Starting a Business in Rhode Island
Many know Rhode Island as a compact state full of opportunities. From Brown University to the quaint diverse neighborhoods of Providence, Rhode Island is a great place to be. It is also a great place to start up a company or for a company to relocate to so it can expand its potential. Specifically, the Healthcare and Tourism industries are booming. Other important industries that are growing at a rapid pace are Financial Services, Education, and Biosciences. The state does have some down sides, such as applying for business licenses or occupational licenses that would not be necessary in other states. Luckily, the state and local governments are known for promoting innovation. Rhode Island has a wide range of state backed programs in the form of tax credits, business grants and loans, as well as other training programs.
STEPS TO STARTING A BUSINESS IN RHODE ISLANDIt can be a complicated endeavor after starting a business in Rhode Island. You need to learn certain things like how to look up a Rhode Island sales tax rate in order to pay Rhode Island sales tax and how to index a Form BAR. If you are in need of assistance, the Rhode Island Division of Taxation helps with the filing of sales tax returns. Once you have completed a business name search and have filed for a Rhode Island company formation with the Rhode Island Secretary of State, you can continue with other administrative filings. One of these tasks is to apply online for a Rhode Island Retail Sales Tax Permit. Another action to take would be to obtain a FEIN. With a FEIN, you would be able to do things such as apply for business credit and look for commercial office space. If you do find a location for your business, you would need to get the correct Business Licenses. One of these would be a general license which would need to be displayed in your place of business. You may even need to register for SST multi-jurisdictional sales tax if you are classified as a remote seller. This means you have customers you sell to in other states. Here are some of the helpful programs offered to qualified businesses in Rhode Island:
- Rhode Island Sales Tax Exemptions are for businesses within certain industries which include Research & Development, Biotechnology, Manufacturing and custom Computer Programming. Capital expenditures on scientific equipment and machinery used in R & D as well as in the manufacturing process of tangible personal property that is for resale qualify for a Sales Tax Exemption. Additionally, an exemption is available for public utilities (electricity or fuel) related expenses. The cost of equipment and machinery used in the manufacturing process in an industrial plant qualifies for a Sales Tax Exemption. Any customized computer programming is also exempt from sales tax. You can use a seller’s permit to issue your resale exemptions.
- The Rhode Island Biotech Investment Benefit Tax Credit is a program that gives companies a 10% discount on tangible personal property against federal tax obligations. A qualified company would either conduct research and development on or manufacture and sell biotech products. Additionally, any company who pays its part time employees (over 30 hours per week) a wage of at least 125% of the same wage paid to employees in the same industry who also work the same hours will qualify. There is a 15 year limit for which the credit can be carried over.
- The Rhode Island Business Investment Program provides tax credits to help new businesses as well as existing businesses grow. It is divided into two sections which are manufacturing and taxpayers who are in a qualified status.
- The manufacturing category offers a 4% discount on specific property a company uses to produce goods or 4% off the expenses related to leasing tangible personal property used in the manufacturing process.
- For the taxpayer category a credit of 4% off the expenses related to leasing tangible personal property used in the manufacturing process as well as 4% off the cost of other tangible personal property.
- Rhode Island has two workforce training programs used to help a business fund its employee training. These are known as the Job Training Grant program and the Job Skills Training credit.
- The Job Grant Program is a grant that is offered to companies to help cover the expenses of employee training. It is funded by a job assessment fee that is given as an addition to payroll. The funds give companies the freedom to facilitate customizable programs for its employees.
- The Job Training Credit is a tax credit offered to Rhode Island businesses that offer ongoing skills training and education to their current workforce. The credit works out to be 50% of total training expenses. To qualify for the credit, employees must be paid a wage equal to 1.5 times the minimum wage. The credit is given for up to 3 years and has a maximum value of $5000 for each employee.
- The Rhode Island Small Business Grant program helps facilitate business grants between $75,000 to $250,000 to start-ups and existing businesses that can show the aptitude to innovate technology and service through an expansion of growth. Another grant program offered in Rhode Island is the Industry Grant program which encourages collaboration between businesses where there is a mutual benefit to all parties involved.