state has its own laws and regulations for LLC operating agreements. In Rhode Island, operating agreements aren’t required and are an internal document for businesses.
However, an operating agreement can provide your business with legal protection. It gives you the opportunity to create rules for your business which can help to prevent disputes in the future. This makes it all the more important to find the right template for your operating agreement.
General laws and regulations for Rhode Island LLCs are outlined in the Rhode Island Limited-Liability Company Act.
How Much Does it Cost to Form an LLC in Rhode Island?
In order to form an LLC in Rhode Island, you’ll have to pay an initial fee. For LLCs, this fee is $150. This fee is due when the LLC’s Articles of Organization are filed with the state.
In addition, you’ll be required to file an annual report with the Department of State. The fee to file this report is $50. Rhode Island LLCs are also required to pay a minimum $400 annual tax to the Department of Taxation.
How to Form an LLC in Rhode Island
Starting a Rhode Island LLC doesn’t have to be a difficult process, but you’ll need to take the right steps. This simple step-by-step guide will tell you exactly what you must do to form an LLC.
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. If abbreviations are used, both upper and lower case are acceptable.
The name registered 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 has restrictions on the words that can be used in a name. 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 registered agent to accept service process on behalf of the business. In Rhode Island, this individual or business entity is known as a resident agent. Resident agents must be legal residents of Rhode Island or a business entity that is authorized to do business within the state.
Step 3 – File Articles of Organization with the Department of State
An LLC is officially formed when articles of organization are filed with the Department of State. The articles can be filed online or by mail, and an initial fee of $150 is due at the time of filing. In order to be recognized by the state, articles must include:
- 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, having an agreement can benefit your business in a number of ways. With a detailed operating agreement, you can outline rules which can help to improve efficiency and prevent future disputes.
An operating agreement allows business owners to determine how the company will be operated and how it will be managed financially. Having an agreement can make it easier for a business to secure funding. The document may be requested if the business is a party to legal action.
Operating agreements are internal documents and do not need to be filed with the state. However, you should make sure that your document is readily accessible so that you can access it as needed. With a Rhode Island operating agreement template, you’ll be able to create a comprehensive document that covers all your needs.
Step 5 – Obtain an Employer Identification Number for Your LLC
In Rhode Island, any LLC with more than one member is required 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. An EIN can be obtained for free by completing the EIN Application Form on the official IRS website.
6. File Annual Reports
To maintain your LLC status, a Limited Liability Company Annual Report must be filed every calendar year after the year the LLC is formed. These forms must be filed between September 1 and November 1. A $50 fee is due at the time of filing.
If you fail to file these reports, or if your LLC fails to maintain a resident agent, your Certificate of Organization could be revoked by the state. A courtesy form reminding you to file will be mailed to the resident agent before September 1 of each year.
Rhode Island LLC Operating Agreement Template
Getting your business off the ground is easier with a Rhode Island LLC Operating Agreement Template, and the template below will provide you with everything you need for a smooth start.
