Rhode Island boasts the country’s sixth-best access to funding and ranks amongst the lowest in sales tax. With fast-growing cities and a reputation for ease of doing business, Little Rhody provides a fantastic platform for those who want to start a new business there.
How to Start a Business in Rhode Island:
1. Determine your business structure.
Choosing the right legal structure for your company is important. Your choice will have an impact on taxes, paperwork, personal liability, and your ability to raise funds.
You can choose from the following legal structures:
A sole proprietorship is the simplest structure and usually involves one individual who is solely responsible for the enterprise while a partnership is suitable for businesses with two or more owners. A corporation is a standalone entity with shareholders while a Limited Liability Company (LLC) is the most popular type because of minimal paperwork, flexibility, tax benefits, and simple implementation process. LLC business owners are not obligated to file a corporate tax return.
Businesses are regulated by Rhode Island state laws and must be registered through the Rhode Island Secretary of State website.
2. Write a business plan.
Your business plan is the foundation of your new business and will serve as an invaluable guide for how to structure, run and grow your company. The business plan must meet your needs and can fall into one of two common categories: traditional or lean startup.
The traditional plan is very detailed, takes more time to write, and is quite comprehensive while the lean startup plan is high-level and fast to write.
A strong business plan can help you get funding and makes opening a new business easier. You can consult with the Rhode Island Secretary of State who offers free business planning and consulting for small business owners in Rhode Island.
3. Sign up for business banking.
Your business and personal finances must be kept separate to maintain accurate records. With a business bank account, you can easily obtain statements and access products that would not be available to you as an individual.
Best Banks for Small Business in Rhode Island:
4. Seek funding.
Opening a new business often requires capital. If you are unable to fund your new business, you will need to take out a loan. There are three common ways to fund your business: commercial loans, business lines of credit and small business loans.
A popular organization that can assist you with small business loans in Rhode Island is the Rhode Island Commerce Corporation.
5. Decide on a business name.
Make a list of names that you like and perform a Google search to find any conflicts with other Rhode Island business names.
Once this is done, you will need to do a trademark search to ensure that the business name that you chose has not already been trademarked. You can perform the trademark search at the U.S. Patent and Trademark Office and the Trademark Electronic Search System. These databases have a comprehensive list of business names that are registered together with their classification.
After you have confirmed that your business name is not trademarked, you need to check the Rhode Island Secretary of State website to ensure that your business name is not the same or similar to another corporation registered in Rhode Island.
If you are satisfied that your business name is available, you can then register it on the U.S. Patent and Trademark Office website. You can check out our guide on How to Name a Business to assist you with naming your business.
Once you have found a suitable name, make sure to register the matching web domain and social media handles, should you wish to market your business online.
6. Request an Employer Identification Number (EIN).
Every business needs to have an Employer Identification Number (EIN). Registering for an EIN is very easy—all you need to do is go to the IRS website. You can complete the application online, and save your EIN confirmation notice once you receive a number from the IRS.
7. Acquire business licenses and permits.
The state of Rhode Island does not require businesses to have a statewide business license. You may, however, require a specific business license depending on the type of business that you start. You can view the specific business types with license requirements at the RI Department of Labor and Training website.
8. Hire employees.
To start hiring you will need to register at the Rhode Island New Hire Reporting Directory. Each employee will need to be registered within 14 days of starting work, whether they are full-time, part-time or temporary.
The Rhode Island Fair Employment Practices Act protects employees against discrimination on the basis of age, race, creed, color, sex, sexual orientation, gender identity, national origin, religion, or disability.
The Wage Discrimination Based on Sex law prohibits discrimination in the payment of wages between genders.
The Rhode Island Whistleblowers’ Protection Act prohibits employers from taking negative action against employees who report violations at the workplace.
With reference to the pre-employment screening process in Rhode Island, an employer is entitled to view a job applicant’s criminal history and obtain the relevant records from the criminal justice system.
Important Posters at Rhode Island Business Premises:
Whistleblowers’ Protection Act.
Minimum Wage Law.
Workers Right to Know.
Workers’ Compensation Law.
Job Safety Law.
9. Check your business employer requirements.
Business employer requirements are specific to the type of business that you are starting and include various labor, safety and tax obligations that need to be met. You should consider hiring a tax or business attorney to ensure your business is fully compliant with the laws in Rhode Island.
If you are starting a business in Rhode Island, you will need to take note of the following important items:
Rhode Island’s law requires all employers to provide workers’ compensation coverage to their employees. You can obtain more information at the Rhode Island Department of Labor and Training website.
Health insurance isn’t a requirement for small businesses in Rhode Island.
In Rhode Island, your small business is required to establish an unemployment insurance tax account with the Rhode Island Department of Labor and Training. If your business is required to contribute towards unemployment insurance, you will need to file quarterly reports.
Rhode Island Business Tax
Every business in Rhode Island selling taxable tangible personal property in the state is required to obtain a Permit to Make Sales at Retail in order to charge sales tax. Services rendered are not taxable. You will need to register for a sales tax permit with the Rhode Island Division of Taxation.
You can refer to the Rhode Island Division of Taxation website here for a comprehensive list of tax requirements.
Starting a business in Rhode Island FAQs:
How much does it cost to start a business in Rhode Island?
Rhode Island articles of incorporation for LLCs cost $150.00 while there are no filing fees for partnerships or sole proprietors.
Rhode Island Registration and Filing Fees:
Corporation for profit
Corporation for nonprofit
You can view a comprehensive list of fees and costs here
How do I register a business in Rhode Island?
You can register your business with the Rhode Island Secretary of State.
How do I start a business in Rhode Island with no money?
Use services to generate cash flow and fund a product-based business.
Get creative to discover funding sources.
Grind it out and look for business, even if you don't get paid for it.
Use your current resources in different ways to generate income.
Get a credit line to help with the early stages of your business.
Locate an accelerator if you can hit the market swiftly.
Crowdfund and allow the public to invest a small percentage of money in return for a future buy-in.
Use a business incubator to provide funding designed specifically to financially assist a startup company.
How can I protect the name and logo of my business in Rhode Island?
The easiest way is to register your business name on the U.S. Patent and Trademark Office website. Prior to registration, remember to check on the Trademark Electronic Search System and the Rhode Island Secretary of State website to ensure that your business name is not already registered by another company.
Do I need workers’ compensation for my new business in Rhode Island?
All employers in Rhode Island are compelled to provide workers’ compensation coverage to their employees.
Does my business in Rhode Island need to contribute to health insurance?
Health insurance isn’t a requirement for small businesses in Rhode Island.
Browse The SMB Guide for more helpful articles for small business owners, and be sure to download our How to Start a Small Business checklist.