How to Start an LLC in Rhode Island: Cost and Registration Steps

People who are starting out in business often choose an LLC as the structure for their venture. This is largely due to the convenience of such a legal organization and the many advantages it offers. If you are interested in liability protection, the possibility of pass-through taxation, and the ease of registering a company, then you should definitely consider establishing an LLC in Rhode Island.

Rhode Island is a small state with a high population density. This area is famous for its long coastal zone and attracts businesses related to tourism and recreation to operate here. With all the advantages of the area, aspiring business owners should be prepared for the high cost of living, renting offices, and tax rates. Both state citizens and business owners in the area note this. But if your start-up capital allows, this state has a lot to offer you!

If you've made the decision to do business in this state, you probably want to know how to start an LLC in Rhode Island. We've created an article that will walk you through all the steps necessary to become a successful business owner in this state.

How to Form an LLC in Rhode Island: Step by Step

When we think about forming an LLC in Rhode Island, we expect to face a lot of red tape, legal terminology, and paperwork. Well, here's the good news: in 2022, the LLC formation process in Rhode Island is really quite simple. That's because you can fill out and submit almost all of the paperwork from the comfort of your own home using the Internet.

We offer you step-by-step instructions that will give you the best understanding of the procedure. Let's get started on the first step right away!

Step 1: Name Your LLC in Rhode Island

The first step is to choose a name for your company, and it is one of the most difficult things you should do on your way to a successful business in the United States.

That's all because the state requires you to comply with a pretty extensive list of criteria for selecting a name. If you violate even one of the points (which we will describe below), your LLC will not be able to exist in the state, and its registration will be immediately denied. We advise you to carefully study each requirement so that you do not have to re-file documents and waste your time in case you make a mistake.

Important Aspects of Choosing a Name for an LLC in Rhode Island

1. Your LLC is a private company and is not a branch of the government. Do not imply a non-existent connection in the name of the company. For example, using the acronym "FBI" in the name is a bad idea that will definitely lead your LLC application to inevitable rejection. Your name should be appropriate for a private organization and not mislead your clients;
2. Indicate your affiliation with the chosen business structure. If you have chosen an LLC as your business structure, be sure to indicate that in your name. You can do this by adding words and acronyms such as LLC, L.C, ltd, limited liability, and any other variations. Choose something from the list and feel free to add it to the business name. The idea is that any client, lawyer, judge, or state representative should be able to see immediately which business structure your company belongs to. Also, don't confuse people by listing acronyms for businesses you're not a member of. For example, when forming an LLC, you cannot put "corp" next to your name;
3. Never use words or phrases that are offensive to certain groups (minorities, religious beliefs, people with disabilities, people of all races, genders, etc.). We don't think you intended to do that, but we can't avoid mentioning this rule. The Secretary of State always strives to make the state comfortable for all people. Offensive names are filtered out by the Secretary of State so as not to hurt the feelings of other citizens or cause a major scandal. Moreover, profanity should not appear in the name. Some business startups abuse such methods to draw attention to their young company. This is a serious mistake that can cost them a lot of time filling out and submitting paperwork again;
4. Get your license first before you start thinking about the name. Not all activities in the U.S. are subject to licensing. Usually, special permits only need to be obtained for those that have a higher level of danger while working. For example, if you plan to practice law, medicine, or construction and reflect that in your name, you definitely need to get a license first. Licensing can occur at different levels. Contact your state representatives to learn more about this;
5. Uniqueness is paramount. There are thousands of companies registered in Rhode Island. Each of them has its own unique and distinctive name. There aren't even any treacherously similar names in the state that are easily confused with one another. This is a critical criterion for choosing a business name. Your company should be the only one in the state with that name. Use the business name search on the Secretary of State's website. If the names differ by a single space or symbol, they cannot exist in the state either. Suppose you chose the name "Her Secret, LLC", and there is already a company called "Her Secret, ltd" in the state. In that case, you would probably encounter a denial. 

Reserve the Name for your LLC in Rhode Island

So, you've chosen a name for the company and made sure it's unique. However, you're not ready to start applying for LLC formation right away and want to put the process off for a while. Given the constant growth of companies in the state, you may be afraid that someone else might snatch up the name you've chosen. Don't worry and just reserve that name for some time. In this way, no one will be able to hijack the name because it will already be assigned to you.

Reservation of the name for LLC is given for no more than 120 days. It will cost you $50. You can apply for an LLC name reservation online or send it by regular mail. 

If you choose not to spend a lot of time and apply online, download and fill out the form on the Secretary of State's website.

But if you prefer traditional mail, send the completed form to this address:

Office of the Secret of State

Corporations Division.

148 W. River Street

Providence, Rhode Island 02904-2615

Buy a Domain Name for Your LLC in Rhode Island

In 2022, it's hard to imagine a modern company that doesn't have a website and brand page on social media. This helps attract new customers through organic traffic and successful marketing campaigns.

While choosing a name for your LLC, do a social media search. Your company nickname may already be occupied by someone else, and you'll have to think of variations.

Do the same work with finding domain names that match your company name. You probably plan to build a website that will increase your company's ranking in the eyes of the customers. Overall, it will be much easier for your clients to find your site if its URL is the same as your business name. So, double-check if the domain name is free and buy it at once if it is available.

Step 2: Appoint a Registered Agent for your LLC in Rhode Island

If you ask the experts how to start an LLC in Rhode Island, they will tell you to appoint a registered agent at the beginning of the process. Obtaining the consent of the resident agent is a prerequisite for successful company registration. This requirement is imposed by the Secretaries of all States in the U.S. Let's learn more about the nuances of a registered agent's work and where to find one for your company. 

Who Is a Registered Agent?

This person or company does an essential job on your behalf: he/she receives business correspondence from state representatives and other people interested in your business. This work is simple but very important and responsible.

Why Is It Important to Appoint a Statutory Agent?

If an agent misses an important notice, you run the risk of ending up in an unpleasant situation. For example, if a lawsuit is filed against your LLC and a trial is scheduled, the judge or his/her assistants will certainly notify your agent of the situation. If you don't show up for a court session, you may lose the case for that reason alone. After all, you may not even be able to provide a legal defense for your company due to your absence.

You may also fail to notice your client's complaint. If you don't respond immediately, you could seriously tarnish the image of your LLC in Rhode Island. But what could be worse? Well, the only thing worse is missing important notifications from the state authorities. In that case, you may lose your business altogether.

As you can see, a statutory agent does a small but important job of allowing your company to operate in a regulated manner.

Who Can Become a Registered Agent for an LLC in Rhode Island?

We are going to tell you how to found an LLC in Rhode Island and choose a resident agent. Any US citizen can become a statutory agent. The main thing is that this person needs to be at least 18 years old and have a physical address in the state. This individual should be available 5 days a week during business hours except for public holidays. So, who can perform these tasks for your LLC?

• You can hire an employee to carry out these tasks. This way, you will be sure that the agent is always present and will not forget to notify you of important emails. Since the Secretary of State puts the agent's address in the public domain, it's not uncommon to encounter a lot of spam mail, and the agent will be able to deflect it;
• You can assign one of your company's employees to this job in addition to the main activity. Since this employee may be distracted from his or her main activity, it would disrupt productivity. In doing so, he/she may still miss important notice while performing the direct duties;
• You can request the services of Rhode Island LLC formation companies that offer registered agents' assistance. This is an excellent and the most popular option for young entrepreneurs. Well-known big companies offer a quality service for as little as $70 to $100 a year. Also, this option is especially suitable for those who are planning to do business in several locations at once. Usually, these companies have representatives all over the country and can even offer you a discount for buying their services in bulk for several states;
• Executing the tasks of a statutory agent on your own. This option has almost no merit other than saving $70-100 a year (which you would pay to an employee). If the company's budget is minimal, it makes sense to cut costs this way. But you can't even imagine what a list of disadvantages you would face if you make that decision.

Why Shouldn't You Be an Agent for Your LLC in RI?

As we mentioned above, the decision to be an agent has many disadvantages. Let's talk more about each of them.

• You will have to forget about days off, vacation, or sick leave. When you're on vacation, you risk missing important notices. To prevent this from happening, you should always be available 5 days a week during business hours (except on public holidays). Yes, you may even have to give up your lunch break. In case of emergencies, you won't be able to take sick leave and get some medical treatment because you have to be available to receive correspondence at all times. Are you willing to deal with such a schedule?;
• Breach of confidentiality. The Secretary of State will place your information in the public domain. That way, anyone interested in your business can easily have your contacts to conduct business correspondence. As a result, you lose your privacy and run the risk of facing bailiffs or a disgruntled client on your doorstep or in your office face-to-face. This also does not go well with the idea of limited liability protection;
• You may make a mistake. You are a business leader and probably have a lot of responsibilities related to your work. So, you can easily make a mistake in an agent's tasks and be responsible for it yourself. It may happen given the flood of spam letters that you'll have to constantly filter (since the agent's data is in the public domain).

So, all of the above facts are crucial. Are you ready to take the responsibility yourself? It's up to you!

What Do We Recommend?

Since there are many disadvantages to doing the statutory agent tasks yourself, we offer you another option. Ask statutory agent service providers for help.

There are many companies in the market that provide this kind of service. You can easily find a contractor according to your requirements and budget. Also, LLC formation services often include agent's help in their packages for setting up an LLC for the first year for free. This is a good opportunity to save money.

If you order the service separately, for as little as $70 to $150 per year, you will be able to outsource the agent's tasks to specialists. In doing so, you will be able to focus your attention on the tasks in the business that cannot be delegated but still keep your hand on the pulse.

Step 3: File your Rhode Island LLC Articles of Organization

The next step is to file your foundation documents. When this application is reviewed and approved by the Secretary of State, you will be able to legally start a business in this area. Of course, this will not be the endpoint on your journey to a business that meets all state requirements. But your company will already be registered with the state.

Although the Articles of Organization is the most important document for your company, it is fairly short and won't take you long to fill out (if you have already completed the previous two steps described in this article).

Get Articles of Organization Forms

Visit the Secretary of State's website and find Form 400 there. You can find this form in the "Business Services Online Filing System" section. The site is very user-friendly, and you will easily find everything you need there. By completing and submitting this form, you will be able to start a business in Rhode Island. 

Fill Out Your Articles of Organization for an LLC in Rhode Island

We want to provide the most comprehensive details on how to register an LLC in RI, so we offer a checklist of information you'll need to provide to the Secretary of State in your Articles of Organization:

• Your chosen name for your LLC;
• Contact information for the registered agent; 
• Your head office address;
• The type of taxation system chosen;
• The company's management system;
• When your company begins operations (immediately or later);
• Signature of a person filing the Articles of Organization. 

You can file Articles of Organization online at the Secretary of State's website or by mail. Along with your document, you will need to enclose a check for the state fee of $150.

Who Can Help You With Filling Out the Articles of Organization?

If you're afraid to take on the responsibility of filing Articles of Organization yourself, you can easily find help on the legal services market. Here are a few options for cooperation:

• Contact a professional attorney. These professionals have enough experience to provide you with expert assistance. An attorney will help you fill out the paperwork and anticipate any problems that may arise in the aftermath. It is not cheap to hire a lawyer. So, you will have to pay him/her several hundred to several thousand dollars for assistance. But this will give you the assurance that everything will work like a Swiss watch;
• Turn to special LLC formation services. Such companies also have a lot of experience with LLC creation. They know exactly how to properly start an LLC in Rhode Island and can file the paperwork for you. Their services are much cheaper than a professional attorney's assistance. For $70 to $500, you can get their help. Moreover, there are many such companies on the market with services to meet any requirements and budget.

Step 4: Draft an Operating Agreement for Your LLC in Rhode Island

This document is internal and does not need to be filed with the state. However, we advise you not to ignore the Operating Agreement preparation or downplay its importance. In fact, this paper contains the rules by which your LLC operates. If any disputes arise in the future within the management team/participants of the LLC, thanks to this document, you will be able to resolve them easily.

You can fill in any information that is important to you in this document. There are many examples of Operating Agreement forms on the Internet, and you can use one of them. Also, attorneys offer their help in drawing up such a document. Professionals can help you include important information and rules that will work perfectly for your business.

Here is the information you should include in the Operating Agreement:

• Terms of purchase/sale of company stock;
• Payout of interests to the participants;
• Spheres of influence distribution among LLC members;
• Terms and procedure for dissolution of the LLC;
• Any other information important to you.

LLC formation services can also guide you through the Operating Agreement drafting process. Usually, there is an additional charge for such assistance.

We also suggest you distribute copies of this document to all members of the LLC management team so they have copies on hand at all times.

Step 5: Get an EIN for Your RI LLC Registration

So, now you know how to form an LLC in Rhode Island. If the Secretary of State has approved your Articles of Organization, your company is already registered. But you are not at the end of your journey, and there are a few more steps you need to take to get there.

One of those steps is to obtain an Employer Identification Number (EIN). If you are not sure if you need an EIN, ask yourself two questions:

1. Will my company have employees? 
2. Does my company have more than one owner? 

If you answered yes to any of these questions, go to the IRS website to complete the Rhode Island LLC formation process.

The IRS gives you this 9-digit code to have more control over your tax returns.

You need the EIN:

• For hiring employees;
• For getting loans and opening a bank account for an LLC;
• For paying taxes.

Many LLC formation services offer you an EIN for a fee. You should cancel this service because it does not cost you a cent to get an EIN online. Moreover, it's faster than having a cup of coffee.

LLC Cost: How Much Is an LLC in Rhode Island

As we have mentioned before, forming an LLC in Rhode Island is quite an expensive process compared to some other states. So, how much does an LLC cost in RI? Let's do the math!

Mandatory Expenses

Your major expense when setting up an LLC in Rhode Island is the fee for reviewing your Articles of Organization. In this state, you have to pay $150 for this.

Additional Expenses

Additional expenses include: 

• Company name reservation: $50;
• Services of LLC formation companies: $0 - $500 or professional lawyer services from $500 and above;
• Purchase of domain name from $5 and above;
• Registered agent services (may be included in LLC formation services);
• Obtaining licenses (the cost is calculated individually for each business).

First Tasks after Creating an LLC in Rhode Island

So, all the basic steps involved in creating an LLC in Rhode Island are behind you, and you can call yourself a business owner. But you're just at the beginning of the journey. You still have a lot of work to do.

Open a Bank Account for Your LLC in Rhode Island

In order to keep the corporate veil intact and maintain limited liability protection, we recommend opening a separate bank account for your business. This way, your assets will be segregated, and you can be assured that in the event of a lawsuit or company debt, your assets will not suffer. Moreover, this way, it makes it easier for an accountant to keep track of business profits and losses.

Get Business Insurance

No one is immune to emergencies. Your choice of insurance depends on the nature of your business. Contact a professional insurance agent, and s/he will help you choose the type of insurance that offers the most protection for your LLC in Rhode Island.

Keep Your Company Compliant

After creating an LLC in Rhode Island, you need to ensure its smooth operation. To do this, keep your company compliant.

Here are the steps you'll need to take to do so:

• Get all the licenses needed;
• File tax returns; 
• File annual reports (it will cost $50 per year for the state to review the annual report).  

Conclusion

Now you know how to start an LLC in Rhode Island. It is not a complicated process if you follow the steps outlined in this article in order. Pay special attention to filling out the Articles of Organization. This is the main document for your business. If you fill it out correctly, you will have no problem registering your company, and the Secretary of State will quickly approve your application.

If you need help, contact lawyers or LLC formation companies who will definitely make the process easier. This way, you can be sure that everything is done correctly according to the requirements.

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