Closing a business is an important part of a business’s lifecycle. The reasons can be many — retirement, a bad economy, bankruptcy, or to move on to better things. Whatever the reason behind the closure, as a business owner, it’s important that you close down your business properly. If you don’t dissolve your Hawaii business according to state law, then it could come back to haunt you. There could be adverse tax implications, fines, and financial penalties. An improper dissolution of your Hawaii business could even affect your credit rating. This guide on how to dissolve a business in Hawaii will help you accomplish everything necessary and file the appropriate documents correctly and on time.
If you’re looking to form a business in Hawaii, let our experts help. With our fast and easy Hawaii limited liability company (LLC) formation service or our corporation formation service, you can easily create your formation documents and get them filed correctly.
Review whatever governing documents you established when you created your business. This will either be an operating agreement (LLC), bylaws (corporation), or a partnership agreement. These documents outline the things to accomplish in order to dissolve the business. But the state of Hawaii also has some requirements that you must meet before your company can be officially dissolved. Your operating agreement and formation documents will have rules that need to be followed. For example, there will be rules outlining how to vote to dissolve the business and what percentage of votes are needed.
This is why it’s important to maintain all your corporation/LLC documents and records in one secure place so that they can be easily accessed and not lost.
The first step is to establish the value of your business. You place a value on everything that the business owns like real estate, inventory, assets, and cash reserves. The value of these assets is reduced by any amount of liability (debts) that are attached to the assets. If necessary, hire an expert at calculating business valuations so the number can be as accurate as possible. Collect all documentation relating to contracts with other parties that your company has entered into. This includes any employment contracts, inventory purchase agreements, union agreements, and sales agreements.
Using our Worry-Free Compliance service and our easy-to-use dashboard will keep you up to speed, so you have all your important documents in one place.
Before you dissolve your Hawaii business, calculate the company’s total amount of debt and to whom it’s owed. Your debts don’t dissolve simply because you’ve dissolved your business. If you don’t repay the debt, it could have a significantly negative effect on your credit rating. This could embroil your company and you personally in new lawsuits.
There is no specific requirement to file dissolution documents for your company in Hawaii. If Hawaii does not receive the required annual report for two consecutive years, the state will involuntarily dissolve your business. However, our experts strongly suggest you do so. You can dissolve a corporation by filing Articles of Dissolution in Hawaii with the Business Registration Division of the Hawaii Department of Commerce and Consumer Affairs (DCCA). For an LLC, you must file Articles of Termination with the DCCA. It’s easiest to file these documents online with the payment of a small fee. You can also file these documents by mail with a check or money order.
Usually, your business’s corporate bylaws or operating agreement will dictate the internal steps the company has to perform to officially and legally dissolve the business. If these documents don’t provide a roadmap as to how to dissolve a business in Hawaii, then you must follow the steps outlined by the state regulators.
Our operating agreement template will allow you to draft truly robust operating agreements that will have the proper dissolution instructions in them. Keep in mind however, that no matter what your governing documents say, you need to file the proper documentation and forms with the state to legally dissolve your business in Hawaii.
Some Hawaii business owners might believe that when they dissolve their business they can just let their permits, licences, and registrations lapse. But this might not take care of the issue. Some of these licenses and permits may automatically renew every year, with the result of charging you extra fees that you don’t want to pay. Make sure to do research on which licenses, permits, and registrations need to be specifically canceled and which can merely lapse.
Before the business is officially shut down, you have to make sure all the outstanding contracts are resolved. Also, if your company is involved in any litigation, you will need to resolve it.
If the company still has employees, you have to comply with employment and labor laws, both state and federal. Make sure to pay the employees their last wages in full and on time to prevent any type of wage claim against the company. Have your accountant prepare all the final local, state, and federal tax returns. You need to close your business account with the IRS as well. This involves sending them a letter giving them the reasons that you want the business account closed and enclosing the Employer Identification Number notice if you still have it.
The last step is to file the Articles of Termination to dissolve a Hawaii LLC or Articles of Dissolution to dissolve a Hawaii corporation. These documents are filed with the Business Registration Division of the Hawaii Department of Commerce and Consumer Affairs. Keep and maintain all the official documents associated with your business, including the documents used to dissolve your Hawaii business. The suggested time to keep these documents is at least 7 years.
Let us help you with your Hawaii business needs. Our experts can give you tools to prepare for a Hawaii voluntary dissolution, so you have time to focus on other things.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Dissolving a business in Hawaii is fairly simple as long as you follow the steps and file the proper dissolution documentation with the state. To dissolve your business properly, legally, and without legal problems, you need to wrap up all the various issues that are still outstanding at the time you plan to close down your company. You need to make sure to pay all debts, to pay all employees what you owe them, and file your final tax returns.
To file termination documents, you need to file a specific form and a small filing fee. You can file online with payment via a credit or debit card, or by mail with a check or money order.
You can put a specific date of termination on the business dissolution form that you file with the state. If you list a date, then your company won’t officially dissolve until that date hits. If you don’t list a specific date, the date of termination will effectively be the date that you officially filed your form with the state.
Dissolving a nonprofit corporation or organization in Hawaii involves a very similar process used for the dissolution of an LLC or corporation. Your company files a dissolution document with the state after the nonprofit’s board of directors vote for a resolution of dissolution. The same wrap-up procedures will be used as well. The nonprofit has to resolve any debts, pay employees, resolve any outstanding contracts, and file the final tax filings.
Hawaii Business Resources
Business Dissolution by State