Do you want to invest or start a small business in Rhode Island? If YES, here is a guide on how to start a profitable business in Rhode Island with no money. Rhode Island is presently at the bottom when it comes to providing an enabling business environment for small businesses. Nevertheless, hope is not lost as the current Rhodes Island government is working tooth and nail to amend its taxation system, form new industries, fix the transport system, and improve its state regulations.
However, Rhode Island is still home to many major companies including CVS Health, Textron, Lifespan, Applied Bio-Systems, and Citizens Bank. Even with the slow economic growth in Rhode Island, the state has the potential to improve its startup environment.
Currently, some of the major industries in Rhode Island are biomedicine; shipbuilding, manufacturing, and data analytics. It still possesses a young market that is open to more exploration. Any willing entrepreneur with the mind to tap into a new and improving market can do well in Rhodes Island, and also build and manage a successful business.
9Steps to Starting and Running a Small Business in Rhodes Island
The following information below describes key, initial steps and decisions regarding starting a small business in Rhodes Island. Nonetheless, two or more of these steps may occur simultaneously.
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The first and most important step is professionally planning your business venture. Financials, objectives, strategies, your target market and pitch, etc. Coupled with being required to secure funding, a professional business plan also supports growth; helps manage cash flow and distinguish fly-by-nights from the ones who are serious.
Writing a business plan gets the ideas out of the entrepreneur’s head and helps to create a roadmap for where they want the business to go. Business planning is a critical element to creating a successful business.
Register Your Rhode Island Business
After putting together a well detailed business plan, your next major task is going to be registering your business with the state of Rhode Island.
Before you can do that though, you have to figure out what type of business structure you want to form: an LLC, S Corp, C Corp, or Sole Proprietorship. Many entrepreneurs in Rhodes Island form an LLC because it has all the advantages of a Corporation without the disadvantages like double taxation, board of directors or corporate officers.
However if you’re trying to take your company public or raise substantial outside capital, you should probably form a Corporation. If you choose not to register your company as a business entity, you will be held personally responsible for the debts and liabilities of your business.
When registering a domestic or foreign in Rhodes Island, it is often advisable to think of a name well in advance to ensure that your filing will be up to the standards of the filing jurisdiction.
As it often takes a while to consolidate all the necessary information and make all the proper arrangements for filing, it is wise to ensure that the name that you have chosen for your business will not be taken by another entity. Nonetheless, the use of the Name Reservation filing will do exactly as it sounds; it will effectively reserve the rights to the name for a period prior to registration.
In this State, a reservation costs a total of $50 and lasts for no more than 120 days. It is usually recommended that you perform a Business Entity Search before committing as it will ensure that the name you’ve chosen hasn’t already been used.
Determine Your Tax Obligations
Note that navigating the Rhode Island tax code is smooth and invigorating unless you’re starting a solar energy company or something along those lines. Although it mostly depends on what kind of business structure you create, how many employees you have, etc.
Don’t forget to investigate incentives, credits, and kick-backs because some may apply! Head to the State of Rhode Island Business Taxes, Division of Taxation section, and sign up to get your tax ID number. Bookmark their Online Services page as well because it’s going to come in handy.
Obtain Business Licenses and Permits
To start a business in Rhode Island, certain licenses and permits will be needed. Depending on the activities and location of the business, licensing may be needed from federal, state and local agencies. Some common registrations include:
The state of Rhode Island doesn’t have a general business license; however, many cities require a business license in order to operate.
Sales Tax Permit
Businesses selling products and certain services will need to register for a Sales Tax Permit with the Rhode Island Division of Taxation.
Some services such as accountants, landscapers, auto body repair and brewpubs require licensing in Rhode Island. While this isn’t a license on the business, licensing is required in order to operate.
Certificate of Good Standing
In the State of Rhode Island, the process of acquiring a Certificate of Good Standing is as simple as can be. You will be mandated to search for the name of your company using the Business Entity Search, then navigate to your business details page where you will be able to click the option to purchase your entity’s certificates.
This document is used to demonstrate legitimacy when requesting financing. It is also necessary if you intend to expand your entity to a neighbouring state or jurisdiction.
Certificate retrievals vary in price; those corresponding to profit-oriented organizations will cost $22 while certificates associated with non-profit entities will only cost $7. These prices will be reduced by $2 if you visit the offices and make the purchase in person.
Employer Identification Number
When forming a new entity, it is very necessary that you apply for an Employer Identification Number to ensure that the federal government is aware of your existence when it comes to tax purposes. This number is of course issued by the IRS and can be used to open bank accounts, hire employees, and apply for credit cards and the like. Your EIN is like a Social Security Number for your company.
It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN, you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.
In the State of Rhode Island, as in many of the states in the united states, it is not legally mandatory for new businesses to register with the use of a corporate bylaw, an operating agreement or a partnership agreement. Howbeit, these documents remain internal to your organization; in other words they will at no point be filed with the Department of State.
As an internal document it is necessary that each signing member receive a copy, as it will delineate the rules and regulations by which your entity is to function.
In addition, any logistical or financial bylaw to be administered that has not already been stated in the original formation documents can be relayed here to ensure that there are no misunderstandings in regards to the company’s internal affairs. You will have to click on the agreement which matches the entity type you’re planning on forming to investigate exactly what might go into one of these documents should you decide to have one drafted.
Annual and Ongoing Requirements
Your Fictitious Business Name should be valid for 2 years, with option for renewal.
Rhode Island corporations are required to file a Periodic Report with the Rhode Island Secretary of State by November 1 each year, in addition to general taxation. Information on your business’ taxes can be found here.
Business in Rhode Island should file a report annually by March 1 to the Division of Corporate and Consumer Services. LLCs and Corporations will pay a filing cost of $52.
In Rhode Island, a business will register with the IRS, Department of Taxation, Department of Labour, Office of Child Support Services and Training and U.S. Immigration and Customs Enforcement.
Businesses are responsible for reporting new hires; verifying employees are eligible to work in the U.S., and withholding state and federal taxes. Employers will also pay federal and state unemployment taxes, Social Security and Medicare in addition to staying on top of state and federal labour laws.