Forming your business entity in Delaware—specifically, a corporation—gives you a lot of flexibility, but you may still need to follow local laws depending on what state you operate in.
Specifically, if you do business in Rhode Island, you need to register with the state. We’ll walk through the process and simplify it. But first, how can you tell whether you’re legally doing business in Rhode Island?
When to register as doing business in Rhode Island
Delaware C corps—and all other corporations formed outside of Rhode Island—are referred to as “foreign” corporations by the State.
Rhode Island statutes do not specifically define what is considered doing business in the state. However, Rhode Island statutes provide that the following activities would not require you to register with the State:
- Defending or settling a lawsuit
- Having a bank account in the state
- Selling through independent contractors
When to register to collect sales tax in Rhode Island
Every state has rules about when a company is required to pay sales tax. These are called sales tax nexus rules.
You can think of the nexus as a special version of that state’s border; if you perform certain business activities within that border, you fall into the state’s sales tax nexus, and you’re required to register for and collect state sales tax.
Typically, these actions take the form of buying and selling goods and services.
In Rhode Island, the sales tax nexus rules only apply to sellers who sell physical goods or services to Rhode Island residents.
Until 2018, selling or buying non-physical goods—like subscriptions to streaming services, SaaS memberships, etc.—did not, generally speaking, qualify you for sales tax nexus. After an important court ruling in 2018, that changed. Now, if you buy or sell non-physical goods or services in a state, you may fall within its sales tax nexus.
Rhode Island sales tax nexus (physical goods and property)
If you have physical presence in Rhode Island, then you will likely need to collect and remit sales tax. According to Rhode Island statute, you could be physically present in a state if you have warehouses, retail spaces, or employees and/or representatives of the business in the state.
You will need to pay sales tax as long as you have physical presence regardless of any minimum thresholds. You can learn more about physical presence for sales tax purposes through the State’s website.
Rhode Island sales tax nexus (non-physical good and property)
The new state sales tax laws applying to non-physical (ie. internet) sales allow you to qualify for sales tax nexus even without physical presence or goods. In Rhode Island, you need to cross a certain threshold to qualify.
You will need to collect and remit sales tax if you do the following in the current or previous year:
- Collect $100,000 or more in gross revenue from Rhode Island; or
- Have 200 or more separate transactions into Rhode Island
If you would like to take a deep dive, you can check out the State’s website.
As usual, this isn’t legal advice—just a guide. If you’re not 100% clear on whether you fall within Iowa’s sales tax nexus, it’s best to confer with your legal counsel and/or an accountant that has expertise in Iowa’s legal code and tax regulations.
How to register to do business in Rhode Island
Select a name under which to do business. This doesn’t have to be the name you registered when incorporating in Delaware, but it can be.
Fill out an application. You’ll need to file an Application for Certificate of Authority by a Foreign Business Corporation to the Rhode Island Secretary of State along with a Delaware Certificate of Good Standing.
Pay the fee. If your company has less than 75 million authorized shares then your filing fee is $310.
Submit your Application for Certificate of Authority by a Foreign Business Corporation.
Wait. Processing typically takes two to four weeks.
Compliance has a qualified business in Rhode Island
To stay in compliance and continue legally doing business in Rhode Island, you need to meet two requirements: maintaining a registered agent and filing your annual report. On top of that, you will also need to pay a corporate tax.
Registered agent in Rhode Island
Your registered agent in Rhode Island is your point of contact with local authorities. If you don’t have a physical address for your company in Rhode Island, it may be advantageous to find a registered agent to receive state notices on your behalf.
Foreign corporations are required to have a registered office in Rhode Island. The office cannot be a P.O. box, rather it must be a physical address of your registered agent or a licensed registered agent service.
Your registered agent will forward any important information, such as business mail, to you. There are a number of firms that contract out registered agents. They typically cost $50 – $100 per year.
Annual reporting in Rhode Island
Every year, you must file a statement with the State, updating any changes to the company address or the composition of the Board and officers. You’ll include info like:
- The legal name of your business
- The name and address of your registered agent
- The names and addresses of board members, managers, and officers
The filing fee for the biennial report is $50.
Paying your corporate income tax
Rhode Island has a corporate tax. The corporate tax is essentially a corporate income tax which is a tax imposed directly on the income of your corporation. For more information on filing and paying your corporate income tax, please see the following guidance from Rhode Island Department of Revenue.
Registering for sales tax in Rhode Island
If you meet the requirements to collect and remit sales tax in Rhode Island, you will need to register with the Rhode Island Department of Revenue. You can register either by mail or in person at the Rhode Island Department of Revenue Division of Taxation.
Hiring and paying employees in Rhode Island
When you hire a new employee in Rhode Island, federal and state laws require that you report new hires within 14 days of their hire date. You can report your new hires online.
Your payroll provider should be able to take care of paycheck withholdings, but it’s up to you to register as an employer with the State and set up an online employer account.
For a comprehensive guide of your responsibilities, Rhode Island provides the following information.
The easiest way to register your business in Rhode Island
To register your business in Rhode Island, you’ve got to keep track of a lot of moving parts. Failing to file the right forms, provide the right information, or stay on top of compliance laws can lead to serious headaches.
Capbase makes it easy. When you incorporate your Delaware corporation on Capbase, we will generate the required information needed to register to do business in Rhode Island and keep you up to date on any required filings.
The compliance calendar inside your Capbase account will notify you of upcoming fees, reporting, or other requirements, so you can keep your startup in good standing with Rhode Island state officials. Try Capbase now.
Written by Capbase Staff
Capbase is a team of designers, engineers, and business professionals spread across 6 time zones on 3 continents united by our passion for dogs, coffee, and great software.
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