How to start a Rhode Island LLC

An LLC is a type of business that helps protect its owners (called members). This means that if the business owes money or gets sued, the members’ personal assets, like their house or car, are usually safe. 

In the state of Rhode Island, an LLC is defined as “an entity that is organized and existing under the laws of this state pursuant to [Chapter 16]” (§ 7-16-2(14)). That means an LLC in Rhode Island is a company created within the state or a company that becomes subject to Rhode Island’s state regulations surrounding LLCs (Title 7 Chapter 16).

If that sounds like a lot of legal jargon – that’s because it is! What you need to know is that LLCs are popular with business owners because they are simple and flexible to run. They have fewer rules compared to comportations and the owners can choose if they want to manage the business themselves or appoint managers to do it. 

Another benefit is how taxes work: LLC owners can pay taxes through their own personal tax returns, or they can choose to have the business pay taxes separately, like a corporation. This gives owners more choices in how they handle taxes as their business grows.

Why should I register for an LLC in Rhode Island?

You may want to register for an LLC in Rhode Island when:

• You own or want to start a business in Rhode Island, or want to expand an existing business into Rhode Island, and want to stay legally compliant. 
• You own or want to start a business, and want more flexibility on how you will manage the business or pay taxes than a corporation would provide.
• You want to protect your personal assets from potential liability resulting from business you conduct in the state of Rhode Island. 
• You own or want to start a business, and want to register in Rhode Island to open accounts, lease or buy property, secure funding, or hire employees.

Do I need to file my LLC in Rhode Island if I live in another state?

Any LLC that does business in Rhode Island must register with the State of Rhode Island. Rhode Island does not outline any specific actions that constitute transacting business, however, these actions, among others, are not considered to be doing business in Rhode Island:

• Maintaining or defending any action or suit or any administrative or arbitration proceeding or effecting its settlement or the settlement of claims or disputes.
• Holding meetings of its members or carrying on any other activities concerning its internal affairs.
• Maintaining bank accounts.
• Maintaining offices or agencies for the transfer, exchange and registration of the foreign limited-liability company's own securities or maintaining trustees or depositories with respect to those securities.
• Effecting sales through independent contractors.
• Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, where the orders require acceptance outside this state before becoming binding contracts.
• Creating as borrower or lender or acquiring evidences of debt, mortgages, security interests or liens on real or personal property.
• Securing or collecting debts or enforcing any rights in property securing the debts.
• Transacting any business in interstate commerce.
• Conducting an isolated transaction completed within a period of thirty (30) days and not in the course of a number of repeated transactions of like nature.
• Acting as a general partner of a limited partnership that has filed a certificate of limited-partnership or has registered with the secretary of state.
• Acting as a member of a limited-liability company or of a foreign limited-liability company that has registered with the secretary of state.

LLCs based in Rhode Island are called "domestic LLCs," and out-of-state LLCs are called "foreign LLCs." Foreign LLCs and domestic LLCs may have different filing and compliance requirements -- Rocket Lawyer can help you navigate foreign LLC registration, regardless of where you live.

How to start an LLC in Rhode Island

1. Find a unique name for your Rhode Island LLC

The state of Rhode Island requires that the names of all LLCs in the state:

• Shall end with either the words "limited-liability company" or the upper or lowercase letters "l.l.c." with or without punctuation, or, if organized as a low-profit, limited-liability company, shall end with either the words "low-profit, limited-liability company" or the abbreviation "L3C" or "l3c."
• Are not too similar to existing LLCs in the state. You can search the state of Rhode Island's database of business entities in the state to ensure your business' name is unique.

Rocket Lawyer can help you determine whether your business' name is eligible for registration in Rhode Island and may be able to help you reserve the name before you file your LLC.

2. Include your other LLC members (if any)

In Rhode Island, you can in fact form as a one-person LLC. In this case, the LLC would be referred to as a single-member LLC (SMLLC), whereas if there is more than one owner, the LLC may be called a multi-member LLC. 

The main difference between single-member and multi-member LLCs lies in ownership structure and management. With a single-member LLC, you have full control over the business. In contrast, a multi-member LLC has multiple owners, each with a specific percentage of ownership as defined in the operating agreement. This means that in a multi-member LLC, owners share profits, losses, and tax responsibilities based on their ownership percentage.

3. Provide a Rhode Island address

This will be used as your official LLC address. The address that you list may either be your home, an office, or another physical location, but it cannot be a PO box.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Rhode Island address) or choose one to do that service for you (if you are not located in Rhode Island or would like an extra layer of privacy).

5. Register your LLC with the state of Rhode Island

Once you have a business name and registered agent, you can register your business as a Rhode Island LLC with the state of Rhode Island by filing your Articles of Organization. This document may be referred to informally as an LLC's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

6. Get an Employer Identification Number (EIN)

Rhode Island LLCs are required to have a Federal EIN tax number. Think of your tax ID as the social security number for your company. It will be important for business contracts, tax filings, and all manner of documents down the line. Every company should have one to remain in good standing.

7. Pay the state filing fee

Every state has different fees for forming an LLC, which can also vary from one year to another.

Congratulations! After you have completed all these steps, you have formed your Rhode Island LLC.

What to do after forming a Rhode Island LLC

There are a few steps you need to take to maintain your Rhode Island LLC:

1. Create an Operating Agreement: we can help you create your Rhode Island LLC Operating Agreement online.
2. Hold a meeting: a first meeting with members of an LLC is not required by law, but it is highly suggested in order to get organized. Also, unlike corporations, LLCs are also not required to maintain Meeting Minutes, but these documents are also recommended as they provide records for important decisions made.
3. Pay taxes according to how you chose to be taxed: traditionally, LLCs are "pass-through entities." This means that you pay your business taxes on your personal tax form. That said, you can elect to be taxed like a corporation, if you choose to do so.
4. File an Annual Report: this is required of all Rhode Island LLCs between Feb. 1st and May 1st each year.

What is needed to keep records for my Rhode Island LLC

The State of Rhode Islands requires LLCs to keep the following documents at their principal office:

• A list, containing full names and last known business addresses, of all current members and managers.
• Copies of information regarding capital values must be available to members along with information regarding member voting rights.
• Copies of the articles of organization and any amendments executed.
• Copies of any certificates executed by powers of attorney.
• Copies of the previous five years' federal, state and local income tax returns.
• A copy of any effective written Operating Agreements.
• Records of proceedings of members and managers.
• Copies of all financial statements for the last five years.

Still have questions? Rocket Lawyer can help you with the process of forming a Rhode Island LLC. Get started today!

  

Key takeaways Registering an LLC in Rhode Island can give you a lot more flexibility than a corporation, as well as protection for your personal assets from potential liabilities. Even if you live in another state, you must register your LLC in Rhode Island if you do regular business there, like selling things or having employees. After starting your LLC, it’s advisable to create an Operating Agreement and hold a first meeting. You’ll also need to file an Annual Report every year. Keep records of your Rhode Island LLC, like the names of all members, tax documents, and your business rules. These help you stay organized and follow the law.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is an LLC
• How are LLCs taxed
• How to start an LLC
• Do I Need a Registered Agent?
• How and when to file an Annual Report