Rhode Island LLC Taxes

Rhode Island’s growing economy and natural landscapes make it a popular spot for new businesses. Yet, as more business owners choose to start their ventures in the state, many may find it challenging to understand the business taxes involved. 

Regardless of the size of your business, if you operate a limited liability company (LLC) in Rhode Island, you’ll need to stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you must pay for your Rhode Island LLC.

Recommended: Schedule a free consultation with an accountant to stay on top of your taxes.

Rhode Island LLC Taxes Owed

LLCs benefit from pass-through taxation, which means the business’s profits pass through to its members’ individual tax returns. As a result, your LLC doesn’t pay taxes to the federal government or the state of Rhode Island. Instead, LLC owners must pay taxes on their portion of the income generated by the LLC. 

In Rhode Island, LLC owners can expect to pay the following taxes:

Federal Taxes

Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.

Federal Self-Employment Taxes

It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%. 

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.

Rhode Island State Taxes

Each state has its own laws that dictate how it taxes individuals and businesses. Below are state-level taxes that likely will affect your Rhode Island LLC.

Rhode Island Income Taxes

The state income tax rate in Rhode Island is 5.99%. This puts it near the midrange of state income tax rates when compared to other states.

Rhode Island Sales and Use Tax

Rhode Island’s state sales tax rate is 7%. Importantly, Rhode Island has no local sales taxes. That means you’ll pay the same sales tax rate no matter where you make your purchases or conduct business.

Register with the Division of Taxation

You must register with the Rhode Island Division of Taxation if your business sells taxable goods or services. You can do this on the Business Registration page of its website.

Additional State Taxes

The Rhode Island Division of Taxation oversees the collection of various state-specific taxes businesses may have to pay, depending on their location, industry, and number of employees. Some examples of these additional taxes include:

  • Alcohol Import Tax
  • Hotel Tax
  • Meals and Beverage Tax
  • Motor Fuel Tax
  • Tobacco Products Tax

To learn more, visit the Rhode Island Division of Taxation website.

Rhode Island Local Taxes

The local laws and ordinances in one Rhode Island county or city may differ greatly from those in another. Regardless of where you live in Rhode Island, check with your local jurisdiction to ensure your business obtains the proper local permits and follows any local regulations that may impact its operations.

Rhode Island LLC Compliance

You must obey Rhode Island’s state and local laws in order to maintain your business in good standing. While LLCs technically don’t file taxes with the state, Rhode Island businesses must still file an annual report each year.

Rhode Island LLC Annual Report

All Rhode Island LLCs must file an annual report with the Rhode Island Secretary of State. You can do this by mail or online, and the filing fee is $50.

Annual reports in Rhode Island are due between February 1 and May 1 every year. Your LLC’s first annual report will be due during that period in the year after its formation. The state provides a 30-day grace period in which businesses can file without any penalty. After that, you’ll have to pay a $25 late fee on top of the filing fee. Continued failure to file this report will mean the state can get involved and shut down your LLC.

For more information, check out our Rhode Island LLC Annual Report guide.

LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure you handle your business taxes correctly.