How to Form a Rhode Island LLC in 10 Steps
The creation of an LLC (Limited Liability Company) is not a difficult process.
LLCs are unique business structures wherein more than one individual can be a member, liability exposure is reduced, separate taxes needn’t be filed separately, and all profits earned are passed through to each individual member.
When you’re ready to form your own Limited Liability Company, we recommend that you follow the 10 steps outlined below.
1. Choose Your Company Name.
You need a company name that no other business has the rights to use. You can conduct your own name search, or SunDoc can run your name search or reserve your name for a reasonable fee. At a minimum, your preferred name must be available in the State of Rhode Island. It is also wise to check for a registered trademark on your preferred name as well.
2. Understand the LLC Organizer Requirement.
You can choose anyone to be the organizer of your LLC. This individual or firm will be the one who prepares and files your Articles of Organization.
By default, the organizer will be you if you prepare your Articles. But your organizer could be an attorney or a filing service like SunDoc. At SunDoc, for a reasonable fee, we can prepare and file your Articles of Organization.
3. Designate a Registered Agent.
The third step on your way to a new LLC is choosing a registered agent. Registered agents are required to be named on your Articles of Organization form (learn more about the Articles of Organization form in step six).
Your registered agent can be an individual or a firm. We recommend checking out the following SunDoc article for more information on this role: Registered Agent Service.
4. Decide Your Ownership and Management Structure.
The Articles of Organization form asks whether your Rhode Island LLC will be managed by one manager, multiple managers, or all the members. You must decide whether you want to be a member-managed or a manager-managed LLC.
5. Create an Operating Agreement.
An operating agreement is a crucial document when creating any new LLC in Rhode Island. This document:
- Lays out financial and functional decisions on your business's behalf
- Outlines business provisions, rules, and regulations
- Pays out profits
- Manages voting, liability, and fiduciary constraints
- Manages working capital
- Drives your business in a legal sense
Most of all, the role of an operating agreement is to govern internal operations, all of which should meet the overall needs of your LLC owners.
You may also wish to consult an attorney for advice.
6. File the Articles of Organization.
Step six will be to file your Articles of Organization. You can also ask SunDoc to file your Articles of Organization on your behalf. This is often done when time is an issue for new LLCs.
The Articles of Organization simply outline essential information for the state. This means the form will need to include:
- Your new LLC’s name and address
- Your registered agent and LLC organizer
- The management method you've chosen
- The member names for your LLC (sometimes required)
After your Articles of Organization have been accepted by the state of Rhode Island, this will be the moment of your company's official creation.
7. Obtain an EIN and Open a Business Bank Account.
Congrats! You are on step seven and you should officially have an LLC registered with Rhode Island state by now.
Your next step is to obtain an Employer Identification Number. This is also known as an EIN, and it must be obtained from the IRS. You need an EIN whether you have employees are not. All LLCs with more than one member need this.
You can file with the IRS yourself, or SunDoc can file for you.
Once you have an Employer Identification Number, now is a good time to open a bank account that will be primarily for your business. With this bank account, you can pay for all business-related expenses, including any reimbursements that need to be made to yourself or other members.
Reimbursements like these can be made at any time, but always remember to keep your receipts.
At this point, some business owners like to hire an accountant. This can be useful for assisting with business matters as you are just starting out with your new LLC.
8. Pay Rhode Island State Taxes.
Each year your LLC may be required to pay necessary fees and taxes to your state, possibly including in your first year of operation. If you sell goods in Rhode Island, you may be required to collect sales tax. You can find more state tax information on the State of Rhode Island’s tax web site.
9. Determine Necessary Licenses and Permits.
Remember that you'll need select business licenses or permits so that your business can legally operate on the county and city levels in Rhode Island. If you don't have the proper permits or licenses, you will likely be charged hefty fines.
Always go to the state of Rhode Island’ business website to see what your specific requirements will be. You should check it even if you are assuming you don't meet the permit and license requirements. Most companies are surprised at what they find.
10. File an Annual Report (Biennial Report or Initial List).
Usually you must file an Annual Report, Biennial Report, or other such document soon after forming an LLC in Rhode Island, and thereafter an updated report every year or two years depending on your state’s requirement. The Annual Report is a simple form that keeps the state up to date on your company information. And down the road when you make changes to your company, it will invariably be one of the forms you’ll need to file with the state.
It is very important to file within the required time. It can cost you as much as ten times the normal filing fee if you file late! If you prefer, SunDoc can file your Annual Report/Biennial Report and other routine filings for you, reliably and on time. All LLC forms, including the report form, can be found on the Rhode Island business web site.
Important Notice: It is beyond the scope of this article to discuss your potential insurance needs, or matters relating to employees. You should consult an attorney or accountant with any questions about legal or financial matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.
For additional learning, please visit our LLC FAQs.
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