Business formations, closures both rise in 2012

IN 2012, RHODE ISLAND saw its first year of back-to-back business formation growth since 2006 to 2007, according to R.I. Secretary of State A. Ralph Mollis.
Posted 1/30/13

PROVIDENCE – For the first time since 2006 to 2007, Rhode Island saw two consecutive years of business growth as 7,121 new corporate entities registered in the Ocean State in 2012 after more than 6,800 new businesses filed in the Ocean State in 2011.

Business starts in the Ocean State in 2012 rose 4 percent from the 6,846 new businesses registered in 2011. Even with this modest increase, 2012 had the most startups since the recession began in 2009, when there were 7,837 new business filings, according to a report released by the R.I. Secretary of State’s office Wednesday.

“We should be careful about reading too much into these numbers after years of struggle. There may still be pain ahead, but at least there are signs that the economy is headed in the right direction,” said R.I. Secretary of State A. Ralph Mollis in prepared remarks.

“Judging from our work with startups over the past year, there were indications that people have more faith in the future of the economy. But the results are still a bit surprising,” said Mollis.

According to Mollis, for the first time since 2004 to 2007 there have been four consecutive years of growth in any one business classification: limited liability companies. In 2012, the number of newly formed LLCs, a popular alternative to the for-profit corporation structure, rose 6.6 percent to 4,479.

“Still, there are signs that the economic shake-out is not over,” warned the report. In 2012, 6,725 corporate entities shut their doors, a 1.5 increase from the 6,627 companies that closed in 2011. Rhode Island still improved on its worst year in recent history: 2008, when a record 7,071 companies went out of business.

“Our economic difficulties have taken a terrible toll on all of us. Let’s hope these figures are a signal that better days are ahead,” said Mollis.

According to a release, most newly formed business entities in Rhode Island choose a corporate structure that requires registering with the Secretary of State’s office.

Across the state, more than 71,000 limited liability companies, for-profit and nonprofit corporations are currently registered.

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