Choosing to start a new company is both exhilarating and terrifying. It’s the first of many choices you’ll have to make along the path. Depending on where you reside, you may need to register your company at the state, municipal, and federal levels. This tutorial will assist you through the process of registering your Rhode Island company.
Establishing a Business in Rhode Island
1. Give Your Rhode Island Business a Name
Naming a new company may be a difficult job for many people. The name should be memorable, letting people know what you have to offer. A strong name, on the other hand, is much more than that. It is a branding tool that provides an inside peek into your organization’s purpose and future goals. The correct name may help you set yourself up for long-term success; the wrong name can destroy a ship before it ever sets sail.
Considering Your Name
While many entrepreneurs are inclined to speed through the name process, you should take your time and investigate all naming options. Take multiple brainstorming sessions and utilize the free internet business tools available today to assist you come up with a variety of choices, narrowing them down as you go.
Name Lookup in Rhode Island
Once you’ve narrowed down your options, you’ll need to determine whether any of them are already being used by another company in your state.
You may search for your chosen name using the Rhode Island Department of State’s corporation database tool. You should also make sure that your name isn’t too similar to any existing firm in your state. This will assist to prevent future misunderstanding and legal problems.
It’s time to start legitimizing your firm once you’ve chosen a name that appropriately portrays your brand. These following procedures will differ based on your company structure and the legal requirements of your state. The next section will go through the various company structures.
If you want to utilize a “doing business as” (DBA) name, also known as a fake name or assumed name in Rhode Island, our DBA guide will assist you in ensuring that you are legally registered at the state, county, and/or local levels. There are several advantages to registering your fake or assumed name with the state. It provides further protection against competing Rhode Island enterprises, establishes your company’s validity, and may be needed by certain suppliers, banks, and lenders.
2. Select a Business Structure for Your Rhode Island Company
Now that you’ve picked a good name for your brand, it’s time to start the legalization process. Before you begin the registration procedure, you must decide which company structure is appropriate for you. Each has its own set of perks, drawbacks, and tax advantages.
The sole proprietorship
A single proprietorship is the simplest straightforward business form. This informal corporation was created for entrepreneurs who do not want to work with others. It provides no personal asset protection and does not need state filing.
Unless you apply for a DBA, your sole proprietorship in Rhode Island will operate under your surname. Because this is done with the city clerk’s office in each city where you operate, the fee and processes for registering a DBA in Rhode Island differ by city. For a complete list of city contact information, go to the state’s website.
A general partnership, like a sole proprietorship, is an informal structure established for entrepreneurs who form a partnership with at least one other person. You and your partners’ surnames may be used for the firm, or you can get a DBA name. Profits and losses would be reported on your (and your partners’) personal tax return, and no personal assets would be protected.
Some partnerships (including limited partnerships and limited liability partnerships) in Rhode Island are required to submit formal documentation with the state, along with a filing fee.
If you do not intend to go public in the foreseeable future, a limited liability corporation (LLC) may be the best option. It provides more freedom and protects your personal assets in the case of a lawsuit.
The state of Rhode Island requires all LLCs to select a resident agent (also known as a registered agent) to receive legal papers on their behalf. Your resident agent must be a qualified Rhode Island resident or a company allowed to do business in Rhode Island. Many new LLCs choose to use a registered agent service, which costs between $29 and $300 each year.
Rhode Island also needs you to follow particular name rules and submit the Articles of Organization, which include important information about your business.
A corporation is a kind of business entity for those who have (or want to have) shareholders. So, if you want to go public in the future, this may be the greatest alternative for you.
Corporations, like LLCs, must designate a registered agent to receive paperwork, compliance papers, and government communication on the organization’s behalf. Your registered agent, like an LLC, might be a professional service, a corporate organization, or a person.
In addition to a registered agent, you must submit the Articles of Incorporation with the state.
3. Determine whether your company has to be registered in Rhode Island.
Once you’ve decided on your formal company structure and registered your new business name, you need check with your state to see what the criteria are for business registration. Each state has its own set of rules, which must be strictly followed.
Most informal company arrangements, such as sole proprietorships and general partnerships, do not need to be registered with the State of Rhode Island. Check with your local government to discover whether your sole proprietorship or general partnership has to be registered at the county or municipal level.
Furthermore, certain firms (for example, sole proprietorships and single-member LLCs with no workers) are exempt from registering and filing for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a necessity for your company, you should consider registering regardless since there are various legal and tax advantages.
Even though you are not compelled to register your firm, it is important to recognize that creating an LLC has several legal and financial advantages. Your business debts are considered personal debts if you are a single proprietorship or a partnership. This implies that in the case of a lawsuit, your personal assets might be taken. Personal protection is provided through LLCs, which legally shield your personal assets and minimize your personal liabilities.
Aside from personal protection, LLCs have various additional advantages, including:
Profit distribution, decision-making, and company management flexibility
“Flow-through” taxes permits the LLC’s revenue and costs to pass through to the owners’ personal income tax returns, with no limits on the number and type of owners.
If you don’t have the time or skills to organize your own LLC, there are a variety of trustworthy LLC filing services that may assist you. We analyzed and selected the five finest LLC registration services because we realize how difficult it can be to navigate through the thousands of accessible alternatives. Our LLC service review compares each to ensure you associate with a service that saves you both time and money.
4. Register Your Rhode Island Business for Taxes
EINs are used by the IRS to identify firms for tax purposes. Every company with workers is obligated to have one. Our EIN guide will assist you in determining the EIN requirements for your company structure and will coach you through each stage of the procedure.
Once you have your EIN, you must register for state income taxes as well as employer taxes such as the Employment Security Tax, Job Development Fund Tax, and Temporary Disability Insurance Tax.
It is possible that you may need to register your company for extra state or municipal taxes. The kind of your company and the county/counties in which you operate determine your tax obligations. Businesses in Rhode Island that sell tangible goods and/or taxable services must register for the state’s sales tax. Visit the Division of Taxation’s website for a complete list of tax registration requirements.
5. Obtain Rhode Island Business Permits and Licenses
In Rhode Island, not all businesses are needed to hold a business license. However, many sectors need industry-specific permissions or licenses to remain compliant. An electrician, for example, will need licensure from the Rhode Island Department of Labor and Training. Before you open your doors, check with the state’s Professional Licensing website and your local government to confirm that all licensing requirements are satisfied.
Furthermore, certain businesses are governed by a federal agency and need federal licenses and/or permits. A liquor company, for example, would be subject to FDA standards and recommendations. Visit the Small Business Administration (SBA) website to learn more about federal permit requirements and costs.