You’re a professional, and you’ve been thinking about starting a Hawaii professional corporation (PC). Is that the right type of business entity for you? What do you need to start your business? What about forms, insurance, and taxes?
Rest easy. We’ve got your back. In this guide, we’ll walk you through the things you need to get your business launched with links, tips, and answers to FAQs.
All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you.
A professional corporation is a for-profit corporation that’s established to offer professional services while giving providers a high level of personal liability protection. In Hawaii, professional services include professions that require a license, such as chiropractors, pharmacists, veterinarians, nurses, and others. Alternatively, the state allows professionals to form a standard LLC, which has a more straightforward and generally less stringent setup and management process.
Forming a professional corporation means that you’ll need to decide what ownership will look like (e.g., how many share classes, how many shares). In Hawaii, shareholders of a professional corporation must be licensed members of the profession for which the corporation was formed. There are also a number of management and record keeping requirements that you’ll need to meet.
The name you choose for your professional corporation needs to follow any rules your industry group might have regarding corporate names. It also shouldn’t contain any words that don’t apply to your profession. Lastly, you should ensure that the name isn’t the same as or too similar to an existing business name in the state. For-profit corporations, including PCs, must include the designator “Corporation,” “Incorporated,” “Limited,” or an approved abbreviation.
Once you’ve got a name in mind, use ZenBusiness’s domain name service to find and register the right one for your online presence. Take advantage of our name reservation service to ensure that the stellar business name you chose doesn’t get snapped up by someone else for 120 days. This process can also be completed through the Secretary of State if you prefer.
A registered agent is your business’s official contact for legal documents and other communications from the Secretary of State. Professional corporations in Hawaii are required to appoint a registered agent.
Any individual or business entity that’s allowed to do business and is located in the state can fulfill this role. You can act as your own registered agent, but this means that you always have to be available during business hours, as the law requires. If you want to work where you want, when you want, it’s worth looking into ZenBusiness’s registered agent services.
The Articles of Incorporation, when recognized by the state, brings your corporation into being. This also registers your organization with the state.
An incorporator is the individual who signs and files the Articles of Incorporation. The incorporator doesn’t have to be part of your corporation.
Hawaii requires specific information to be included in the Articles of Incorporation, such as the name and mailing address of your professional corporation, the professional service being provided, and the number and type of shares.
Filings can be submitted online, by mail, or in person. Mail-in forms should be accompanied by a check or money order for the filing fee. Expedited service costs an additional fee. Credit cards are accepted online.
Corporations in Hawaii are required to keep a collection of official documents regarding their corporation. This is known as the corporate record. It’s best practice to keep these corporate records at your professional corporation’s head office or its main place of business.
Your corporate records should include:
The state of Hawaii sets out certain requirements for a professional corporation’s board of directors:
The corporate bylaws contain the rules for how your professional corporation will operate. This can include the purpose of the organization, shareholder rights, how and when meetings should be conducted, and document retention policies.
At the first board meeting, your directors should address any outstanding issues regarding the formation of your professional corporation. These outstanding items may include:
At the federal level, professional corporations must obtain a federal employer identification number (EIN). The IRS uses this nine-digit code to identify every corporation. ZenBusiness can help you apply for one if needed, or you can go through the IRS.
All businesses in Hawaii must have a Hawaii Tax Identification Number (HI Tax ID). You’ll also likely need a General Excise Tax (GET) license. If you plan on having employees, an employer’s withholding tax license is required, too. Your profession and specific business activities may require additional tax licenses, so be sure to check with the Hawaii Department of Taxation or a qualified tax professional.
Regional and/or industry-specific tax obligations may also exist (e.g., property tax). Check with your local government and/or industry authority to be sure you’ve got everything covered.
Hawaii doesn’t have a general business license. Instead, each municipality and profession has its own licensing rules and requirements. The state provides licensing and tax information for new businesses, and it manages a Business Action Center that has additional information about licenses and permits.
We recommend checking with the various government offices and industry-specific bodies to determine which licenses and permits your professional corporation needs. You can also try our business license report service to see all of these requirements at a glance.
If your professional corporation has employees, Hawaii requires that you get coverage for unemployment insurance, temporary disability insurance, and workers’ compensation insurance starting with your first employee.
Although optional, professional corporations should also consider getting general liability insurance as well as professional liability insurance. Commercial property insurance is also a smart idea.
Finally, you may want to purchase professional malpractice insurance to protect against client lawsuits and other legal issues. Your insurance needs will be specific to your professional corporation and its activities. Speak with a qualified insurance agent to determine the right coverage.
As a corporation, it’s crucial to open a business bank account. It ensures that personal and business assets are kept separate, which provides a clear line of separation between owners and the corporation. It also gives your professional corporation added legitimacy, as payments will be processed through your business account.
Each bank has different rules, but you’ll likely need your Hawaii Tax ID, EIN, certified ownership information, and Articles of Incorporation to open a business account.
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
Fees change over time, so check the Hawaii Secretary of State website for the most recent fee schedule. Fees are payable by cash, check, or credit card depending on the filing method (in person, online, or by mail). Checks or money orders should be payable to the Department of Commerce and Consumer Affairs.
No, you don’t need a lawyer, but you may want to have one review certain documents, such as your corporate bylaws. You may also want to speak with a lawyer if your corporation’s structure is complicated or you need personalized advice.
No, Hawaii doesn’t have any other professional business entity types. However, licensed professionals are allowed to form a limited liability company and various types of partnerships.
In general, a professional corporation can only represent professionals from a single profession. The one exception is if two or more professions are allowed to be combined according to their licensing rules or Hawaii laws. This typically applies to related professions, such as engineering and architecture.
Disclaimer: The content on this page is for information 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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