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What Do Therapists Need to Know About Taxes in Rhode Island?

Rhode Island may be small, but its tax system can still cause headaches if you’re not structured properly. From business registration to state income tax and annual fees, here’s what therapists in private practice need to know in 2025.


Who this guide is for

This guide is for:

  • Licensed Rhode Island therapists (LCSWs, LMHCs, LMFTs, psychologists, etc.)
  • Solo or group practice owners
  • Therapists earning self-employment or 1099 income
  • Clinicians offering in-person or telehealth services

Step 1: Pick the right structure for your practice

How you structure your practice affects how you're taxed and what paperwork you’ll deal with.

Sole Proprietorship

  • No registration required unless using a business name
  • No liability protection
  • Income taxed on your personal return
  • Must register a fictitious business name (DBA) with the Secretary of State if needed

PLLC (Professional LLC)

  • Rhode Island permits licensed professionals to form PLLCs
  • Offers personal liability protection
  • Taxed like a sole prop by default
  • Can elect S Corp taxation later
  • Must file Articles of Organization with the RI Secretary of State

S Corporation

  • Helps reduce self-employment tax via payroll/distribution split
  • Requires bookkeeping, payroll, and additional filings
  • Becomes cost-effective at ~$75K+ net income
  • Still taxed at the personal level in RI

Professional Corporation (PC)

  • Allowed in Rhode Island
  • More admin-heavy, used more by larger or multi-owner practices
  • Can elect S Corp taxation
  • Must comply with licensing board and Secretary of State requirements

Step 2: Know your state tax obligations

State income tax

    • Rhode Island has progressive tax brackets, topping out at 5.99% (2025)
    • Pass-through income from PLLCs or S Corps taxed at the individual level
  • File with Form RI-1040

Minimum business tax

    • Rhode Island charges a minimum annual tax of $400 for S Corps and LLCs
    • Due even if the business makes little to no income
  • Must file Form RI-1065 (LLC) or Form RI-1120S (S Corp)

Annual reports

    • PLLCs and PCs must file annual reports
  • Due March 1
  • $50 filing fee
  • Filed through the RI Secretary of State’s website

Step 3: Pay taxes throughout the year — not just in April

Estimated taxes

  • Required if you expect to owe $250+ to RI or $1,000+ to the IRS
  • Due quarterly: April 15, June 15, Sept 15, Jan 15
  • File with RI-1040ES or pay via the RI Division of Taxation portal

Self-employment tax

  • 15.3% on net income from sole props or default PLLCs
  • Can be reduced by electing S Corp and paying yourself a salary

Filing requirements

  • Sole prop: Schedule C + RI-1040
  • PLLC: RI-1065 + RI-1040 + annual report + $400 minimum tax
  • S Corp: Federal 1120-S + RI-1120S + payroll + annual report + $400 minimum tax

Step 4: Track and claim your deductions

Smart expense tracking saves money at tax time.

Deductible expenses for therapists

  • Office rent or home office
  • EHR and billing software
  • Professional liability and malpractice insurance
  • Supervision, CEUs, license renewal
  • Marketing and directories
  • Office supplies, phone, internet
  • Health insurance (if self-employed)
  • Retirement contributions (Solo 401k, SEP IRA)

Step 5: When it’s time to consider an S Corp

An S Corp may help you keep more of what you earn.

  • Pay yourself a reasonable salary
  • Take the rest of your income as distributions
  • Distributions aren’t subject to self-employment tax
  • Still responsible for $400 minimum tax and RI S Corp filings

Step 6: Common mistakes therapists make

    • Forgetting to file the annual report by March 1
  • Not accounting for the $400 minimum tax
  • Waiting too long to consider an S Corp
  • Skipping estimated tax payments
  • Missing deductions like CEUs or office space
  • Not separating personal and business finances

Step 7: Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Sole prop or PLLC; keep expenses documented; budget for minimum tax

$50K–$100K

Consider S Corp; implement payroll; file RI S Corp return

Over $100K

Use S Corp; maximize retirement and health deductions; work with a CPA

Need help figuring this out?

We help Rhode Island therapists stay compliant, avoid penalties, and build tax-efficient practices — whether you’re just starting or scaling up.

Book a consult or email us at david@leichtercpa.com

Disclaimer: This guide is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, state laws and regulations can change without notice. You should consult a licensed professional in your state before making any decisions based on this information. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this guide.