So, are you all keen to start a limited liability company in Rhode Island? Before you think of anything else, you need to factor in the cost of forming your LLC. In this article, we will take you through the costs involved in setting up an LLC in Rhode Island.
Before we continue, we summarize the costs to give you an idea of the cost involved in setting up an LLC in Rhode Island. The table below just gives you the bare-bones cost of setting up a business in Rhode Island. There may be additional costs if you put in add-ons like hiring a registered agent, an external LLC formation agency, or an attorney to handle things for you.
|Certificate of Formation Fee||This is a one-time fee. You need to pay it whether you file it online or on paper by mail.||$230||Mandatory|
|Registered Agent fees||Not mandatory to hire. Fees can vary across services.||$0 to $300||Optional|
|Hiring an LLC Formation Agency||This is also up to you. You can choose to forego this option.||$40 to $400||Optional|
|Operating Agreement||You can find free templates online||$0||Mandatory|
|EIN Number||Federal Tax||$0||Mandatory|
|License Fees||This may be required for some businesses. Check with the state of Rhode Island to see if any of these apply to your business.||Depends on the industry and nature of business||Required for most|
The First Steps
So you have a great business idea and want to start your own company. Great! You have done your homework and have come up with a business plan. Even better! But may we suggest a few things you need to do before you proceed?
1. Select Good LLC Name
This may be a key to your business success. Some may say, “What is in a name?” However, your business name needs to have thought put into it so that you do not need to change it in the future.
All you need to do is either call or email the office of the Rhode Island Department of State to check if the name you want is available. If it is, you can use the name. Rhode Island does not charge you for your business name.
If you think you have a great name the good news is that you are not charged for the name. However, if you feel that someone else may take the same name, you may want to do a Name Reservation. This would cost you $50 for 120 days. You can find a detailed guide about the process in Rhode Island here.
2. Certificate of Formation
This is perhaps the most important and most expensive part of forming an LLC in Rhode Island. It is important because without a Certificate of Formation you cannot do business in Rhode Island. If you file the Certificate of Formation, it costs $230 only.
The Certificate of Formation needs to have the following details: the official name of your LLC, the name and address of the registered agent, whether the LLC is managed by the members or managers, the names and addresses of the members or managers, and the date your LLC will be formed. The form has to be signed with your name and address and date of the application.
3. Do I Need to Pay a Foreign Qualification Fee?
This fee is only applicable to a business that already exists outside Rhode Island but now wants to expand its footprint to include Rhode Island. In such cases, the Foreign Qualification Fee is applicable instead of the Certificate of Formation.
Any business entity that is expanding into Rhode Island needs to file for this Foreign Qualification Fee. It is a one-time fee, the same as that of the Certificate of Formation at $150.
Once again, please check whether or not this applies to you only if you are expanding into Rhode Island. If you are registering a new business in Rhode Island, this does not apply.
4. What about Registered Agents?
Every LLC needs to have a registered agent. A registered agent is a person or agency that is responsible for all the paperwork and compliance that a business needs to go through. You could act as your registered agent. But that would mean you may not have time enough to plan and strategize for your business. You can find a detailed guide on hiring a registered agent in Rhode Island here.
This also means that you would always have to be present in the office in case legal papers are served to your business. Again, you cannot be your own registered agent if you are not a resident of Rhode Island.
Another good reason to hire a registered agent is that he/she/the agency then has to look after any government compliances and filings that need to be done on behalf of your company. If you are your own registered agent, this could be an extra burden on you.
Keeping this in mind, we suggest that you do hire a registered agent to handle all the paperwork, compliances, and summons’ that your business may receive.
The cost of hiring a registered agent in Rhode Island could be anywhere from $100 to $300 per year. However, the money is well spent as the registered agent will handle the bureaucratic work for you.
5. LLC Formation Agency?
Though you can register your company on your own, there are some documentation requirements that you may not be able to handle. It is advisable to hire an LLC Formation Agency to do the hard pulling for you to ensure that your company registration meets all compliance goals and that you do not have any problems.
There are many LLC formation agencies. You can find our top picks of online incorporation services here. An LLC formation agency could charge you anywhere from $40 to $400 to help you file your LLC. This is a decision we suggest you take on your own. Do some research and see if you would like to handle the registration of your LLC or would like an agency to do it for you.
6. Need an Attorney?
To make sense of all the official jargon and to decide what are the best options for your business, you may need the services of an attorney. This again is a personal choice. Maybe you are a professional good at your business segment or your area of expertise, but you may not understand or be able to handle legal and bureaucratic requirements.
In such a case, we suggest that you look around, ask around, do a bit of research, and hire an attorney to handle the legal part of your business. The cost of hiring an attorney could vary quite a bit. You would need to look around in your area to find a good attorney should you choose to hire one.
7. Business or Professional License Fees
Normally Rhode Island does not have business or professional license fees for businesses. However, we suggest you ask to see if your business needs some licenses.
You may need the help of an attorney or agency to tell you if you require any such license fees. You can also head over to the government’s website regarding the forms you need to fill out.
These are just some of the expenses involved in setting up an LLC in Rhode Island.
What About an Employer Identification Number?
Yes, you would need an Employer Identification Number (EIN), also called a Federal EIN (FEIN). However, you can get this for free ($0) from the IRS.
Please note that some LLC Formation Agencies do charge you for an EIN, but you can get it for free.
Are There Any Other Expenses to Start an LLC
Other than the expenses mentioned above, there are no other expenses involved in starting an LLC in Rhode Island. However, there are some annual recurring fees that you need to pay on an annual basis.
Rhode Island does not require businesses to pay any taxes per se and an annual Franchise Tax isn’t imposed on businesses. However, the State of Rhode Island imposes a $450 that must be paid every year on its LLCs. Also, they have to file a report every year which costs $50 only.
What Are the Steps Involved in Starting a Business in Rhode Island
Here are the steps you would need to follow to start a business in Rhode Island:
- Think of a good name for your business. You are not charged for an LLC name in Rhode Island.
- Select a registered agent if you want one. You could be your own registered agent, but we suggest you hire one.
- File your Certificate of Formation with the main details of your business.
- Apply for and get your EIN.
- Check if there are any annual taxes and fees you need to pay.
Rhode Island makes it easy for businesses to register an LLC in the state. We suggest that you take professional help to guide you through the process. There are expenses involved in setting up an LLC in Rhode Island. The good news is that these are one-time fees. Please check with the Department of the State of Rhode Island and a registered agent to see if there are any other fees involved or other recurring annual expenses.