If you’re considering starting a business, you’re likely looking at your first steps toward making that a reality. Filing paperwork and forming a limited liability company (LLC) is one such step to making your business official.
It might not sound like the most glamorous task, but you can get to the more exciting stuff later. Forming your LLC in Hawaii is important in protecting yourself and your business. It helps to protect your personal assets against potential legal or financial action.
This is a straightforward process that’s fairly pain-free. Take a look at this step-by-step guide to getting your LLC up and running in Hawaii.
The 5 steps to form an LLC in Hawaii:
- Name Your Hawaii LLC
- Appoint a Registered Agent in Hawaii
- File Hawaii Certificate of Formation
- Create an Operating Agreement
- Apply for an EIN
Step 1: Name Your Hawaii LLC
How will your brand identify itself? So much goes into your name, and it’s time to choose your company’s title. A brand name sets you apart. It tells potential customers who you are and what you do. Use guidance when choosing your company’s name.
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. Meanwhile, ensure your name falls within Hawaii’s LLC guidelines. You’ll also have to include “LLC,” “L.L.C.,” or “Limited Liability Company” in the full business name.
Conduct a business name search using Hawaii’s Business Express database to confirm that your desired name hasn’t been claimed. You won’t be able to file a duplicate company name, so it’s important to find a unique moniker. Be sure to check with the Hawaii government to ensure your LLC follows all guidelines, and you aren’t infringing on an existing business. For instance, Hawaii prohibits new businesses from falsifying themselves as government entities.
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 $10.
In most states, businesses using a DBA (“doing business as”) name will need to register their business name and DBA name; however, Hawaii does not require this step. LLC owners can choose to file their DBA name, but it is strictly voluntary. You can find the forms for doing so and more information here. If you choose not to register a DBA name, consider that this name could be taken by another business owner and potentially trademarked for their use.
Trademarks create a legal claim to your business name, logo, or intellectual property. Business owners might want to file for a trademark so that their names cannot be taken by another company.
It might be a smart idea to file your trademark with Hawaii for $25, or an additional $20 for an expedited review. This fee will adjust to $50 at the start of 2021. You can register your trademark online or send this form to:
Department of Commerce and Consumer Affairs
Business Registration Division
P.O. Box 40
Honolulu, Hawaii 96810
For broader protection, you should check to see if your name has been registered at the federal level and apply using the United States Patent and Trademark Office (USPTO) database.
Step 2: Appoint a Registered Agent in Hawaii
Next, it’s time to designate a registered agent for your LLC in Hawaii. This is a requirement for Hawaii LLCs.
A registered agent receives legal paperwork on behalf of your LLC. That includes paperwork such as taxes, licenses, or state compliance documents. A registered agent can be the business owner, an involved party, or an outside business entity. However, they must be a Hawaii resident and authorized to do business in the state of Hawaii.
If it helps, think of the registered agent as your Hawaii LLC’s point of contact.
And while you can certainly be the registered agent for your business, it’s not always a smart choice, as your personal information will become public and you’ll be required to always be available during normal business hours. Instead, you may benefit from hiring an outside registered agent service, keeping your home address private. Work when you want, too, as the registered agent service will be available during normal business hours.
Additional perks include:
- Discreet receipt of any legal paperwork
- Helps keep your business in compliance
- 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 any paperwork
Step 3: File Hawaii Articles of Organization
In Hawaii, you will need to file paperwork known as the Articles of Organization. This essentially legitimizes your business in the eyes of the Hawaii government. Your Articles of Organization can be filed online or via mail to the Department of Commerce and Consumer Affairs Business Registration Division P.O. Box 40 Honolulu, Hawaii 96810 Filing will cost $50, and you can pay an additional $25 for expedited review. Hawaii’s Articles of Organization are extremely simple to fill out. The single-page form includes:
- The business name
- The business address
- The registered agent’s name and address
- Additional members and their addresses
- Whether your LLC will be manager- or member-managed
- Your signature
Most LLCs are “member-managed,” meaning that the members (owners) themselves manage and make decisions for the company. A manager-managed LLC is one in which the owners appoint one or more managers (can be someone outside the LLC or a select member or members of the LLC) to manage the company. There are also boxes to check regarding liability. Most people check the first box, which states that the owners will not be personally liable for the debts, obligations, and liabilities of the company, which is one of the main reasons for forming an LLC. Your Articles of Organization can be processed in about two weeks unless you paid for it to be expedited.
Step 4: Create an Operating Agreement
Hawaii doesn’t require its LLCs to have an Operating Agreement; however, it’s a good business practice to have one.
An LLC Operating Agreement names the members of the business and outlines things like protocols for bringing in new members, dissolving the business, and selling its name. These and other factors can be included in the Operating Agreement to keep all LLC members accountable and on the same page. Essentially, it’s a business outline of what’s to be expected from all parties involved.
While you don’t have to submit an Operating Agreement with your Articles of Organization, it’s a good idea to keep the agreement with your other business documents. All members should sign the agreement, and you should have it notarized for future use.
Step 5: Apply for an EIN
An EIN — employer identification number — is an assigned tax ID number for your business. It’s used when filing taxes and helps identify your Hawaii LLC with the IRS. It’s also needed to open a business bank account and hire employees.
You can request an EIN from the IRS website. The application only takes a few minutes, and you’ll receive your unique number immediately, free of charge.
How much does it cost to start an LLC in Hawaii?
In Hawaii, filing your Articles of Organization will cost $50. If you opt to reserve your business name, you will need to pay, and if you get a state trademark on your business name, this can be done for.
Altogether, if you do all of the options above, you’re looking at around $85 in fees for your LLC in Hawaii. At a minimum, you’ll need to pay the $50 filing fee for the Articles of Organization.
However, this doesn’t take into consideration Hawaii’s annual report requirement. The annual report provides public information about your LLC, including your annual activity. It does not include financial information. You’ll need to file each year to remain in good standing with the state of Hawaii. You can file your annual report on the Hawaii website with a fee of $15.
Let ZenBusiness help you file so you can spend more time working on your business. Our business formation services offer an affordable way to get your company running and in good legal standing.
This includes completed and submitted LLC paperwork and our registered agent service. ZenBusiness will also provide a template for you to create your Operating Agreement. Upgrade and receive help with your EIN and state regulations.
What are the benefits of an LLC in Hawaii?
Hawaii offers a simple filing process for broad protection. Free yourself of liability, but without the requirements that are put on corporations. Hawaii LLCs create a flexible way to grow your business without putting your personal assets at risk.
The benefits of forming a Hawaii LLC include:
- Keep your personal liability and debts separate from that of your business
- Easy filing process and low annual fees
- More freedom than corporations
- Avoid double taxation. LLC owners only have to pay taxes on their business’s profits when filing a personal tax return.
Learn more about the benefits of the LLC business structure.
How is an LLC taxed in Hawaii?
One of the biggest benefits of starting an LLC is that you will only pay income tax on your personal tax return, but your business will be exempt. That’s a huge financial perk, and one reason many business owners opt to form an LLC in the first place.
However, as a business owner, you’ll need to be mindful of other taxes that will need to be paid. Taxes will also vary based on your industry.
One such tax that’s payable to the Hawaii government is a general excise tax. The GET charges businesses based on their gross income, rather than a state sales tax. The tax rate is 0.15% for insurance commission and 0.5% for wholesaling, manufacturing, producing, wholesale services, and imports for resale. All other businesses are charged 4%. Some counties also charge a fee, including:
- The city and county of Honolulu: 0.5% through 2030
- Kauai County: 0.5% through 2030
- Hawaii County: 0.5% through 2030
Your business will need to register with the Hawaii Department of Taxation. To do so, you’ll need to fill out and submit Form BB-1 either online or by mail.
You will also need to pay federal, self-employment, and possibly payroll tax to the IRS.
Hawaii Small Business Services
Hawaii DBA
Hawaii Registered Agent
Hawaii Annual Report
Form a Hawaii Corporation
Hawaii LLC FAQs
- What is the processing time to form my Hawaii LLC?
Hawaii processes LLC applications in seven to 14 business days. If you need a faster turnaround time, you can pay for an expedited process.
- Do I need to file an Operating Agreement with the state of Hawaii?
No. While it’s recommended for the safety and security of your business, Hawaii does not require its LLCs to have an Operating Agreement.
- What tax structure should I choose for my Hawaii LLC?
When you receive your EIN, you’ll be informed of available tax classification options for your Hawaii LLC. Most LLC owners decide to have their business taxed the default way, which is as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method only requires partners to pay taxes on their percentage of the profits on their personal tax returns. The LLC itself is not taxed. This avoids the “double taxation” that corporate shareholders pay, in which profits are taxed both at the business level and the personal level.rnrnAnother option is to choose to be taxed as a corporation. This option sometimes is favorable for large LLCs that bring in high earnings. There are some disadvantages to consider when opting to be taxed as a corporation, so consult a qualified tax professional before making a decision.
- Does Hawaii allow a Series LLC?
No. Hawaii law doesn’t offer Series LLCs. (A Series LLC consists of multiple LLCs under a single LLC setup.) Hawaii business owners with different companies must file separate LLCs that can be placed into a holding company.
- Which licenses and insurance are required for an LLC in Hawaii?
When registering a business in Hawaii, you’ll need a business name, EIN, and Articles of Organization. Depending on your industry, you might need additional paperwork that shows you’re approved to conduct certain business.rnrnKeep in mind that your LLC could need business licenses or permits on the federal, state, and/or local levels and that many licenses are industry-specific.rnrnThe kinds of insurance your LLC needs could depend on many factors. ZenBusiness can help you determine what your business insurance needs are and save you money with a free business owner’s policy insurance quote.
- How do I dissolve my Hawaii LLC?
To dissolve your Hawaii LLC, you will need to submit your Articles of Termination to the Hawaii Department of Commerce and Consumer Affairs, Business Registration Division. The fee for filing is $25.
