Start a Hawaii LLC

Step 1: Name your Hawaii LLC

Find a name for your Hawaii LLC. You’ll start an LLC in Hawaii first by choosing a name for your business. An original name sets you apart. It also tells potential customers who you are and what you do.

In addition to marketing considerations, though, you’ll need to follow the Hawaii DCCA rules for naming LLCs. Otherwise, your filing could be rejected, and you’ll be back at square one.

Hawaii LLC Naming Guidelines

Take your time in choosing an LLC name that represents your mission. You might have a few in mind already, or you may need to do some brainstorming. As you make your list, keep Hawaii’s LLC naming guidelines in mind, such as:

• Your name must be distinguishable from all other business names in Hawaii.
• Your company name must include a “designator” indicating that it’s an LLC. You must choose from “LLC,” “L.L.C.,” or “Limited Liability Company.” Limited may be abbreviated as “Ltd.,” and Company may be abbreviated as “Co.”
• The name can’t be intended to deceive, confuse, or defraud the public.
• You must avoid words that could make your business sound as if it’s a government agency.
• The name can’t suggest the business was created for an illegal purpose.
• Certain words suggesting a licensed profession or financial institution (for example, “CPA” or “bank”) may require additional paperwork and permissions. 

Conduct a Hawaii entity search

To comply with the first rule above, you’ll want to confirm that your desired LLC name isn’t already in use. You can conduct a Hawaii LLC search following the directions on our Hawaii business name search page. You won’t be able to file a duplicate company name, so it’s important to find a unique moniker. 

Although the business name search engine can help you determine what names are available, the Hawaii BREG website cautions you not to assume your desired name is available until you get confirmation from their office. You can contact BREG at (808) 586-2727 for more information.

Federal and State Trademarks

Even if the BREG approves your business name, that’s no guarantee that someone else hasn’t already claimed it with a federal or state trademark. To truly check to see if your business name isn’t trademarked isn’t easy because there’s no one central place to check. Some businesses even employ an attorney specializing in trademarks to see if they’re in the clear.

You can take some measures yourself, like searching the trademark database on the U.S. Patent and Trademark Office website. This can help you determine if someone’s already claimed a federal trademark on the name you want.

State trademarks are applicable only within the borders of a state. To see if anyone has a state trademark on your desired LLC name, contact the BREG at (808) 586-2727 or the email address breg@dcca.hawaii.gov. For information on applying for your own state trademark, visit the BREG page for trade names, trademarks, and service marks.

In addition to checking these databases, it’s wise to do an internet search for your business name, including checking domain names, social media sites, and online phone directories.

Securing a Domain Name

When you’re coming up with an LLC name, it’s wise to consider whether you can secure a matching domain name so that your future website can be easily found online. We have a tool to help you do a preliminary domain name search, and our domain name registration service can help you secure the online name that will best serve your company.

Is your Hawaii LLC name available as a web domain?

Even if you don’t sell your products or services directly online, you’re going to want a presence on the web. After all, you want people to be able to find your company’s name, address, and contact info when they search for it.

Getting a good domain name that pairs well with your business name is important. You’re likely going to be putting that URL on your business cards and other marketing materials, and you want clients to be able to remember it and associate it with your business.

The perfect domain name for your company may already be taken, but you can still find others. In fact, if you find a truly great available domain name, it might be worth naming your business after that URL rather than the other way around.

Using our domain name search tool, you can see if your desired business name or something else that’s suitable is available as a URL. If you find a domain name you like, you might want to lock it down before someone else does.

You can also check to see what social media handles are available. Many businesses market on platforms like Twitter, Facebook, and Pinterest, so getting the appropriate social media names can be important for effective online marketing.

Our domain name service helps you find and purchase a domain name for your business. We can also help you create a business website and provide domain name privacy.

Reserving a Business Name

If you aren’t ready to officially register your LLC, you can reserve your business name via the Hawaii Business Express website for up to 120 days. The reservation can be done for a small filing fee.

If you’d rather not deal with this process yourself, we have a business name reservation service that can handle it for you. As part of the service, we also check to see if your desired name is available.

Filing a DBA: Hawaii

A DBA (“doing business as”) name, known as a “trade name” in Hawaii, is a name your business uses that’s different from its legally registered name. In most states, businesses using a DBA name are legally required to register it with the state. However, Hawaii doesn’t require this step. LLC owners can choose to file their Hawaii DBA name, but it’s strictly voluntary. 

You might wonder why you should even bother with registering a trade name if it’s not required. Well, it does let others know that you’re claiming rights to the name. The registration process will also let you know if anyone else is claiming the right to use the name.

Step 2: Appoint a registered agent in Hawaii

Next, designate a registered agent for your LLC in Hawaii. This is a requirement for all Hawaii limited liability companies.

What is a registered agent?

A registered agent receives legal paperwork (such as service of process and subpoenas) and certain official government notices on behalf of your limited liability company. That can include paperwork such as tax notices, business licenses, or state compliance documents.

Who can be a registered agent in Hawaii?

The registered agent can be an individual resident of Hawaii or a domestic or foreign (out-of-state) business entity authorized to transact business in the state. They must have a physical street address in Hawaii (not just a P.O. box or something similar) and be available during normal business hours so they can receive notices in person.

Hiring an Outside Registered Agent Service

While you can certainly appoint yourself as the registered agent for your business, it’s not always a smart choice. As the registered agent, you’ll be required to always be available during normal business hours. Plus, it can be embarrassing to receive notice that you’re being sued in front of your clients and/or employees.

Instead, you may benefit from hiring an outside registered agent service like ours. Work when you want, too, as your Hawaii registered agent service will be available during normal business hours.

Additional perks include:

• Discreet receipt of any legal paperwork
• Keeping your business in compliance with the registered agent requirement 
• Freedom to be out of the office during regular business hours for client meetings, vacations, etc.
• The ability to move your office location without having to update Hawaii registered agent paperwork

What if a process server can’t find my Hawaii registered agent?

Serving as your own registered agent or appointing a friend or family member to be your agent might seem the simplest way to meet Hawaii’s registered agent requirement. But consider what could happen if a process server is unable to find you or your appointed agent.

This can occur if you or your appointee isn’t in the office (for example, they’re out of town, on vacation, sick, etc.) when someone needs to reach the agent. It can also happen if the registered agent moves or quits and you forget to update your paperwork with the state.

In addition to legal penalties for being out of compliance, failing to maintain a registered agent could mean that a process server can’t find you to notify you of a lawsuit. In that case, a legal action against you could go forward without your knowledge, meaning you wouldn’t even have a chance to defend yourself.

Step 3: File Hawaii Articles of Organization

File paperwork known as the Hawaii LLC Articles of Organization with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division. This essentially legitimizes your business in the eyes of the Hawaii government.

Filing official government documents like this can be intimidating and/or complicated for many people, which is why we’re here. With our business formation plans, our professionals will file for you to make sure it’s done quickly and correctly. But, although we can handle this for you, we’ll show you how the process works below.

File with the Hawaii Department of Commerce and Consumer Affairs

You can file your Hawaii Articles of Organization online or by email, postal mail, or fax. To file online, you’ll have to use the Hawaii Business Express system on the Business Registration Division of the Hawaii Department of Commerce and Consumer Affairs website.

For postal mail, you’ll complete the paper Articles of Organization form and mail it to:

Department of Commerce and Consumer Affairs
Business Registration Division
P. O. Box 40
Honolulu, Hawaii 96810

Regardless of your filing method, you’ll need to pay a non-refundable $50 filing fee (as of this writing). You can expedite your filing for an additional fee.

Articles of Organization Requirements

For the Articles of Organization, Hawaii requires the following information. Be aware that this information becomes public once submitted:

• The complete LLC name (including the designator)
• The business address
• The name and address of your registered agent or registered agent service
• The name and address of each LLC organizer
• The duration of the LLC (if not perpetual)
• Whether your LLC will be manager- or member-managed. If member-managed, list the names and addresses of all the initial members. If manager-managed, list the name and address of the manager(s) and the number of initial members. 
• Your signature

The form also has boxes to check regarding liability. Most people check the first box, which states that the owners won’t be personally liable for the debts, obligations, and liabilities of the company, which is one of the main reasons for forming an LLC.

Member-Managed or Manager-Managed?

As with many states, Hawaii asks you to list how you plan to govern your LLC, by the members/owners (member-managed) or by a manager (manager-managed).

Most LLCs choose to be managed by the members because they only have a few owners or just one. In those cases, it often makes sense for the LLC owner(s) to do member-management because they’re running the business themselves. All of them are sharing in running and making decisions for the company.

But some LLCs would rather appoint or hire a manager instead. In the manager-managed option, one or more LLC members can be appointed to make management decisions, or someone from outside the LLC can be hired to manage the company.

Manager-management can be helpful when some of the members only want to be investors in the company as opposed to running the business and making decisions about it. LLCs that have a lot of members also sometimes find it easier to have a manager because it’s difficult to get all the members together to vote on decisions on a regular basis.

Digitally Storing Your Hawaii LLC Paperwork

If you have us file your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard. The dashboard is where you can keep it and other important paperwork digitally organized.

Once you get a physical copy from the state approving your LLC, store it alongside other important business documents. These other important documents can include your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.

How to Amend Your Articles of Organization

If any of the original Articles of Organization information needs to be updated, altered, or expanded, your business is required to inform the state about the changes.

You would report these changes by filing paperwork with the BREG. The type of paperwork will depend on what information you’re changing. For some guidance, see our page on amending your Hawaii Articles of Organization and how to change your business name in Hawaii.

If your Articles of Organization isn’t current, it could impact your ability to get a Hawaii Certificate of Good Standing. A Hawaii Certificate of Good Standing isn’t required to conduct business, but it’s important for things like expanding your LLC to other states, renewing certain licenses and permits, and attracting potential investors. Do you need help amending your Articles of Organization? We have an amendment filing service that can handle it for you, as well as our Worry-Free Compliance service, which includes two amendment filings every year.

Step 4: Create an operating agreement

Make an operating agreement for your LLC. While it’s not a legal requirement to have a Hawaii operating agreement, it’s wise to have one.

An operating agreement (OA) clearly defines the terms of ownership and management for an LLC.  And, without one, you’ll be subject to Hawaii’s default rules for LLCs, which might not reflect the wants of yourself and the other members.

Benefits of an LLC Operating Agreement: Hawaii

Here are some of the benefits an OA offers to owners of an LLC:

• Agreements help prevent and resolve conflicts between LLC members by clearly indicating the powers and privileges of each member.
• Creating an OA empowers you to customize your business’s rules and procedures to serve your LLC’s interests, requirements, and expectations.
• An agreement can define your LLC’s management structure. While some companies choose to be member-managed, others designate a manager to run day-to-day operations.
• An OA helps separate your business from your personal assets in the courts’ eyes, further sheltering your savings from legal liability.
• A well-drafted agreement specifies the rules and procedures to guide the LLC if you want to add or remove members from the business.
• It creates a plan of succession for when a member passes away, which is useful even for single-member LLCs. The agreement can stipulate what happens to that member’s portion of the business.

What should I include in my LLC operating agreement?

Here are some basic items you may want to include in your LLC’s OA:

• Ownership allocation: While many LLCs split ownership evenly among the members, you have the option to divide up ownership in another way if you want some members to own more of the company than others. 
• Management system: In Hawaii, you can choose to have your LLC managed by its members or a manager. 
• Authority to act on behalf of the business: Who can take action on the business’s behalf? Who can sign checks for the LLC? Who’s in charge of negotiating major agreements? What percentage vote is required for routine and major decisions? Your agreement should clearly outline each individual’s responsibilities and authorizations.
• Admitting new owners: If your business is successful, you might invite new individuals or businesses to join your LLC. If you want to admit new members, your agreement should specify the requirements and processes to join the membership. You’ll also want to lay out the procedure for removing members, buying out their interest, and repaying them for any remaining debt. 
• Dissolution and winding up: At some point, you may want to close your business and move on to something new. Your OA can make this easier by including provisions for dissolving and winding up the LLC. Common issues upon dissolving a business include selling the business’s assets, paying off debt, and distributing remaining profits among the existing members. 

Feeling unsure as to how to create an operating agreement for your LLC? We offer a guided customizable template to help get you started. Our chatbot walks you through the process of creating your agreement and allows for e-signature of the document.

Do I need an operating agreement if I’m the only owner?

It seems like most of the things in your operating agreement are intended to avoid disputes among the LLC members, so we understand why you might think you don’t need one if your LLC is just you. But potential investors, future business partners, and others may want to see your operating agreement regardless.

Your operating agreement can also explain in detail what you want to happen to the business and its assets if you die or become incapacitated.

One more thing to consider: Someone could take an LLC owner to court to try to prove that the owner and the LLC are the same entity so that they can go after the owner’s personal assets. If that happens, having an operating agreement in place is one more thing further demonstrating to the court that the business owner and the LLC truly are separate.

Step 5: Apply for an EIN

Get an Employer Identification Number (EIN) for the business. You’ll need an EIN, also referred to as a Tax ID Number or Federal Tax Identification Number, from the Internal Revenue Service (IRS) if you have more than one LLC member, hire employees, or meet certain other criteria. Most banks will also require an EIN for opening a business bank account.

You can get your Hawaii LLC’s EIN through the Internal Revenue Service website, by mail, or by fax. If you’re not fond of dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the hassle.

Register for Hawaii taxes

All Hawaii businesses must get a Hawaii Tax ID Number and any required tax licenses. To do this, you need to complete Form BB-1, State of Hawaii Basic Business Application, and pay a small one-time registration fee. You may have to pay additional fees depending on which tax licenses you need.

You can register for the Hawaii Tax ID Number and other tax licenses through the Hawaii Department of Taxation website.

Other Hawaii Tax Registrations

Hawaii has a General Excise Tax (GET) you’ll need to register for and pay. It’s a tax on your gross business income. When you apply for the GET license, you’re automatically registered for use tax, as well. Use tax is a tax on imports from unlicensed sellers.

Here are some other Hawaii tax licenses you may need, depending on your business activities (this is not a complete listing):

• Employer’s withholding (if you have employees)
• Transient accommodations
• Rental motor vehicle
• Tour vehicle
• Car-sharing
• Vehicle surcharge
• Cigarette and tobacco
• Liquor
• Fuel

Open a business bank account for your Hawaii LLC

Once you’ve secured an Employer Identification Number, you’ll be able to open a business bank account. Having separate accounts for business and personal banking is critical for tax time and helps you avoid commingling funds.

Commingling funds not only makes your taxes more difficult, but it could also be used against you. This could happen if someone takes you to court to challenge whether you and your LLC are truly separate entities.

We offer a discounted bank account for your new LLC. This allows for online banking, unlimited transactions, a debit card, and more. If you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process. You might also want to think about getting a business credit card to start building a credit history.

For further help managing your new business’s finances, try ZenBusiness Money. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.

Can filing as an S corp lower my taxes?

The LLC business structure gives you flexibility, and that extends to how you can choose to have your LLC taxed.

An LLC has pass-through taxation by default. This appeals to most owners of LLCs because it avoids “double taxation,” in which a corporation pays taxes at both the business level and again when the income is paid to the individual owners. But some LLCs opt to be taxed as a C corporation or an S corporation because, in their case, it works to their advantage.

Being taxed as a C corporation does mean you get double taxation, but, for certain LLCs, the pros sometimes outweigh the cons. One benefit is that C corporations have the widest range of tax deductions, which could be an advantage in some scenarios, especially for more profitable LLCs. For instance, employee insurance premiums can be written off as a business expense.

S corp (short for “Subchapter S Corporation”) is a tax status geared toward small businesses. Having your LLC taxed as an S corp has pass-through taxation like a standard LLC, but it has another potential advantage for some LLCs: It could reduce your self-employment taxes. 

Self-employment taxes are the portion of your taxes that pay for Social Security and Medicare. In a typical LLC, you would pay these on all of your profits.

But filing as an S corp allows you to be an “employee-owner” and split your income into your salary and your share of the company’s profits. In this way, you pay employment taxes on your salary, but not self-employment taxes on your profits. (You’ll still pay the other applicable taxes on your LLC profits, of course.)

One drawback is that the Internal Revenue Service scrutinizes S corps more closely, meaning you’re more likely to get audited. S corps also have more restrictions for qualifying.

Though it’s possible that one of the above options could work better for your LLC, remember that business taxes are complicated. They’re also very specific to your situation. That’s why you need to consult a tax professional to see which taxing method works best for your Hawaii business.

If you decide to form your LLC with an S corp status, our S corp service can help you do that.