Rhode Island has a personal income tax with a graduated rate structure and a corporate income tax with a minimum franchise-tax component. The Rhode Island Secretary of State handles entity formation. The IRS handles federal tax classification via Form 8832 and Form 2553. A Rhode Island LLC can elect to be taxed as an S corporation for federal purposes, and Rhode Island generally follows the federal S election. Rhode Island LLC basics. - Articles of Organization filed with the Rhode Island Secretary of State, Business Services Division, under the Rhode Island Limited Liability Company Act (R.I. Gen. Laws Chapter 7-16). - Formation filing fee is published on the Secretary of State's fee schedule; verify before filing. Source: RI Secretary of State Business Services (https://sos.ri.gov/divisions/business-services). - Rhode Island LLCs must file an Annual Report with the Secretary of State each year. - Single-member LLCs default to disregarded entity for federal tax. Multi-member LLCs default to partnership tax. Either can elect S corp treatment with IRS Form 2553. Rhode Island state tax treatment. - Rhode Island imposes an annual minimum corporate tax on entities doing business in the state. Rhode Island LLCs classified as partnerships or disregarded entities for federal tax pay the $400 annual minimum tax (R.I. Gen. Laws §44-11-2(e)) to the Rhode Island Division of Taxation; S corporations pay the same $400 minimum. Verify the current minimum-tax amount, which the General Assembly adjusts periodically. Source: RI Division of Taxation, Business Taxes (https://tax.ri.gov/business/). - Pass-through entities file informational returns; income flows through to members or shareholders, who pay Rhode Island personal income tax at graduated rates. - Rhode Island allows a Pass-Through Entity (PTE) election (R.I. Gen. Laws §44-11-2.3), under which a qualifying pass-through may pay state income tax at the entity level to preserve a federal state-and-local tax (SALT) deduction above the SALT cap. Evaluate the PTE election annually with a CPA. Rhode Island S corp basics. - Federal S corp election flows through to federal income tax only. Rhode Island follows the federal S election by default and applies the $400 annual minimum corporate tax. - Payroll. An S corp must pay its owner-employee a reasonable W-2 salary. Rhode Island has Temporary Disability Insurance (TDI) and Temporary Caregiver Insurance (TCI) obligations in addition to federal Social Security, Medicare, and federal/state unemployment. Why a Rhode Island trades shop might elect S corp. The primary driver is federal self-employment tax savings. A disregarded-entity LLC owner pays self-employment tax on the full net profit. An S corp owner-employee pays payroll tax on wages only; the distribution portion avoids federal self-employment tax. Both entity types incur the $400 Rhode Island annual minimum corporate tax, so the state-side cost comparison is roughly neutral, and the federal-payroll-tax math typically drives the decision. The Rhode Island PTE election may add SALT benefits for higher-income owners. Rule of thumb. Start as a Rhode Island LLC. When annual profit after a reasonable owner wage is high enough that payroll tax savings clear payroll, retirement plan, and accounting costs, elect S corp and re-evaluate the PTE election with a CPA.
RI · LLC vs S-Corp
LLC vs S-Corp in Rhode Island
Entity formation, tax treatment, and when to switch.
Not legal, financial, or career advice. Trades Navigator compiles state board rules, statutes, and federal data into a navigable layer linked to primary sources. We do not maintain editorial attestation on each line. Always verify the specific number, fee, deadline, or rule against the linked primary source before relying on it. Confirm any decision with the relevant state agency, a lawyer, or an accountant.
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