If you want to start and run a Rhode Island limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Rhode Island LLCs.
The State of Rhode Island requires you to file an annual report for your LLC. Blank report forms are available for download from the SOS website. To complete the annual report you'll need to provide information such as:
The annual report must be filed each year between September 1 and November 1 beginning the year following the year of the LLC's organization, except that new LLCs don’t need to file a report until the first year after they're created. The filing fee is $50. Late-filed reports are subject to a penalty fee.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do. Rhode Island, however, imposes its minimum business corporation tax on typical LLCs (those not choosing to be taxed as corporations; see below). The annual tax is $400. Use Form RI-1065 to pay this tax to the Department of Taxation (DOT). For more information, check the DOT website.
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Rhode Island, like almost every other state, has a corporation income tax. In Rhode Island, the corporate tax generally is a flat 7% of net income with a $400 minimum tax. Use the state's corporation income tax return (Form RI-1120C) to pay this tax. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOT website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Rhode Island employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOT. Begin by registering your business online with the DOT (you will be completing Form BAR, Business Application and Registration Form). Once you've registered, you'll need to file withholding taxes on a periodic basis. You'll also need to use some version of Form RIW3 each year to reconcile your LLC's tax withholding.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Employer Tax Section of Rhode Island's Department of Taxation. You can register for these taxes online (you'll be completing Form BAR). Then, each quarter, you'll report on wages and pay the UI taxes using form TX-17.
If your LLC will sell goods to customers in Rhode Island, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Taxation and then make periodic sales tax payments for goods sold. You can register online. After you've registered, you'll be sent a retail sales permit. Then, on a periodic basis (usually monthly or quarterly), you must submit sales tax returns to the DOT. You can do this on paper (forms are available for download) or online. For more information, check the DOT website.
If you will be doing business in states other than Rhode Island, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Rhode Island, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.