Starting a Corporation in Rhode Island | What You Need to Know

Start a Corporation in Rhode Island

In Rhode Island, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in Rhode Island, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in Rhode Island.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in Rhode Island?

A corporation in Rhode Island is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in Rhode Island are required to have at least Three directors. One of the main advantages of a corporation in Rhode Island is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in Rhode Island is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in Rhode Island if you would like to provide limited liability protection to your shareholders rather than Rhode Island LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in Rhode Island

To start a corporation in Rhode Island, you must follow the below steps that, include choosing a corporate name, hiring a Resident Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with Rhode Island naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in Rhode Island-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the Rhode Island Secretary of State‘s business name database and Business Name Search in Rhode Island. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $50. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, by mail and in person., which costs around $50. In addition, the DBA’s validity in Rhode Island is Indefinite, which you can file in Rhode Island Secretary of State.

You can check out How to File a DBA in Rhode Island for clearer understanding.

Step 2: Hire a Resident Agent

Hiring a Resident Agent is essential in starting a corporation. Resident Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are Rhode Island Resident Agent Services to check in forming Rhode Island Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in Rhode Island are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In Rhode Island, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your Rhode Island corporation, the next step is to write and file a Articles of Incorporation. In writing, the Rhode Island Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Resident Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your Rhode Island corporation, you must prepare and file Articles of Incorporation with the Rhode Island Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the Rhode Island Secretary of State’s office, along with the required filing fee. Fees vary by state, but in Rhode Island, the Articles of Incorporation filing fee costs around $230 for online, by mail filing or in person filing.. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail to or drop it off in person at Division of Business Services, 148 W. River Street, Providence, RI 02904

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in Rhode Island, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing Rhode Island corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your Rhode Island corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in Rhode Island are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • Rhode Island Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required Rhode Island licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your Rhode Island corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in Rhode Island for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your Rhode Island corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Rhode Island can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or Rhode Island Division of Taxation for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your Rhode Island corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the Rhode Island Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in Rhode Island

Even if you have established your corporation in Rhode Island, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Rhode Island has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Rhode Island are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Rhode Island

In forming a corporation in Rhode Island, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in Rhode Island, it costs $230 for online, by mail filing or in person filing.. The corporation in Rhode Island also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is a corporation?
A corporation is a legal entity that is separate from its owners and can own property, sue and be sued, enter into contracts and conduct business.
How do I start a corporation in Rhode Island?
You can start a corporation in Rhode Island by filing articles of incorporation with the Secretary of State.
In Rhode Island, do corporations have limited liability?
Yes, corporations in Rhode Island have limited liability, meaning that the owners are not personally responsible for the company’s debts and obligations.
What are the requirements for incorporating in Rhode Island?
To incorporate in Rhode Island, you will need to file articles of incorporation and pay a filing fee.
How much does it cost to incorporate in Rhode Island?
The cost to incorporate in Rhode Island is $230 for the filing fee, plus any other fees associated with obtaining a business license.
How long does it take to incorporate in Rhode Island?
It typically takes about 5-7 business days to incorporate in Rhode Island after submitting your paperwork to the Secretary of State’s office.
Can I incorporate online in Rhode Island?
Yes, you can file articles of incorporation online with the Rhode Island Secretary of State.
Is Rhode Island a good state to incorporate in?
Rhode Island is a good state to incorporate in if you plan to do business within the state or have physical operations there.
Do I need an attorney to incorporate in Rhode Island?
No, it is not required to have an attorney to incorporate in Rhode Island, but it is recommended to work with a professional to ensure all legal requirements are met.
Can a business incorporate in Rhode Island if it is not based there?
Yes, businesses can incorporate in Rhode Island even if they are not based there.
Can non-US residents incorporate in Rhode Island?
Yes, non-US residents can incorporate in Rhode Island, but they may need to work with a registered agent to do so.
What taxes will a corporation need to pay in Rhode Island?
Corporations in Rhode Island may be subject to corporate income tax, sales tax, and payroll taxes, depending on their business activity.
What is the minimum number of shareholders needed to form a corporation in Rhode Island?
Rhode Island does not have any minimum number of shareholders requirement for incorporating a business.
Can a corporation be owned by a single person in Rhode Island?
Yes, a corporation can be owned by a single person in Rhode Island.
Are there any residency requirements for incorporating in Rhode Island?
There are no residency requirements for incorporating in Rhode Island.
What is the process for naming a corporation in Rhode Island?
You can verify if the proposed name is available using the Rhode Island Corporation Database for Corporations Online Access Reports & Tracking system.
Can I reserve a name before incorporating in Rhode Island?
Yes, you can reserve your business name for up to 120 days by filing a reservation application with the Secretary of State’s office.
What documents are needed to incorporate in Rhode Island?
You will need to provide the Articles of Incorporation and the Certificate of Incorporation.
Can I incorporate as an LLC in Rhode Island?
Yes, you can incorporate as an LLC in Rhode Island, which is known as a limited liability corporation.
What is required to register a foreign corporation in Rhode Island?
A Foreign Information Certificate must be completed and submitted with the original signature from an officer of the company.
What is a registered agent in Rhode Island?
A registered agent in Rhode Island is a person or company that will be able to receive legal documents on the corporation’s behalf.
Can I act as my corporation’s registered agent in Rhode Island?
Yes, you can act as your corporation’s registered agent in Rhode Island, or you can appoint someone else to do so.
How often does a corporation in Rhode Island need to file an annual report?
Corporations in Rhode Island must file an annual report once a year, usually by the first day of January of every year.
What are the fees associated with filing an annual report in Rhode Island?
The annual report fee for corporations in Rhode Island is $50.
What is the penalty for late payment of annual report fees in Rhode Island?
If you fail to pay the annual report fee in a timely manner, you may be charged a $25 penalty.
Can I dissolve a corporation in Rhode Island?
Yes, you can dissolve a corporation in Rhode Island by filing a Certificate of Dissolution with the Secretary of State’s office.
Are there any fees associated with dissolving a corporation in Rhode Island?
Yes, there is a $50 fee for filing the Certificate of Dissolution in Rhode Island.
Can I revive a corporation in Rhode Island if it has been dissolved?
Yes, you can revive a corporation in Rhode Island if it has been dissolved, but you will need to file a revival and reinstatement application first.
Where can I find more information about incorporating in Rhode Island?
More information about incorporating in Rhode Island can be found on the Secretary of State’s website.
Is there a fee to file the Articles of Incorporation in Rhode Island?
Yes, there is a $230 fee to file the Articles of Incorporation in Rhode Island.
How long does it take to process the Articles of Incorporation in Rhode Island?
It usually takes about 3-5 business days to process the Articles of Incorporation in Rhode Island.
Can I file the Articles of Incorporation in person in Rhode Island?
Yes, you can file the Articles of Incorporation in person at the Secretary of State’s office in Rhode Island.
Do I need to have a registered agent in Rhode Island to start a corporation?
Yes, you need to have a registered agent in Rhode Island to start a corporation.
Can I be my own registered agent in Rhode Island?
Yes, you can be your own registered agent in Rhode Island if you have a physical street address in the state.
What are the requirements to be a registered agent in Rhode Island?
The registered agent must be a resident of Rhode Island or a corporation authorized to do business in the state.
How long does the registered agent serve in Rhode Island?
The registered agent must serve indefinitely in Rhode Island as long as the corporation is active.
What is a Certificate of Good Standing in Rhode Island?
A Certificate of Good Standing in Rhode Island is a document that shows your corporation is up to date with its filings and taxes.
Do I need a Certificate of Good Standing to start a corporation in Rhode Island?
No, you do not need a Certificate of Good Standing to start a corporation in Rhode Island, but it may be required for certain business activities.
How do I obtain a Certificate of Good Standing in Rhode Island for my corporation?
You can obtain a Certificate of Good Standing in Rhode Island by submitting a request to the Secretary of State and paying the applicable fee.
How often do I need to file a tax return for my corporation in Rhode Island?
You need to file a tax return for your corporation in Rhode Island every year.
When are corporate taxes due in Rhode Island?
Corporate taxes in Rhode Island are due on March 15th.
What is the corporate tax rate in Rhode Island?
The corporate tax rate in Rhode Island is 7%.
How do I register for an Employer Identification Number (EIN) in Rhode Island?
You can register for an Employer Identification Number (EIN) for your corporation in Rhode Island through the IRS website.
Is there a fee to register for an EIN in Rhode Island?
No, there is no fee to register for an EIN in Rhode Island.
What is the minimum number of directors required for a corporation in Rhode Island?
You need at least one director to start a corporation in Rhode Island.
Can I use a PO Box as the address for my corporation’s principal office in Rhode Island?
No, you cannot use a PO Box as the address for your corporation’s principal office in Rhode Island.
How do I change the officers or directors of my corporation in Rhode Island?
You can file an amended Annual Report with the Secretary of State to change the officers or directors of your corporation in Rhode Island.
Is there a fee to file an Annual Report for my corporation in Rhode Island?
Yes, there is a $50 fee to file an Annual Report for your corporation in Rhode Island.
What is franchise tax in Rhode Island?
Franchise tax in Rhode Island is the fee that corporations have to pay every year.
How is franchise tax calculated in Rhode Island?
Franchise tax in Rhode Island is calculated based on the corporation’s authorized capital stock.
Is there a minimum franchise tax in Rhode Island?
Yes, the minimum franchise tax in Rhode Island is $500.
Do I need to register for sales tax in Rhode Island?
If your corporation sells goods in Rhode Island, yes, you need to register for sales tax.
Is there a fee to register for sales tax in Rhode Island?
No, there is no fee to register for sales tax in Rhode Island.
How do I obtain a business license in Rhode Island?
You need to obtain a business license in Rhode Island by contacting your city or town clerk’s office.
Is there a fee to obtain a business license in Rhode Island?
Yes, the fee to obtain a business license in Rhode Island varies depending on the city or town.
What is the minimum number of shareholders required for a corporation in Rhode Island?
There is no minimum number of shareholders required for a corporation in Rhode Island.
Can a corporation be owned by just one person in Rhode Island?
Yes, a corporation can be owned by just one person in Rhode Island.

Also Read

How to Save Money While Forming Your Rhode Island Corporation

One of the first ways to save money when forming a Rhode Island corporation is to do thorough research before making any decisions. It may be tempting to simply hire the first attorney or online service that comes up in a Google search, but taking the time to compare prices and services can result in significant savings. Look for flat fee services or attorneys who offer competitive rates for their expertise in business formation.

When it comes to paperwork and filing fees, Rhode Island offers a range of options for small businesses. Entrepreneurs can choose to file themselves using online forms provided by the Secretary of State’s office, which can save on attorney fees. However, if the process seems overwhelming or confusing, it may be worth the investment to hire an attorney to ensure everything is properly filed and in compliance with state regulations.

Another way to save money on forming a Rhode Island corporation is to consider the long-term costs associated with different business structures. While a corporation offers certain advantages, such as limited liability and potential tax benefits, it may not be the best fit for every business. Entrepreneurs should weigh the pros and cons of forming a corporation versus other business structures, such as a limited liability company (LLC) or sole proprietorship, to determine which option makes the most financial sense for their specific business goals.

In addition to choosing the right business structure, entrepreneurs can also save money by being proactive in managing their ongoing legal and compliance requirements. For example, keeping accurate records, filing annual reports on time, and staying up to date on changes in state laws can prevent costly fines and penalties down the road. By taking these small steps to stay organized and informed, entrepreneurs can avoid unnecessary legal expenses and keep more money in their pockets.

Finally, entrepreneurs can save money on forming their Rhode Island corporation by taking advantage of free or low-cost resources available to small businesses. For example, the Rhode Island Small Business Development Center offers counseling and workshops on a range of topics, including business formation and legal issues. Additionally, entrepreneurs can find helpful information and guides on the Secretary of State’s website to navigate the process more efficiently.

In conclusion, forming a Rhode Island corporation doesn’t have to break the bank for entrepreneurs. By conducting thorough research, choosing the right business structure, managing ongoing legal requirements proactively, and utilizing free or low-cost resources, entrepreneurs can save money and set their businesses up for success from the start. Remember, every dollar saved in the formation process is a dollar that can be reinvested in growing and scaling the business in the future.

Conclusion

Starting a corporation in Rhode Island involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your Rhode Island corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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