What are the Advantages of Forming an LLC in Rhode Island

A state’s wealth is typically measured by its economic performance in various fields such as manufacturing, food, fashion, transportation, innovative developments, and the business industry. In fact, it isn’t just those Hampton Homes that bring so much success in the Ocean State. It is also about the small and big businesses that keep on rising. Likewise, the productivity in the said state is very high, and there is no doubt that many entrepreneurs are interested in starting a business venture there. It could actually be one of your wise decisions to make because building a business in the state of Rhode Island has some advantages you’d want to look at.

Great benefits for LLC owners

The state offers its LLC owners salient benefits such as incentives for small businesses. You are eligible to apply and join incentive programs like:

• Small Business Capital Investment Tax Incentives, and;
• Disabled Access Credit for Small Businesses

Aside from that, another benefit of an LLC is you can also guarantee flexible profit distribution and liability protection, which is helpful when there are lawsuits from your clients.

Lesser corporate formalities

Unlike a corporation that requires regular meetings, minutes of every meeting, and filing of annual reports, LLC is the total opposite. Although there’s still a need to file annual reports, LLC members aren’t required to hold regular meetings for its directors or shareholders. Consequently, it will save you from lots of paperwork, documentation, and complications, which is favorable.

Flexible taxation

When it comes to taxation, an LLC is treated as a default pass-through entity, just like sole proprietorship. This could mean that you don’t have to deal with double taxation. Likewise, you will not worry about paying unemployment insurance taxes deducted from your salary. In terms of flexibility, if you want your business to be elected as an S or C corporation for tax purposes, you also have the liberty to do it.

No restrictions on ownership

One downfall of S corporation is its member limitations, which would not be your problem if your business is under LLC. Typically, a corporation isn’t allowed to have more than 100 shareholders, and each member should have a physical address in the United States. These restrictions and requirements aren’t effective on LLC owners. 

Cash method accounting

Many states require the use of accrual accounting on businesses operating under their government. However, not all businesses are required to have this mandatory accounting because an LLC is an exemption. When your business is registered as an LLC, you can use cash method accounting, which is easy and straightforward. This cash method accounting also means that your income won’t be stated as long as it doesn’t have proof of earnings.

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Aside from the ones mentioned above, registering your business under a Limited Liability Company can definitely give you other advantages. This includes your ability to deduct the company’s operating losses and allot the membership interests into a living trust, which you cannot do under a corporation. More and more entrepreneurs are switching to LLC because of its vast potential, and it could also be the perfect structure you are looking for.