Do you want to expand an existing LLC into Hawaii with a foreign qualification, but you’re not familiar with the process?
This guide will outline important details when expanding your business and explain how to foreign qualify an LLC in Hawaii.
Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!
But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.
It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.
For example, if your LLC is registered in California and you are looking to open a second location in Hawaii, you may need to complete a foreign qualification in Hawaii before you can expand there.
Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, many of the best LLC services can handle this task for you.
Foreign qualifying is essentially asking permission to do business in the state of Hawaii. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Hawaii yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
Those fees will add up quickly, especially if your LLC has been transacting business in Hawaii for a number of years and, considering the fact that foreign qualification only costs $50, it’s just not worth the risk.
If you’re caught doing business without authorization, however, it won’t invalidate your current and ongoing contracts in the state, and it won’t prevent your LLC from defending an action in court.
The Hawaii LLC Act Sec. 428-1008 has a bit more to say about these penalties if you’re interested.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Hawaii? Unfortunately, Hawaii law is fairly vague on the matter, but according to other state and tax laws, in most cases, you are considered to be “doing business” and required to foreign qualify if:
And, of course, there are taxes to consider too. In Hawaii, LLCs are required to pay a General Excise Tax each year, and foreign qualifying informs the state that you’ll be paying. Otherwise, you may be charged with tax penalties down the line. For more information on Hawaii business taxes, visit the Hawaii Department of Taxation website. It’s important to always stay on top of your LLC’s taxation requirements to avoid any unwelcome surprises.
If you’re unsure whether or not you need to file for a foreign qualification in Hawaii, we suggest seeking legal counsel.
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Hawaii. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
Read over the list carefully – including the expanded list in Hawaii’s LLC Act Sec. 428-1003 – and assess your own business activities in the state. If they all appear on the list, you’re likely exempt from foreign qualification. But if you have any hesitations or questions, it’s best to seek legal advice.
Foreign qualification in Hawaii is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC, your golden ticket to Hawaii registration is Form FLLC-1: Application for Certificate of Authority for Foreign LLC, which you can file online or on paper.
Before we get into the details, a quick note: along with your FLLC-1, Hawaii requires a Certificate of Existence (or Certificate of Good Standing) from the state where your LLC was formed. To obtain one, contact the appropriate state government.
Online filings all go through the Hawaii Business Express site. On the right side of the screen, click “Use QuickFile,” and you’ll be directed to create an account. After that, you can choose your form and begin the process.
Prefer trusty postal mail? Download and complete the FLLC-1 (make sure you do it in black ink!), then mail it to:
Department of Commerce and Consumer Affairs
Business Registration Division
P.O. Box 40
Honolulu, Hawaii 96810
If you happen to live near Honolulu, you’re also welcome to drop your form off in person. Grab your materials and swing by:
335 Merchant St.
Honolulu, Hawaii 96810
The DCCA offers step-by-step instructions for the FLLC-1 in case you have questions about a particular part.
Like other states, foreign qualification in Hawaii isn’t free. Accompanying your form, you must include a $50 payment. Online filings can be paid by credit card and mailed or in-person forms require a check made out to the “Department of Commerce and Consumer Affairs.”
After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is on its way to foreign qualification, and you’re embarking on another chapter in the life of your business.
You’ve done all this work, so to avoid your application being returned for a non-compliant LLC name, make sure you review Hawaii’s naming requirements. In short, your LLC name must:
For a detailed list of requirements, see Hawaii’s Business Naming Rules page.
We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a jurisdiction where you don’t have permission to do so.
You’ll typically need to wait roughly 3-5 business days for standard filings or one day for an expedited filing. For more information, consult the Department of Commerce and Consumer Affairs’ General Info on Registering page.
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Hawaii state law. For more information about general excise tax business licenses and more in this state, check out Hawaii’s “Starting a Business” guide. Looking for info about professional licensing? Take a look at the state’s Professional Licensing page.
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Hawaii LLC annual report.
The overall costs of operating a Hawaii LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.
The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.
Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.
Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your Hawaii registered agent.
The service then registers your Application for Certificate of Authority for Foreign LLC with the state to qualify your LLC to do business in Hawaii.
Disclaimer: The content on this page is for informational 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.
Ready to Start Your LLC?