Starting an LLC in Hawaii is obviously a way to launch your dream business against the backdrop of a tropical paradise. But did you know that the Aloha state boasts among the highest startup survival rates in the U.S.? Now you have multiple reasons to start a Hawaii LLC.
A limited liability company (LLC) is a business entity type that allows its owners (called “members”) to have the personal limited liability protection of a corporation with the tax benefits and flexibility of a partnership or sole proprietorship.
LLCs bypass many of the structural and reporting requirements of a corporation while protecting the personal assets of the owners in the event the business is sued or goes into debt. LLCs also avoid the “double taxation” of a typical corporation, in which profits are taxed both at the business level and again on the personal level.
But even though setting up an LLC is easier than forming a corporation, it still requires following the right steps and filing the correct paperwork. If you’ve never started a business before, slogging through that red tape can feel like being stuck in traffic on Interstate H-1 at rush hour.
Don’t fret. This article will take you through the steps for how to set up an LLC in Hawaii. Along the way, we’ll show you how our business services can make the process even less stressful.
First, you’ll need to find a name for your LLC and get a registered agent. From there, you’ll be able to file Articles of Organization with the State of Hawaii Department of Commerce and Consumer Affairs (DCCA), Business Registration Division (BREG). Afterward, you’ll probably want to create an operating agreement and get a federal tax identification number.
Note: These are the steps for creating a domestic LLC in Hawaii, meaning one that originates within the state. To create a foreign LLC – one that originated in another state but wants to do business in Hawaii – you would need to file an Application for Certificate of Authority for Foreign Limited Liability Company with the BREG and pay the required fee.
Okay, let’s show you how to open an LLC in Hawaii with the following steps.
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.
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:
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.
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 firstname.lastname@example.org. 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.
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.
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.
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.
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.
Name your LLC
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Next, designate a registered agent for your LLC in Hawaii. This is a requirement for all Hawaii limited liability companies.
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.
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.
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:
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.
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.
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.
For the Articles of Organization, Hawaii requires the following information. Be aware that this information becomes public once submitted:
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.
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.
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.
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.
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.
Here are some of the benefits an OA offers to owners of an LLC:
Here are some basic items you may want to include in your LLC’s OA:
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.
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.
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.
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):
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.
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.
Following all the steps above should make you the proud owner of a new LLC. But there’s still more to know than how to form an LLC in Hawaii. You need to know about things like hiring employees, getting business licenses and permits, getting additional financing if you need it, how to make changes in your business, and how to stay in compliance with the government.
We offer many services beyond just helping you form your LLC. Our business experts can also give you long-term business support to help run and grow your company.
Hawaii has many business opportunities, but, if the paperwork of starting a business feels overwhelming, we can help. Let us take care of the Hawaii formation process, compliance, and more. That way, you can get back to running your dream business, whether it’s an IT firm in Oahu or a shave ice stand in Kailua-Kona.
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.
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The state fees for forming a Hawaiian LLC range from $50 to $125, depending on factors such as whether you choose to reserve your business name. Note that fees change over time, so you should check the Business Registration Division of the Hawaii Department of Commerce and Consumer Affairs website for the most recent filing fee schedule.
Hawaii offers an LLC filing process for broad protection. Free yourself of personal 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 Hawaiian LLC include:
Learn more about the benefits of the LLC business structure.
Hawaii usually processes LLC applications in 7 to 14 business days. Hawaii has options for expediting your filing for an additional fee.
No. While it’s recommended for the safety and security of your business, Hawaii does not require its LLCs to have an operating agreement. It’s an internal document, so you don’t file it with any government agency.
One of the biggest benefits of starting an LLC is that you will only pay federal 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 instead of a corporation.
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 the general excise tax (GET). Hawaii has this instead of a sales tax. The GET is assessed on all business activities. The tax rate is 0.5% for wholesaling, manufacturing, producing, wholesale services, and use tax on imports for resale; 0.15% for insurance commission; and 4% for all others.
In addition, county governments are allowed to add a county surcharge on the state GET at the 4% rate. This surcharge doesn’t apply to activities at the 0.5% and 0.15% rates. The following counties have a county surcharge:
As we mentioned earlier, 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’ll also need to pay self-employment tax to the IRS.
To learn more about your tax obligations, see our Hawaii tax guide for small businesses and consult a qualified tax professional.
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 C corporation or an S corporation. This option sometimes is favorable for large LLCs that bring in high earnings. You can learn more on our S Corp vs. LLC and LLC vs. Corporation pages.
The tax structure that will work best depends on your business needs. Your best option is to speak to a tax professional about what suits your particular circumstances.
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.
You’ll need to make sure your LLC has all the licenses and permits it’s required to have by law. Hawaii doesn’t have a statewide general business license that’s required to do business in the state, but local governments may have one for their jurisdiction. Earlier, we listed some of the tax licenses your business may be required to have.
In addition to these, your business may need a variety of licenses and/or permits. 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 Hawaii business licensing and other licensing 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 of knowing that you have all the licensing your LLC is legally required to have, our business license report service can do the work for you.
Yes. 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). You must pay a fee 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.
Dissolving an LLC requires multiple steps. First, consult your operating agreement so that you can follow the rules established there for dissolving the LLC. You’ll also need to submit your Articles of Termination to the Hawaii Department of Commerce and Consumer Affairs, Business Registration Division. You’ll need to pay a filing fee.
For more on how to dissolve an LLC in Hawaii, visit our Hawaii business dissolution guide.
Transferring all or part of the ownership of an LLC can be a complicated process because, unlike corporations, you can’t simply sell shares. First, consult any established rules for transferring ownership in your operating agreement. From there, you may want to consult an attorney. See our How to Transfer LLC Ownership in Hawaii guide for more information.
Having a business plan in place isn’t a legal requirement. However, it’s an excellent idea to have one. Business plans help entrepreneurs develop strategies to set up new companies for success.
Without a business plan, it might be hard for you to persuade others to invest in or join your business.
Follow the rules for removing a member established in your operating agreement. If you don’t have an operating agreement or you still have questions, consult an attorney.
Yes, but, unlike most states, it’s not legally required for an LLC. Hawaii trade names don’t grant you legal rights to the name.
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