Start Your Own Business in Rhode Island: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Rhode Island.



Here’s an overview of the key steps you’ll need to take to start your own business in Rhode Island.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Rhode Island Secretary of State (SOS). You can check for available names by doing an  entity name search  on the SOS website. You can reserve an available name for 120 days by filing anApplication for Reservation of Entity Name  form with the Rhode Island SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See  How to Form an LLC in Rhode Island  and  How to Form a Corporation in Rhode Island  for more information.

Is your business a sole proprietorship or partnership that uses a business name that is different from the name of the business owner (for a sole proprietorship) or individual partners (for a partnership)? If so, you must file a certificate of assumed business name with the city or town clerk where your business is located.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Rhode Island, you don’t need to file any organizational documents with the state. For more information, see  How to Establish a Sole Proprietorship in Rhode Island.
  • Partnership:  To create a general partnership in Rhode Island, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement . The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Rhode Island.  To form a  limited liability partnership  (often used by professionals), you must file an Application for Registered Limited Liability Partnership with the Rhode Island SOS. For more information, see  How to Form a Limited Liability Partnership in Rhode Island.
  • LLCs:  To create an LLC in Rhode Island, you must file  Articles of Organization  with the Rhode Island SOS. You will also need to appoint a  resident agent  in Rhode Island for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Rhode Island  and  How to Form a Professional LLC in Rhode Island  (for professionals).
  • Corporations:  To create a corporation in Rhode Island, you must file  Articles of Incorporation  with the Rhode Island SOS. You will also need to appoint a  resident agent  in Rhode Island for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Rhode Island.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Rhode Island, you must apply for a retail sales permit for sales tax. If you will have employees in Rhode Island, you must register for employer withholding tax. You can accomplish both types of registrations, and many others, by completing  Form BAR,  Business Application and Registration, which you can do either online or on paper.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Regulatory licenses and permits.  These cover areas such as:

  • health and safety
  • the environment
  • building and construction; and
  • specific industries or services.

You can find information about commercial licenses from the Commercial Licensing & Racing & Athletics section of Rhode Island’s  Department of Business Regulation  (DBR) website. For certain sales-related licenses, check  Form BAR, Business Application and Registration. For information about local licenses and permits, check the websites for any cities or counties where you will do business.

Professional and occupational licenses.  These cover people who work in various fields. A good first place to check for information is the  Professional License Renewal  section of the ri.gov website. The section provides licensing information for some professions and occupations. Another option is the Rhode Island  Department of Business Regulation, which has links for licensing for a few professions, such as insurance professionals.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Rhode Island taxes every kind of business. See  Rhode Island State Business Income Tax  for more information on state business taxes in Rhode Island.

Sole proprietorships.  Pay state taxes on business income as part of their personal state income tax returns (RI-1040).

Partnerships.  Partners pay state taxes on partnership income on personal tax returns. In addition, Rhode Island partnerships also must file  Form RI-1065  ,  Partnership Income Tax Return. Limited Liability Partnerships (LLPs) also must pay an annual fee equal to the minimum annual corporate tax.

LLCs.  Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. LLCs also must pay an annual fee equal to the minimum annual corporate tax. Furthermore, Rhode Island LLCs must file an  annual report  with the Rhode Island SOS. See  Rhode Island LLC Annual Report and Tax Requirements  for more information.

Corporations.  Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Rhode Island  corporation taxes. Finally, corporations must file an  annual report  with the Rhode Island SOS.

If you have employees, you must also deal with state  employer taxes.

And, apart from Rhode Island taxes, there are always federal income and employer taxes. Check IRS Publications 334,  Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

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