How to Start an LLC in Hawaii (Step-by-Step Guide)

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.

1. Select a name for your Hawaii LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the state of Hawaii:

1. 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.
2. 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.

Need help coming up with a business name? Check out our free business name generator.

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.

Your Hawaii LLC’s Articles of Organization must provide the following details:

• LLC name
• LLC address of the principal office
• Registered agent’s name and address
• LLC organizer’s 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

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.

4. Create 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:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. 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 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.

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.

Understand Hawaii taxes

In Hawaii, small business owners should be prepared to pay income tax, a General Excise Tax, withholding tax, and unemployment tax.

• State income tax rates: When it comes to income tax, Hawaii levies a 1.4-11% tax rate. Depending on your income, you’ll fall into a tax bracket with a percentage associated with it. All taxes are paid online through Hawaii Tax Online.
• General Excise Tax: All companies conducting business in Hawaii must pay the state’s General Excise Tax (GET). The rate you pay is determined by your business activities: 0.15% for insurance commissions, 0.5% for manufacturing and wholesaling, 4% for all other products and services
• Unemployment taxes: If you employ people, you must pay federal taxes, including withholding, which are then sent to the IRS to cover things like Social Security and Medicare. Hawaii employers also pay unemployment taxes. The current tax rate for new businesses is 4% on the first $56,000 of each employee’s wages. Established businesses are then assigned a new rate ranging from 1.7% to 6.2%.

File a BOI report

As of 2024, businesses are required to file a Beneficial Ownership Information Report with the Financial Crimes Enforcement Network. The report asks businesses to provide contact information for all owners and anyone with a controlling interest in the company. The report results from a new law passed by Congress to help authorities combat financial crimes.

Learn more about BOI reporting.

Post LLC tasks

Set up business bank accounts

Your business needs its own bank accounts. Even if your sales are small, keeping your personal and business finances separate is best. Whether you’ve quit a full-time job to launch your business or are still juggling a 9-5 position in Honolulu while getting a company off the ground, you want separate accounts.

By keeping business income and expenses in one account, you:

• Clearly understand what’s coming in and what’s going out.
• Can make informed decisions.
• Identify income and itemize expenses, which aids in tax filing.

If your personal and business finances are co-mingled, you lose the financial clarity that comes from separate accounts.

What you need to open a business bank account: To open a business bank account, you need an EIN. This nine-digit number is issued online by the IRS. Whether brick-and-mortar or online, the bank will ask for this number during the application process. If you plan to apply for a business credit card, you’ll also need an EIN.

If you aren’t sure where to start, consider researching these pro-business banks Found, Relay, and Mercury.

Obtain a Certificate of Good Standing

To show that your business is legally registered with the state and can conduct business, request a Certificate of Good Standing on Hawaii.gov. You may need this certification during certain transactions or while forming partnerships. For instance, a vendor may ask to see it before working with your company. Obtaining this certificate is not mandatory, but it’s a good idea to have it on file. It costs $7.50.

Build a business website

When potential customers hear about your business, one of the first things they do is look at your website. An online presence has become necessary for every business, regardless of size. Fortunately, creating a website has never been easier. With website builders, you can buy domain names and create a site without coding skills.

Get a business website up and running by following these steps:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Use premade templates and drag-and-drop pieces to explain your company’s offerings.
5. Tailor your site to your customers, adding appropriate pages, content, and images.
6. If you’re selling goods, add an e-commerce section to your site.
7. Review, test, and publish your site.

Consider LLC costs

Average cost to start a Hawaii LLC: $65-$265

It’s important for business owners to prepare for the upcoming costs associated with starting a business. While startup funds will vary, here’s a list of expenses to consider:

• Incorporation fees: To establish a business in Hawaii, you must register it with the state. You’ll file Articles of Organization, also known as LLC formation documents. As you submit this paperwork online, you’ll also pay a filing fee of $50.
• Annual Report filing fees: LLCs are responsible for filing an Annual Report with the state as well. While it’s not an immediate fee, you will pay it near your first-year anniversary. The cost is $15.
• Registered agent services fee (optional): Commercial registered agents can serve as your company’s registered agent. By hiring a professional service, you have peace of mind knowing that someone is always available to receive documents on your company’s behalf. If you’d like to hire a registered agent service, expect to pay an annual fee of $50 to $200. Prices vary depending on the services you choose.

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:

1. 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.
2. Appoint a registered agent based in Hawaii.
3. File an Application for Certificate of Authority with the Hawaii Business Registration Division. You can file the articles online or via postal mail. 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.