A limited liability company is a hybrid legal structure that combines aspects of a corporation and a legal partnership.If a company suffers a financial loss or is sued, the limited liability company must pay but the individual members who own that company are not personally responsible.In order to start a business in Rhode Island, you will need to understand the legal procedures and requirements.The path to forming an limited liability company requires close attention to tax obligations and common business practices according to the Secretary of State of Rhode Island.Learning how to form an limited liability company can help you get your business off the ground.
Step 1: Pick your members.
A limited liability company is made up of a single owner or multiple members.Each member has ownership interest in the company, which includes the member's share of the profits and losses, the right to receive assets, and the ability to vote or participate in management roles.
Step 2: You can choose an entity name.
The name of your company is the first thing you need to do to form an limited liability company.The name of the company has to include either the words "limited liability company" or the letters "LLC"To ensure that your business is not confused with an existing business, there are specific requirements regarding the name chosen by a prospective LLC.Any existing name of a corporation, non-business entity, domestic/foreign LLC, or any other limited partnership on file or on reserve must be distinctly different from the new name.The Office of the Secretary of State's Division of Business Services can help you find out if your proposed business name is registered in Rhode Island.You can call the Business Filing offices at (401) 222-3040 Monday through Friday between the hours of 8:30 am and 4:30 pm to speak with a representative who can help you determine if your chosen name is viable.
Step 3: Reserve your name.
You can reserve a name with the Office of the Secretary of State's Corporations Division if you verified that it is not already taken or reserved.For a fee of $50, an entity name can be reserved for a period of 120 days.Form 620: Reservation of Entity Name is required to reserve an entity name.The reservation must include the full entity name, the type of entity, your name and address, and be signed and dated.Even if you conduct a preliminary name check online, that doesn't mean that another entity has chosen that name or reserved it.The final decision on a name's availability is made by the Secretary of State.The $50 reservation fee should be sent to the Rhode Island Secretary of State.
Step 4: A resident agent is what you should choose.
A resident agent is a registered agent in Rhode Island.The primary roles of the resident agent are to keep the articles of organization and operating agreement and to serve as the primary point of contact.Any important correspondences, including lawsuits, tax forms, and other business documents, may be submitted to the resident agent during business hours and he or she is responsible for forwarding those documents.At the time the application materials are submitted to the state, the resident agent must have a registered Rhode Island street address.
Step 5: If you don't know your entity's filing status, you should.
A partnership, corporation, or separate entity can be formed in Rhode Island.Only limited liability companies with a single sole member can use the separate entity filing.There is a choice between filing as a partnership or corporation.Unless the members file for a corporation status, a partnership with more than one member will default.If you're unsure about the advantages and disadvantages of each filing status, you should speak with a tax expert.These people can help you determine which filing status would work best for your business.
Step 6: The address should be a principal one.
A valid Rhode Island street address is required to designate a principal address.A final address must be settled upon at a later date if the members do not yet have an address.
Step 7: Determine a structure for management.
There are two options for the management of the company.It can be managed by all of its members, or one or more of them.The name and address of all managers must be listed in the appropriate box on the form.
Step 8: Form 400 needs to be completed and submitted.
Form 400 must be submitted to the Department of State's Business Services Division.You must include all of the above information and choose an effective date, either the date you file the form or a later date no more than 30 days from the filing date.The Business Services Division website can be found at http://sos.ri.gov/documents/business/forms/400.The organization's Articles of Organization must be signed by an authorized person.If the authorized person is not a member of the limited liability company, he or she must be authorized by the articles of organization or by an operating agreement to act as an officer, manager, or other form of representative.Form 400 requires the Articles of Organization to be accompanied by a $150 filing fee.Cash, credit card, or check can be used to make the fee at the Business Services Division.The fee can be mailed to the Business Services Division if the form can't be filed in person.Checks should be sent to the R.I. Department of State.
Step 9: Request an EIN from the IRS.
If you have more than one member in your limited liability company, you must request an IRS Employer Identification Number.If you are a sole-member but hire any employees, or if you choose to have your limited liability company taxed as a corporation, you need to obtain an EIN.You can apply for an employer's number through the IRS website.There is no fee to request an EIN from the IRS.
Step 10: Do you know your tax obligations?
You have to determine your tax obligations through the IRS after you register your business in Rhode Island.Depending on how you choose to be taxed, your obligations and forms will be different.A sole proprietor filing with a "disregarded entity" status needs to submit either a federal pro forma tax return or federal Form 1040 Schedule C, depending on which form is applicable for their limited liability company.You have to submit a completed state form.A partnership filing requires a copy of federal Form 1065 and a completed state form.A "corporation" filing requires a copy of federal Form 1120 with a completed state Form RI-1120C.
Step 11: Yearly reports should be filed.
The State of Rhode Island requires limited liability companies to submit an annual report.The report must be filed every year between September 1 and November 1 after the original Articles of Organization have been filed.The form is available online at www.sos.ri.gov.Each year, a $50 filing fee must be submitted to the Division of Business Services.