When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Entrepreneurs planning to form an LLC in Hawaii won’t have to deal with any atypical requirements or pay prohibitively high filing fees: the state’s LLC formation process is as standard as you’ll find anywhere in the United States.
To avoid a misstep in the filing process, follow these steps to start an LLC in Hawaii, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Find more information on starting an LLC here.
Starting an LLC in Hawaii step-by-step
1. Select a name for your Hawaii LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of Hawaii:
- Your LLC’s name must be distinguishable from the names of existing businesses that are on file with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division.
- Your LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “L.L.C.”, or “LLC.” The words “Company” and “Limited” may be substituted with the abbreviations “Co.” and “Ltd.”, respectively.
Reserve your LLC name with the Business Registration Division
After selecting a name for your LLC, you may reserve it with the Hawaii Business Registration Division. First, check that the name is available for use in the state by searching the Business Registration Division business name database.
If your chosen LLC name is available, file an Application for Reservation of Name to put a hold on the name until you are ready to file Articles of Organization. Filing can be done online or through the mail. The name reservation fee is $10.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Hawaii requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Hawaii OR if the individual or business is based out-of-state, they must have a business office in Hawaii.
3. File Articles of Organization
An LLC is formed in Hawaii through the filing of Articles of Organization For Limited Liability Company with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division. You can file the articles online or via postal mail. The filing fee is $50 (plus an optional $25 fee for expedited service) and payment can be made by check or credit card.
Your Hawaii LLC’s Articles of Organization must provide the following details:
- LLC name
- LLC address of principal office
- Registered agent’s name and address
- LLC organizers names and addresses
- The LLC’s duration (if temporary)
- A statement that declares whether or not LLC members are liable for company debts
- A statement declaring whether the LLC is member-managed or manager-managed
- The names and addresses of the initial managers or members of the LLC
- LLC organizer’s signature
Foreign LLCs intending to do business in Hawaii
LLCs formed in states other than Hawaii that plan to do business in the state must register with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division.
Follow these steps to legally do business in Hawaii as a foreign LLC:
- Comply with Hawaii LLC naming guidelines and confirm that your name is available for use in Hawaii by checking the Business Registration Division business name database.
- Appoint a registered agent based in Hawaii.
- File an Application for Certificate of Authority with the Hawaii Business Registration Division. The filing fee is $50, or $75 for expedited service. When filing the application, you must include a Certificate of Existence from the state where the LLC was formed. The certificate must be dated from within 60 days of the filing date.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Hawaii, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Hawaii LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
Filing Annual Reports
Hawaii LLCs and foreign LLCs doing business in the state are required to file an Annual Report every year with the state’s Business Registration Division. An annual report is due during the quarter of the year in which the anniversary of the LLC’s formation falls (Example: An LLC formed in May must filed during quarter 2: April, May, or June). Filing can be done online or by submitting a completed Domestic Limited Liability Company Annual Report form through the mail.
The annual report filing fee is $15.
Register with the Hawaii Department of Taxation
Certain Hawaii LLCs–such as those that collect general excise tax or those that have employees–must register with the Hawaii Department of Taxation.
Registration can be done online or by filing a paper application through the mail.
Obtain necessary business licenses and permits
Some LLCs may be required to obtain one or more state or local business licenses, permits, and/or certifications depending on the nature of their business and location.
Check the State of Hawaii’s business information site for detailed info on state-issued business licenses and permits. For information on local licensing and regulations, you may need to contact a local government representative.
Hawaii LLC checklist
A Hawaii LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “L.L.C.”, or “LLC.” The words “Company” and “Limited” may be substituted with the abbreviations “Co.” and “Ltd.”
Required formational documents and filing fees:
- Application for Reservation of Name – $10 reservation fee
- Articles of Organization For Limited Liability Company – $50 filing fee
- An LLC is formed in Hawaii by filing Articles of Organization For Limited Liability Company with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division.
Additional legal obligations:
- File Annual Reports – Required for all LLCs doing business in Hawaii
- Obtain business licenses – Required for certain types of LLCs
- Hawaii DOT registration – Required for certain types of LLCs