Starting a Rhode Island business could be the first step in your journey toward becoming independently wealthy. But before you get started, there are some formal and legal steps you’ll need to take, including obtaining your federal EIN number. Rhode Island may be the smallest state in the United States, but it’s a promising place to start a business. There are nearly 100,000 small businesses in the state, which make up 98.9 percent of all businesses there. Together, they have 224,254 employees, or 52.7 percent of the workforce. Thanks to impressive growth in the entrepreneurial sector, small businesses alone added 2,381 net new jobs in the state last year.
Steps to Obtaining a Tax ID (EIN) Number and Registering a Rhode Island Business
- Forming a Business in Rhode Island
- Federal Tax ID (EIN) Number Obtainment
- Rhode Island State Tax ID Number
- Localized Licenses and Permits in Rhode Island
You won’t get far with your business until you decide how you want to formally structure it. There are a handful of business types to choose from, based your business objectives, how you’re going to be taxed and whatever your future goals may be.
These are some of the most popular business types to choose from:
- Sole proprietorships. Sole proprietorships are the easiest business to understand, and the easiest business to form and manage. You’ll pay taxes as an individual in this business type, which is ideal for small-time entrepreneurs who want to make things simple. However, you’ll also bear full liability for any actions you take in the business, and you’ll take on any business debts personally.
- Partnerships. Partnerships work much like sole proprietorships, with the main difference being the number of people involved. Partners will pay taxes as individuals, and will take personal liability for the business.
- Limited liability companies (LLCs). LLCs are slightly more complex than sole proprietorships or partnerships, but aren’t especially difficult to create or manage. As the name suggests, they provide you with some degree of liability protection because they serve as separate legal entities. They can take on debts of their own, and they track income and losses separately. They don’t pay taxes on their own; instead, you’ll pay taxes as an individual on any money you make from the business, including your salary or profits. In Rhode Island, you’ll be required to file an annual report for your LLC, with a fee of $50.
- Corporations. Corporations are more complicated to create and manage, since they have a few special perks and must follow a few extra rules and regulations. They can issue publicly available shares to raise funds, which is advantageous if you’re interested in eventually expanding the business. They serve as separate legal entities like LLCs, and provide you with significant liability protection. However, they must pay taxes on any eligible income they generate. You’ll also pay taxes on money you make from the business, resulting in a kind of double taxation. The corporate income tax rate in Rhode Island is a flat 7 percent.
Your Rhode Island business is likely required to obtain a federal tax ID number for one reason or another. This tax ID number, sometimes called an employer identification number (EIN), is a 9-digit, unique identifying code assigned to your business when you register with the federal government. It’s a requirement for several applications. For example, you’ll need one if you’re going to hire employees, if you’re going to open a business bank account, or if you’re applying for any business licenses or permits. You’ll also need one if your business has multiple members.
Even if you find your business doesn’t formally need a federal tax ID to operate, it’s a good idea to get one anyway. Getting a federal tax ID allows you to apply for a state tax ID, and can be used on many business forms and applications in lieu of a personal social security number.
The best way to get your federal tax ID number is to use our federal tax ID number obtainment services. All you’ll need to do is answer a few questions about your business using our online questionnaire, and we’ll send you your tax ID number via email in less than an hour.
Some businesses may also need to acquire a Rhode Island state tax ID number. This is a unique identifier, similar to your federal tax ID, but is used for different purposes. You’ll need one if you’re hiring employees in the state of Rhode Island, if you’re going to sell taxable goods and services in the state, or if you’ll owe excise taxes on regulated goods like alcohol and tobacco.
You’ll want to get your federal tax ID number before you get your Rhode Island state tax ID number. Once you’re ready, make things simple for yourself by using our Rhode Island state tax ID number obtainment services. Just answer a few questions about your business, and you’ll receive your state tax ID number in just 4 to 6 weeks.
Some businesses will be required to acquire additional documents for their business to operate legally, such as licenses, permits, or other forms of certification. However, there isn’t a single, state-level agency that regulates these forms of documentation, nor is there a generic business license required by every business. Instead, licenses and permits are typically required by a diverse assortment of different agencies and organizations, and will vary depending on your location. If you aren’t sure which licenses or permits your business may need in a given area, your best option is to speak with someone at your local Chamber of Commerce. Just make sure you have your federal ID in place if you plan on filling out an application for one.
If you want to start a business faster and with fewer headaches, make use of our federal tax ID number and Rhode Island state tax ID number obtainment services. Either way, you’ll be able to fill out a short, simple online application and get your tax ID number as quickly as possible.