A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.

Here are the steps you need to take to form an LLC in Rhode Island.

1. Choose a Name for Your LLC

Under Rhode Island law, an LLC name must end with the words "Limited Liability Company" or the abbreviations "LLC" or "L.L.C." (upper and lower case abbreviations are permitted).

Your LLC's name must be distinguishable from the names of other business entities already on file with the Rhode Island Secretary of State. Names may be checked for availability by using the Rhode Island Secretary of State's business name database.

You may reserve a name for 120 days by filing a Reservation of Entity Name (Form 620) with the Rhode Island Secretary of State's Corporations Division. The reservation can be filed online or by mail.

2. Appoint a Resident Agent

Every Rhode Island LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC's behalf if it is sued. The resident agent (called registered agent in most states) must be a Rhode Island resident or a business entity authorized to do business in Rhode Island. The registered agent must have a physical street address in Rhode Island.

3. File Articles of Organization

A Rhode Island LLC is created by filing Articles of Organization (Form 400) with the Rhode Island Department of State. The articles must include:

• the LLC's name
• the name and address of the LLC's registered agent
• how the LLC will be treated for federal tax purposes
• the address of the LLC's principal office
• whether the LLC will be member-managed or manager-managed--if the LLC is manager-managed, the managers' names and addresses must be provided.
• the date the Articles become effective--upon filing or a later date, and
• the signature of authorized person.

The articles may be filed online or by postal mail.

4. Prepare an Operating Agreement

An LLC operating agreement is not required in Rhode Island, but creating one is highly advisable. The Operating Agreement is the primary document that establishes the rights, powers, duties, liabilities, and obligations of the members among themselves and to the LLC. The Operating Agreement is purely an internal document and is not filed with the Department of State. If an existing or newly created LLC does not adopt an operating agreement, its existing articles of organization, bylaws or operating agreement, and/or its member control or limited liability company agreement will collectively become its operating agreement.

5. Obtain an EIN

If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.

6. File Annual Reports

All Rhode Island LLCs and foreign LLCs authorized to do business in the state must file a Limited Liability Company Annual Report (Form 632) with the Rhode Island Secretary of State and pay a $50 filing fee. The report must be filed each calendar year between September 1 and November 1, beginning with the year following the year in which the LLC's original Articles of Organization were filed with the Secretary of State. The report may be filed online or by postal mail. Be sure to follow up with your resident agent concerning the filing of this report.