LLC Annual Report and Tax Filing Requirements in Rhode Island

If you have a limited liability company (LLC), you'll need to take steps to maintain it. In Rhode Island, you'll need to file an annual report, pay a minimum corporate tax, and pay other applicable business and employer taxes.

This article covers the most important ongoing reporting and state tax filing requirements for Rhode Island LLCs.

Rhode Island LLC Annual Report

Rhode Island requires you to file an annual report for your LLC with the Rhode Island Secretary of State (SOS). You can file your report online or mail a completed Form 632 to the SOS.

To complete the annual report you'll need to provide information such as:

• your LLC's state-issued entity ID number
• the name of your LLC
• a brief description of the character of the business conducted by your LLC
• your LLC's principal office and mailing addresses
• any changes to the name or address of your LLC's resident agent (also called "registered agent"), and
• a few other basic details.

The annual report must be filed each year between February 1 and May 1 beginning the year following the year of the LLC's organization. For example, if you formed your LLC on March 31, then you wouldn't need to file an annual report until the next year.

As of 2023, the annual report filing fee is $50. Late-filed reports are subject to a penalty fee.

State Business Taxes in Rhode Island

Most LLCs are considered "pass-through tax entities" for the purpose of income taxes. Specifically, multi-member LLCs are considered partnerships, and single-member LLCs are considered disregarded entities. With a pass-through tax entity, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, the LLC doesn't pay taxes on its income. Only the LLC members pay taxes on their share of the LLC's income.

As an LLC member, you'll file a personal tax return and pay your share of the LLC's taxes to the Rhode Island Division of Taxation (DOT), part of the state's Department of Revenue. You can file and pay your taxes online using Rhode Island's Tax Portal.

Must pay minimum corporate tax. Sometimes, states will impose a tax or fee on LLCs and other business entities for the privilege of doing business in the state. This particular tax is often called a "franchise tax." Rhode Island imposes a type of franchise tax on most business entities doing business in the state. LLCs must pay an annual fee that equals the minimum tax imposed on corporations in Rhode Island. As of 2023, the minimum tax is $400. For more information, check the DOT's tax filing requirements webpage.

Must withhold nonresident members' income. In Rhode Island, LLCs (and other pass-through entities) are required to withhold income tax from its members who don't reside in the state. The highest income tax rate is applied to nonresident LLC members. Use Form RI-1096PT to withhold income tax from nonresident members. Your LLC might also need to make estimated payments.

Electing to file a composite return. Instead of withholding income tax, the LLC can choose to file a composite income tax return on behalf of nonresident members. In this case, the electing nonresident members can include a tax credit on their individual income tax return for the taxes paid on their behalf on the composite return.

Electing pass-through entity tax status. Instead of withholding income tax or filing a composite return, Rhode Island LLCs—along with S corporations and other pass-through entities—can elect to be taxed at the entity level. Typically, only the owners of a pass-through entity are taxed. However, in Rhode Island, the owners of a pass-through tax entity can elect to have the business itself taxed. In this case, the LLC would pay income tax on behalf of all of its members (both resident and nonresident). Use Form RI-PTE to make this election.

Electing corporate tax status. While LLCs are taxed as partnerships by default, you can choose to have your LLC taxed as a corporation for federal tax purposes. You can make this corporate tax election by filing IRS Form 2553 with the IRS. If you elect to have your LLC taxed as a corporation at the federal level, your LLC will also be taxed as a corporation in Rhode Island. As of 2023, the Rhode Island corporate tax rate 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. You can file your return using the Tax Portal, Modernized e-file, or by paper.

You can download the business tax returns from the DOT's corporate tax forms webpage. For more information about Rhode Island's taxes, including information about pass-through entity taxes, check out the corporate tax section of the DOT website.

Rhode Island Employer Taxes

If your LLC has or plans to have employees, you must pay employer taxes to the federal and state governments. You should get your federal employer identification number (EIN) from the IRS to report and pay these taxes as an employer. You can register to pay employer taxes (as well as sales tax) to the DOT online through the DOT's Combined Online Registration Service.

Withholding employee wages. As a Rhode Island employer, you must withhold and pay employee income taxes to the DOT. You'll first need to register your business for withholding taxes. Once registered, your business must file withholding taxes either weekly, monthly, or quarterly. Your assigned filing frequency depends on the amount of wages withheld. You must also file Form RI W-3 each year to reconcile your LLC's withholdings. Check the DOT's withholding tax webpage for more details.

Unemployment insurance (UI) tax. In addition to withholding taxes for employees, your LLC will probably need to register to pay state UI taxes to the Department of Labor and Training's Employer Tax Unit. You can register to pay this tax online when you register for withholding taxes. Each quarter, you'll file a tax and wage report and pay the taxes owed using Form TX-17.

Rhode Island Sales and Use Tax

If your LLC will sell taxable goods or services to customers in Rhode Island, you'll need to collect and pay sales tax to the DOT. You can register online to pay this tax through the DOT's Combined Online Registration Service. After you register, you'll be sent a sales and use tax permit.

Most businesses must file and pay sales and use tax every month. If your sales tax liability is low enough, you can apply to file and pay taxes on a quarterly basis. You can file your sales tax returns and make payments online through the Tax Portal.

For more guidance, see the sales and use tax section of the DOT website.

LLC Registration in Other States

In some cases, business owners will organize their LLCs in one state but do business in another. For example, you might organize your LLC in Rhode Island but have business activities in Massachusetts. If your LLC does business outside of Rhode Island, then you might need to register as an out-of-state (foreign) LLC in the states where you do business.

Each state has its own rules for when an out-of-state business must register. Typically, however, you'll need to register as an out-of-state LLC if you have a physical presence in a state, hire employees in the state, or advertise directly to residents of the state. But you should check the state's laws around qualifying as a foreign business.

You can review our state guide to qualifying to do business outside your state to determine whether you need to register your LLC in another state.

More Information About Rhode Island LLCs

Rhode Island's SOS and DOT websites are great resources for small business owners. You can find information about when and how to file your annual report, which taxes your LLC is responsible for, and general guidance on the laws and rules that apply to your business.

If you're not sure if you want to make a pass-through entity tax election or you have questions about what taxes your LLC is responsible for, consider speaking with a Rhode Island business lawyer or tax professional. They can help you identify the forms to file and the tax rates that apply.

If you'd like general guidance on managing and running your LLC, check out the articles in the LLC section of our website. (If you want information about other states' LLC requirements, you can review our article on LLC tax and filing requirements.)