Think about your LLC a year from now: raking in profits and taking Rhode Island by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Rhode Island.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Rhode Island startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Rhode Island
Optional: LLC Name Reservation Fee
- $50 for online or hard copy filings
Required: Articles of Organization Fee
- $150 for online or hard copy filings (with an additional $6 for online processing)
Overall Rhode Island LLC Formation Costs
LLC Name Reservation Fee
First, you should know that reserving a business name is not required to start an LLC, so this $50 fee is optional. However, if you’ve come up with a perfect name but aren’t ready to get your business going, you might consider reserving it. Filing for a reservation online or by mail will give you a non-renewable 120-day hold on your desired name. On the other hand, if you’re prepped and ready to file your Articles of Organization, do that instead, as it will automatically register your name.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Rhode Island LLC. You can’t begin conducting business in the state until you have the Articles of Organization on file. It’s what officially puts your LLC on record with the state. It’s $150 to file online or with a paper form, but it’s a $150 well spent. Plus, you only file the Articles of Organization once, so as long as it’s accepted, you won’t need to pay this fee again.
Business and Professional Licenses
Even with your Articles of Organization on file, your LLC may still require certain professional licenses before doing business in the state. Different types of business need to apply for licensure with different state agencies, and license costs vary. A refrigeration mechanic, for example, must apply for a license through the Department of Labor and Training, while a commercial fisher needs on from the Department of Environmental Management.
On top of that, your local city and/or county may have its own set of licensure requirements, so check with the Department of Business Regulation website and your local government to find out which licenses your LLC may need.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Resident (Registered) Agent Service
Appointing a resident agent is an important part of your LLC formation process. Your resident agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Rhode Island business law. In short, you need an agent you can trust.
While you can be the resident agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A resident agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all resident agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to resident agent services, Northwest also handles LLC formation — and they’ll include a resident agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Resident Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer, and there are plenty of quality options. So how do you make the right choice? Using a site like Avvo, which provides access to a database of Rhode Island business lawyers, can help you be confident that you’re hiring the right fit for your LLC.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Rhode Island. Does this describe your business? If so, don’t worry about the Articles of Organization. Instead, you’ll need to file an “Application for Registration.”
All foreign business entities are required to foreign qualify in Rhode Island, or they could incur some pretty severe penalties. Stay in the Department of State’s good graces by downloading an Application for Registration, filling it out, and mailing it in with a $150 filing fee. Similar to the Articles of Organization, this is a one-time filing and fee, so after it’s accepted, you can forget about paying it again.
LLC Annual Fees
All the fees we’ve discussed up until this point have been one-time payments, startup costs. But LLCs carry recurring maintenance fees as well, primarily the Annual Report. In order to maintain the most current information on its businesses, the Rhode Island Department of State requires them to file Annual Reports (online or by mail) between Sept. 1 and Nov. 1 each year. Each report costs $50, and you can include this $50 payment in your budget for each fall.
When it comes to federal taxes, LLCs are considered as “pass-through” entities, meaning that they don’t need to file corporate tax returns. Rather, their owners and/or members report income and losses on their personal returns.
While LLCs are treated similarly at the state level, Rhode Island does impose an annual charge of $450 on its LLCs – the minimum business corporation tax. To pay this tax, file a Form RI-1065 by Apr. 15.
Additionally, if your LLC sells merchandise, it will be subject to a Sales/Use Tax, and if it maintains employees, it will owe a Withholding Tax and Unemployment Insurance. Register for these taxes using the Department of Revenue’s Combined Online Registration Service, or download the paper forms here.
Some LLCs are set to be taxed as corporations. If you’ve done this (or plan on doing this) with your company, it will be responsible for filing a corporate tax return and paying Rhode Island’s corporate income tax of 7%.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
If you fail to submit startup filings or fees – like the Articles of Organization or the Application for Registration – you’ll be unable to commence business in the state, and penalized for doing so. And if you miss an Annual Report filing, like businesses commonly do, you’ll incur a late fee of $25 and fall out of good standing with the Department of State. This means that your LLC cannot foreign qualify in most other states, apply for business loans, renew some professional licenses, and more until you reconcile your outstanding filings and fees. Remain outside of good standing, or fail to maintain a valid resident agent and your LLC can be administratively dissolved.
Failure to pay taxes will result in a whole different set of penalties. The Sales Tax specifically incurs a late filing penalty of 10% of the amount owed and a late payment penalty of 10% as well. Missing other tax payments will result in similar fines and loss of good standing.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Rhode Island.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Annual Reports and minimum business corporation taxes – so your business doesn’t fall out of good standing.