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 The Aloha State.
First, you’ll choose and claim your name. Next, you’ll appoint a registered agent, letting the Hawaii government know who it can contact with legal documents. Finally, it’s time to make your LLC official by filing your Articles of Organization and applying for an EIN, or tax ID number, which can be used for many purposes, such as paying taxes or opening a business checking account.
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. Think comprehensively 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.
You can conduct a business name search using our Hawaii business name search tool 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 a government entity.
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.
When you’re coming up with a business 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.
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. If you decide to move forward with a DBA, we can help simplify the process through our Hawaii DBA service.
To make sure you’re entirely in the clear with your business name, visit the United States Patent and Trademark Office website to see whether your business name or logo is federally trademarked. Trademarks can also happen at the state level. To find out if your desired business name is already trademarked and/or apply for a trademark of your own, go to the Secretary of State website page for trademarks.
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 you’ll be required to always be available during normal business hours. Instead, you may benefit from hiring an outside registered agent service. 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
- 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.
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 handle the filing for you to make sure it’s done quickly and correctly the first time. But, although we can handle this for you, we’ll show you how the process works below.
Your Articles of Organization can be filed online or via mail to:
Department of Commerce and Consumer Affairs
Business Registration Division
P. O. Box 40
Honolulu, Hawaii 96810
Filing will include a fee, and you can pay an additional fee 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.
If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the state approving your new LLC, you’ll want to keep it in a safe location along with your other important documents, such as 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.
By now you’re realizing how often you’ll need to supply an address for your new business. That can be unsettling for some business owners, especially those running their business from home. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy.
With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary.
Step 4: Create an Operating Agreement
It is not required to have a Hawaii Operating Agreement for your LLC; 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 (also referred to as a Federal Tax Identification 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 get your Hawaii LLC’s EIN through the IRS website, by mail, or by fax, but if you’re unfond of dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the hassle.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes more difficult, but it could also be used against you 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 business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, try the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.
Hawaii LLC FAQs
How much does it cost to start an LLC in Hawaii?
The state fees for forming a Hawaii LLC range from $50 to $125, depending on factors such as your method of filing, whether you choose to reserve your business name, etc. Note that fees change over time, so you should check the Secretary of State website for the most recent fee schedule.
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.
Compare ways to file
Let us take care of the unpleasant paperwork, allowing you to stay focused on your business’s future. With our business formation services, you won’t have to worry about mailing in documents: We’ll handle each step with the state, and let you know when your LLC becomes official. Our work is quick and affordable, saving you a lot of headaches at an extremely low price.
What is the processing time to form my Hawaii LLC?
Hawaii processes LLC applications in seven to 14 business days.
Hawaii has options for expediting your filing for an additional fee. If you’re in a hurry to form your LLC and don’t want to jump through the hoops of the state’s expedited filing processes, we can handle it for you with our faster filing speeds service.
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.
How is a Hawaii LLC taxed?
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.If you want to determine your bookkeeping, accounting, and tax needs, check out our Free Accounting Assessment.
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 LLC members 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.
Another 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?
You’ll need to make sure your LLC has all the licenses and permits it’s required to have by law. Unfortunately, because licensing varies by industry and location and can occur on the federal, state, and local levels, there’s no central place to check to see if you have all the licenses and permits you need. You’ll have to do some research.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
When do I file my Hawaii LLC annual report?
Those who file a Hawaii LLC must submit an annual report no later than the last day of the quarter in which you formed your business. For instance, if you filed in February (Q1), you would need to submit your annual report no later than March 31 of that year (the last day of the quarter). There is a fee that must be paid when filing your annual report.
We can help you with your annual report in a couple of ways. Our Hawaii annual report service will help you file your annual report, and our Worry Free Compliance service not only helps with filing your annual report, but also sends you other important compliance reminders and helps you with two amendment filings each year.
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. There is a fee involved to file.