Starting an LLC in Rhode Island is taking a huge step in your entrepreneurial journey. The process requires new business owners to consider a lot of issues, including costs. While the legal formation of a Rhode Island LLC is definitely not the most significant expense you’ll encounter, it can be a substantial part of the budget for those who are bootstrapping a business.
Since starting your own business is investing in your future, make sure you do it correctly. Involving an LLC formation business right from the start can help take a lot of the pressure off of you when it comes to ensuring you don’t make a costly mistake. The good news is that many businesses that specialize in assisting business owners form an LLC are relatively low-cost, and many even have no additional cost options.
This guide will give you a general idea of some of the fixed costs associated with creating an LLC in Rhode Island, as well as some of the popular optional services that can affect your budget. But remember, costs can change at any time, so make sure to check with the state for the most up-to-date fees.
Coming up with the perfect name for your LLC is more complicated and more important than you think – so take your time. As the first point of contact for your future customers, you need a name that is both representative of your business and memorable. But you can’t just choose any name.
Besides your business’s name having to adhere to Rhode Island’s LLC naming guidelines, it must be “distinguishable upon the record.” That means the name can’t be the same or very similar to a business currently operating or recently dissolved in the state of Rhode Island.
Remember that the official name of your LLC in Rhode Island must include a marker (such as LLC) in the name.
If you want to do business without that marker, you need to file a Fictitious Business Name Statement (commonly known as a DBA) either online, in person, or through the mail. The cost is $50, plus the Enhanced Access Fee of $3, if filed online.
If you are not ready to start an LLC yet but don’t want anyone to be able to use a particular name, it is possible to reserve a business name through the mail or do it online. It costs $50 to file by mail or $50, plus a $3 Enhanced Access Fee if done online. Names are reserved for 120 days.
In Rhode Island you need to file your LLC’s articles of organization with the Department of State. You can do this through the mail or fill out the form online. Rejected filings will be returned to you and posted online. In contrast, successful filings will only be posted online, and the state will not mail out a confirmation letter.
If you choose to mail in your articles of organization, the cost is $150. If you decide to register online, you will need to pay an Enhanced Access Fee of $6 in addition to the $150 filing fee.
Rhode Island requires that each LLC appoints a registered agent to receive business documents and act as a general contact person. You have the option of being your own registered agent, or you can hire a person to act as your registered agent on your behalf. Many LLCs prefer to hire a registered agent because it saves a lot of time on paperwork, and the person’s contact information will become a public record.
The fee for a registered agent can vary widely. On average, a registered agent service will charge $199 per year, but some charge double that amount or even more.
In the state of Rhode Island, creating an operating agreement for your LLC is not required by law. Still, it is highly suggested, especially if there will be more than one member of the LLC. Even for a single-member LLC, an operating agreement can be a good idea.
An operating agreement generally covers the roles of each member and how the LLC will do business, and perhaps, even more importantly, dissolve itself if the time comes to end the business. Having a well-written operating agreement can eliminate a lot of legal wrangling in the future.
There are many ways you can create an operating agreement. The cheapest is writing your own operating agreement using a template. It’s inexpensive but time-consuming, and easy to omit important language. Hiring a private attorney to draft your operating agreement ensures everything necessary will be included in the operating agreement, but it can be very expensive. Using an LLC formation service is a great middle-of-the-road alternative since it reduces your paperwork, and you can rest assured all the bases are covered.
The costs described above are one-off expenses you have to pay when forming your LLC, but you will need to cover additional and ongoing fees to run your LLC. Some of the most common operating expenses are listed below.
Even after you file the articles of organization with Rhode Island, you can’t just hang a shingle out and start doing business. Although Rhode Island does not require a general business license, many types of business activities will need either a license or a permit.
One of the most common licenses new businesses must apply for is the Rhode Island Sales Tax License. Any business that does retail sales that charges sales tax will need this license. You can apply for the Rhode Island Sales Tax License either by mail or online.
Other standard licenses include occupational licenses. Each of these licenses has different requirements and costs associated with them. Check out the state’s Professional License Renewal web page for more details on each type of license and their costs. Local municipalities may also have their own licensing requirements and fees.
In addition to licenses, your LLC may need a permit. While the state may require your business to have some permits, many counties, cities, and towns also require permits. Some of the most common permits include:
Rhode Island requires LLCs to file an annual report.
In Rhode Island, the filing period is between February 1 – May 1. You may file your LLC’s annual report online or use Form 631 to file by mail or in person. The fee to file in person or by mail is $50, and the fee to file online is $50, plus a $2.50 Enhanced Access Online Fee.
The late filing penalty is $25, plus a $3 fee if you file late online.
In Rhode Island, every LLC needs to pay a Minimum Corporate Tax of $400. This is the minimum an LLC needs to pay to the RI Division of Taxation regardless of any profitability or even if the business never operated that year. The Minimum Corporate Tax is not prorated.
The one upside of all of these fees and expenses is that come tax time, you can write off many of them on the LLC’s federal taxes. Some of the most common ones are listed below, but it is a good idea to speak with a tax professional to avoid any unpleasantness in the future.
These tax deductions may include:
LLC Expense | Estimated Cost |
Articles of organization filing | $150 – $156 |
Business licenses and permits filing | Varies |
Registered agent | Varies ($0 – $400) |
Fictitious Business Name Statement filing | $50 – $53 |
Operating agreement creation | Varies |
Minimum Corporate Tax | $400 |
Annual report | $50 – $52.50 |
Getting everything right when starting your LLC in Rhode Island is quite an accomplishment in itself. It will require a lot of time and effort, but there is a simple way to make things easier for you. You can hire an LLC formation company.
An LLC formation business is an affordable way to get the assistance you need to ensure your LLC gets off on the right footing. The good news is that most of these businesses offer a free basic service that covers the most important filings. And if you want more help, the extended services are usually affordable.
Ultimately, the decision of which type of corporation to use for your business is up to you. Still, many business owners find LLCs offer the best balance between benefits and responsibilities. LLCs provide personal asset protection and advantageous taxation without having you jump through too many hoops.
The best resource for starting your Rhode Island LLC is the Rhode Island Secretary of State LLC Welcome Packet. The packet provides an overview of the requirements and lists resources you may need while forming your LLC and later on.
For peace of mind and reducing paperwork, an LLC formation service is absolutely worth it. Many of these businesses offer a free basic service, and even the more extensive services are usually reasonably priced.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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