Establishing an LLC in Rhode Island provides numerous advantages, including liability protection, pass-through taxation, and operational flexibility. Below is a comprehensive step-by-step guide on how to set up an LLC in Rhode Island:
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STEP 1: Choose a Name for Your LLC
Naming Requirements: Your chosen name for the LLC must include the words “Limited Liability Company,” or the abbreviations “L.L.C.” or “LLC.”
Distinctiveness: The name should be unique and distinguishable from existing registered business entities in Rhode Island.
Name Search: Utilize the Rhode Island Secretary of State‘s online business database to verify the availability of your chosen name.
Optional Name Reservation: If you want to reserve a name before officially forming your LLC, you can do so for up to 120 days by paying a reservation fee.
Time it Takes to name an LLC
Researching and deciding on a name: 1-2 hours
If opting for a name reservation: The act of filing can take about 10-15 minutes.
If opting for a name reservation: Filing can take minutes, but approval might take a few days to a week.
STEP 2: Appoint a Registered Agent
The Registered Agent can be an individual or business entity responsible for receiving official notices and legal documents on behalf of the LLC.
The Registered Agent must have a physical address within Rhode Island and be available during regular business hours.
Time it Takes to be a Registered Agent
Registered Agents MUST BE at the Business Address everyday during business hours. This is why Home Addresses Are Not Accepted.
If you already have someone in mind (like an attorney or a service), this can be quick. If you need to find and appoint a registered agent: 1-3 hours.
Why use Inc Authority vs Being your own Registered Agent?
Benefits of having Inc Authority serve as your Registered Agent include:
· Privacy: Keep your home address private
· Efficiency: Easily receive and promptly process state and legal documents
· Hassle-free: Reduction of junk and solicitation mail
· Legal Compliance: Avoid fines, penalties, and possible dissolution
· Convenience: Serves as your public & legal business address
Inc Authority offer you a FREE year of Registered Agent Service with the purchase of your LLC.
STEP 3: File Articles of Organization
To formally establish your LLC, submit the Articles of Organization to the Rhode Island Secretary of State.
This document requires information such as the LLC’s name, its purpose, the registered agent’s details, and management structure.
You can submit this form online, by mail, or in person.
A filing fee will apply.
Time it takes to write the Articles of Organization
Preparing the document: 1-2 hours
Filing online: 30 minutes to 1 hour.
Waiting for confirmation/approval: This can range widely, but typically, online filings can be processed in a few days to a couple of weeks.
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STEP 4: Create an Operating Agreement
Though not mandated by Rhode Island law, creating an Operating Agreement is advisable.
The Operating Agreement defines the operational procedures, roles, responsibilities, and ownership percentages of members.
It is an internal document and doesn’t need to be filed with the state.
Time it takes to write an Operating Agreement
If using a template and making minimal changes: 1-3 hours
If drafting from scratch or having extensive negotiations among members, it could be considerably longer, but for our purposes, we’ll stick with the 1-3 hours range.
If drafting from scratch or having extensive negotiations among members: Several days to weeks.
Why Spend Hours or even Days trying to figure it out?
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STEP 5: Obtain an Employer Identification Number (EIN)
Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes.
You can apply for an EIN online at no cost through the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
The EIN will be used for tax filings, opening bank accounts, and hiring employees.
Time it takes to get an EIN / Tax ID
Filling out the online form and receiving the EIN: Approximately 0.5 to 1 hour (the online process is relatively quick if there are no complications).
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SO HOW MUCH TIME WILL IT TAKE TO FORM AN LLC MYSELF? DO IT MYSELF (DIY) an LLC?
Total Time Investment (Minimum): 5 hours (if you exclude the higher range estimates and name reservation)
Total Time Investment (Maximum): 11.5 hours (if you include the higher range estimates and name reservation)
This gives a ballpark range of 5 to 11.5 working hours for an individual, excluding all waiting times. It’s worth noting that these times can vary based on the person’s familiarity with the processes and any specific details or challenges related to the business being set up.
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