Rhode Island LLC Tax: Everything You Need to Know
The Rhode Island LLC tax for C corporations is a flat rate of 7 percent as of 2018, with a minimum business corporation tax of $400.3 min read
2. Articles of Organization for a Rhode Island LLC
3. Rhode Island LLC Annual Report
4. Understanding Rhode Island Tax Rates
The Rhode Island LLC tax for C corporations is a flat rate of 7 percent as of 2018, with a minimum business corporation tax of $400. As an example, consider a Rhode Island business that had a taxable net income of $500,000 in 2018. It would owe $35,000 in business corporation tax.
Establishing Your Rhode Island LLC
Establishing a Rhode Island LLC is a great idea, as it limits your liability for debts incurred by the company. Understanding the LLC formation process is tricky, so it's often best to hire a business and corporate law lawyer to assist in the process. In addition to helping you with the initial organization, an attorney can also take care of your annual report.
The steps involved in creating your Rhode Island LLC include:
- Filing an articles of organization.
- Paying the Division of Business Services a fee of $150.
- Receiving approval for your articles of organization from the state.
- Creating a federal EIN tax ID for the business, which allows you to open a bank account, get credit from various vendors, and fill out local tax forms.
- Writing an operating agreement for the LLC.
- Opening a bank account for your LLC.
Articles of Organization for a Rhode Island LLC
Creating your articles of organization takes just a few simple steps:
- Pick your LLC's name. It must include Limited Liability Company or LLC. You also can't include restricted words, such as "bank" or "insurance," unless you have specific permissions.
- Think about hiring a registered agent so you can reduce your public disclosures. If you decide on a registered agent, you must include their name and address.
- Decide how your business will be structured. All single-member LLCs are automatically classified as a disregarded entity, while multi-member LLCs have partnership classification. If you'd like to be taxed as a corporation, you'll need to file specific forms with the IRS.
- Choose the public address for your LLC.
- Establish either a member-managed or manager-managed format for the LLC. Most LLCs choose member-managed formats.
- Decide on the date the LLC will officially exist. If you don't specify, it will begin upon filing, but you can choose a specific date within 30 days of filing.
When you're ready, deliver your paperwork and $150 filing fee in person at the Division of Business Services, located at 148 W River St., Providence, RI, 02904. This is the fastest method, as you can have your articles approved in just a couple of hours.
You can also file online and pay a $156 fee via credit card. This process usually takes one to two days for approval.
Your last option is to mail your paperwork to the Division of Business Services with a check or money order for $150. This is the slowest process and takes two to five days for approval.
Rhode Island LLC Annual Report
Each year, you'll need to file an annual report for your LLC. The state charges a $50 fee for this (with a surcharge of $2.50 if you decide to file it online). This form is used to update your contact and ownership information and is due on November 1. You have until December 1 to get your form in; otherwise, you'll face a late fee of $25.
Understanding Rhode Island Tax Rates
After your LLC is established, you'll have to start thinking about tax rates.
If you pay a personal tax return in Rhode Island, you're probably familiar with the individual income tax rates:
- Income of $0 to $61,299 — 3.75 percent tax.
- Income of $61,300 to $139,399 — 4.75 percent tax.
- Income of $139,400 or over — 5.99 percent tax.
However, LLC tax rates are slightly different. Regardless of how your LLC is structured or how much income you make, you'll need to pay a minimum of $400 to the Rhode Island Division of Taxation.
- Partnerships, disregarded entities, and S corporations pay the minimum business corporation tax of $400.
- Regular corporations pay $400 or more, depending on their profits.
Of course, state business corporations taxes aren't the only taxes your LLC will face. You may also need to account for some of the following:
- Local taxes.
- Fuel tax.
- Property tax.
- Employer's withholding tax.
- Alcohol tax.
- Tobacco tax.
- Sales and use tax.
If you need help with the Rhode Island LLC tax, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.