Forming a limited liability company (LLC) in Rhode Island comes with many advantages. This business entity structure offers asset protection for the owners, who are called members. That means that the actions, debts, and obligations of the company will not affect the personal assets of the members.
Additionally, an LLC is also treated as a pass-through entity by default when it comes to taxation. That means that the company will not be paying federal income taxes at a corporate level. Instead, the members report business profits and losses on their individual tax returns.
Forming an LLC
Generally, a company will have to register with the state to formalize its organization and ensure the legality of its operations. This registration is at the state level and involves the completion of multiple steps. Among these is the submission of formal paperwork and payment of corresponding fees.
The requirements and steps to form an LLC vary depending on the state where the business will be organized. State laws may also impose additional obligations during the LLC’s existence. To prevent any issues, a company will have to ensure compliance with all of these.
That is where an agent comes in. Having a reliable agent can help a business entity handle all state processes and ensure that it remains compliant with its state obligations at all times.
Here are some of the things a company needs to prepare before starting an LLC in Rhode Island:
- LLC Name – The state has naming guidelines for business entities. For instance, an LLC should include a proper designator. It can be the phrase Limited Liability Company or any of its abbreviations like L.L.C. or LLC.It is also prohibited to use any term that could mistake the LLC for a government agency. Additionally, it is important to ensure the LLC name is distinguishable. So, an LLC can not use a business name if another entity in Rhode Island is already using it. To prevent any issues, it is best to conduct a business entity search on the database of the Department of State.
A company has the option to reserve an entity name for 120 days. Submit an Application for Reservation of Entity Name to the Business Services Division and pay the $50 filing fee.
A reliable agent like DoMyLLC can help make sure that the LLC name of a company follows the naming guidelines set by the state. We can include in our services a business entity name search. We can also handle the filing for name reservation.
- Articles of Organization – The LLC paperwork in Rhode Island that will formalize the company’s registration is called the Articles of Organization. File this form with the Business Services Division of the Department of State and pay the $150 corresponding fee. To fill out the Articles, the company should provide some basic information related to the business. These include the following:
- LLC name
- Name and address of the registered agent
- How the company wants to be taxed
- Principal office address
- Management structure
- A list of the names and addresses of the managers if the company will be manager-managed
- Effective date
- Signature of an authorized representative
- Operating Agreement – Another important piece of LLC paperwork in Rhode Island is the Operating Agreement. This document is not a requirement in the state. However, having one is advantageous.The operating agreement will set the rights, powers, duties, and responsibilities of the members of the LLC. It will define how profits and losses will be distributed. So, it helps prevent any possible disagreements. This internal document will also determine the operating procedures of the company. Additionally, having an operating agreement helps maintain the asset protection feature of the business entity structure as it proves that the company is a separate legal entity.
Preparing an operating agreement requires attention to detail and a proper understanding of the needs of the company. Those who find it a bit complicated can rely on an agent to help prepare a quality operating agreement.
- Employer Identification Number (EIN) – LLCs with multiple members need to get an EIN from the Internal Revenue Services (IRS) for tax filing purposes. The EIN is also necessary for hiring employees and opening business bank accounts.Applying for an EIN requires the submission of a completed IRS SS-4 form. The submission is free of charge. Those who choose DoMyLLC as their agent can also request assistance to apply for an EIN.
- Business Licenses and Permits – In some cases, an LLC may need to obtain certain business licenses and permits. These will depend on the industry the company is in, its business activities, and the location of its primary place of business. To prevent any problems, check the requirements with the county, city, and state government agencies.
- Annual Report – LLCs operating in Rhode Island should also file annual reports to maintain in good standing status with the state. The form is available for download from the website of the Department of State. To complete the annual report, a company will have to provide the following pieces of information:
- The state issues entity ID number
- LLC name
- A brief description of the business activities
- Principal office address
- Official mailing address of the company
- Contact person
- The names and addresses of the managers if there are any
- Any changes regarding the name and address of the registered agent
The annual report should be filed between September 1 and November 1 every year. The filing fee is $50. Having a reliable agent can help prevent a company from missing its deadlines.
Registered Agent
Aside from LLC paperwork in Rhode Island, a company should also nominate and maintain a registered agent. The name and address of whom will be disclosed in the Articles of Organization.
The registered agent will serve as the company’s point of contact with the state. They will be receiving all legal correspondence and other business mail on behalf of the company.
Before choosing a registered agent, a company needs to know the qualifications set by the state. This way, it will prevent any issues with the state.
Individual registered agent
- at least 18 years old,
- a resident of Rhode Island,
- has a physical street address in the state,
- is present at the listed address during regular business hours, and
- agrees to be the registered agent of the company.
Commercial registered agent
- has a physical presence and street address in the state,
- is present at the listed address during regular business hours, and
- agrees to be the registered agent of the company.
Finding the Right Registered Agent
The state allows LLCs to choose their registered agent. Whether it be an individual or a commercial agent, it should be one that offers the best services for the circumstances and needs of the company.
While some LLCs may choose to have an individual agent because it allows them to save money, others opt for a commercial agent because it prevents exposure to unwanted risks. Even though it requires additional expenditure, having a reliable third-party organization like DoMyLLC will make the experience hassle-free. It also ensures that the necessary paperwork is being handled by professionals.
As stated earlier, the registered agent should always be available at the registered office during business hours. That is because the state sends all communications through them. If the agent fails to receive important documents, the company may end up missing filing and reporting deadlines. When that happens, the LLC may lose its good standing status or face involuntary dissolution.
Process servers also reach out to Rhode Island companies through their registered agents. They will let the agent know if the company faces a lawsuit. If the agent fails to relay the message, the company will not know about the lawsuit and proceeding. The worst-case scenario is a judgment of default. That means the court may reach a decision against the LLC because it was not able to defend its side.
Maintaining a Rhode Island LLC comes with various responsibilities, such as the handling of paperwork. Having a reliable agent will streamline state processes and ensure compliance. Contact us to learn more.
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