What opportunities could be there for a startup company Rhode Island? The Ocean State is considered to be an epicenter for food innovation, design trends, and innovative developments in manufacturing. Here’s a fact: The concentration of consumer goods industry in the state is almost double the national average, and the good news is that expansion is being predicted in the manufacturing sector. In fact, the productivity is also very high for certain Rhode Island industries including Custom Manufacturing, which has seen a growth of 45% more than the national average.
Advantages of setting up an LLC or Corporation in Rhode Island
Although, Rhode Island is one of the smallest of the 50 states, it has several big industries. One of the industries that have been thriving for quite some time and has seen a spur in the growth of a startup company Rhode Island is the “Health” industry and it is also the largest growing industry. This is followed by the Tourism industry where sales have been exceeding $5.75 billion per year. One of the reasons for industries and businesses growing in the state is because of the strong business climate driven by advantages and incentives. Let’s take a quick look at some of the advantages of forming an LLC or a Corporation in Rhode Island.
Advantage#1: Salient benefits of Corporation or LLC
- Sales Tax Exemptions: There are a variety of sales tax exemptions that you can benefit from especially if you register a new business in Rhode Island. Some of the top programs beneficial for businesses include:
– Tax exemptions on sales of computer software, tangible personal property, and public utility services
– Tax exemptions on sales, use, or even storage of various machinery, tools, and equipment to be used in an industrial plant for manufacturing purposes.
– Sales and use tax exemption on wine and spirits being sold at liquor stores and package stores.
– Tax exemption on scientific equipment used for research and development. Certificate of Exemption
- Pass through taxation: If you register a new company in Rhode Island as an S corporation then the corporation or firm will not pay any income tax. Instead, the income or loss of the corporation will be passed on to the stockholders.
- Independent Life: One of the salient advantages of an S Corporation in Rhode Island is that it enjoys an independent life. The death or incapacity of a stockholder will not disturb operations of the business.
- Small Business Incentives: If you register a new company in Rhode Island as an LLC, you will be able to benefit from several small business incentive programs the state offers. Some of the popular programs include:
– Small Business Capital Investment Tax Incentives: Small business entities including LLC’s in the state will be eligible for two types of incentives, which are Deductions or Modifications and Capital Gains Exclusion.
– Disabled Access Credit for Small Business: tax credit program where businesses can derive a credit of 10% of the total amount of expenditure on specific activities of business.
- Flexible Profit Distribution: An LLC has the benefit of being able to select different ways of distribution of profits.
- Limited Liability: If you register a new business in Rhode Island as a LLC then you will be able to enjoy limited liability protection. This means claimants can sue the LLC and not the owner or investors.
Advantage#2: Other Business Incentive Programs
There is a variety of business incentive programs including innovation incentives and financing programs available for small and medium enterprises or a startup company Rhode Island. Let’s look at some of the top programs in Rhode Island.
- Small Business Loan Program: Small businesses comprise of 98.9% of all businesses in the state and hence a Small Business Loan Fund Program (SBLF) has been implemented to ensure businesses can focus on their growth and expansion and have a level playing field. A startup company Rhode Island can avail of a maximum working capital of $500,000 through the SBLF program. More Information
- Innovation Network Matching Grants: This program is an integral part of “Innovation Incentives” for small and medium sized businesses. Innovation Network Matching Grants is normally provided to intermediary organizations involved in projects that offer space on flexible terms, technical assistance, or provide capital to small businesses registered in Rhode Island especially in key industries like healthcare, life sciences, clean technology, food and agriculture, and cyber security among others. Download Application
Are there any Disadvantages of Incorporating in Rhode Island?
When you register a new business in Rhode Island, you can be rest assured that there is a wide variety of business incentives to leverage. The question is – are there any disadvantages? The disadvantages are limited to the type of business entity you form like an LLC requires more paperwork and is complex as compared to a partnership or sole-proprietorship. Similarly, disagreements or conflicts among the stockholders of a business corporation may immobilize overall decision making. The disadvantages will not affect business growth keeping in mind the incentives and infrastructure offered by the state.