How to Start an LLC in Hawaii (Step-by-Step Guide)
If you want to start an LLC in Hawaii, you are choosing a well-suited structure for island businesses.
The state has relatively low filing fees and simple requirements, which means you won’t be bogged down by red tape.
To start an LLC in Hawaii, you must choose a name, select a registered agent, file the Articles of Organization, file tax identification numbers, and file an annual report.
Forming your LLC in Hawaii costs $50 and takes about ten days.
This guide details everything you need to set up an LLC in Hawaii.
What Are the Steps to Start an LLC in Hawaii?
To start an LLC in Hawaii, you need to:
- Step 1. Choose and search for a unique name
- Step 2. Designate a registered agent in Hawaii
- Step 3. File Articles of Organization with the state
- Step 4. Create an Operating Agreement
- Step 5. Get an EIN from the IRS
- Step 6. Register for a Hawaii Tax Identification Number
- Step 7. File annual reports
Let us dive more in-depth into these steps so I can show you how to get them:
Step 1: Choose a Name for your Hawaii LLC
The first step is choosing a name for your Hawaii LLC. The name must meet specific state requirements and be unique from all other businesses and trademarks in Hawaii.
Your name must include “limited liability company” or “LLC.” You can abbreviate “limited” to “Ltd.” and “company” to “Co.” LLC can be punctuated or shortened to LC.
To avoid confusion, your name should not be similar to the names of federal or state agencies, such as the FBI or the Department of Health. Words like doctor, attorney, accountant, bank, and insurance are off-limits unless the business meets the necessary credentialing requirements.
You can check if your preferred name is available by searching on the Hawaii Business Express website.
If you find a name you like, consider reserving it. You can do this by filing an application for a reservation of name and paying the $10 filing fee. Checks can be made payable to the Department of Commerce and Consumer Affairs.
The reservation lasts 120 days, giving you time to set up your LLC.
Look into trademarking your LLC name for added protection. You can do this through the DCCA, too. Depending on your expansion plans, state and federal trademark registration options exist.
You don’t have to operate under your formal LLC name; instead, you can use a “DBA” or “trade” name as a business alias. To secure this trade name, submit an application for registration of trade name with the state and pay the $50 fee. Remember that ownership rights to the trade name are granted only through its actual use.
Step 2: Choose a Hawaii Registered Agent
A Hawaii Registered Agent is a crucial part of your LLC. This person or company will accept legal documents and state notices for your business.
Who Can Be a Registered Agent?
You have a few options for who can be your Registered Agent in Hawaii:
- You: You can act as your registered agent, but remember you must be available during business hours to receive documents.
- A Family Member: A trusted family member can be your registered agent.
- An LLC Formation Service: Professional services offer expertise in handling official correspondence and ensuring compliance with state regulations.
- A Lawyer: A legal service firm can also serve as your registered agent, providing additional legal support if needed.
Requirements for Hawaii Registered Agents
Hawaii law requires registered agents to have a physical street address, not just a P.O. Box. The address must be where the agent can consistently receive legal documents and official mail during regular business hours.
Additionally, the registered agent must be at least 18 years old and available to accept service of process. This means they must be present to handle any legal notices or court documents delivered to the LLC.
Your registered agent’s name and address will be listed on public records for everyone to see. If you don’t have an address in Hawaii or want more privacy, I recommend hiring a Registered Agent Service for your LLC.
What registered agents do I recommend for Hawaii?
I highly recommend Northwest registered agent services for obvious reasons.
They offer a range of benefits that set them apart, including a free year of registered agent service, which helps you save (about $300) on initial costs.
You’ll receive a complimentary operating agreement essential for outlining your LLC’s internal structure. My favorite part? Northwest also allows you to use their office address for your LLC filing, keeping your address off public records and enhancing your privacy.
Their free email forwarding service ensures you stay on top of important correspondence, and their exceptional customer support is always available to assist you whenever needed.
Step 3: Prepare and File your Hawaii LLC Articles of Organization
You must file the Articles of Organization to officially form your LLC in Hawaii. This document is a formal request to establish your business with the state.
The Articles of Organization is the most crucial document that officially registers your LLC with the state of Hawaii. This form includes essential details such as your LLC’s name, address, registered agent, and members’ or managers’ names.
To file your Articles of Organization in Hawaii, follow these steps:
Step #1. Complete the Form: Obtain and complete the Articles of Organization (Form LLC-1) from the Hawaii DCCA website.
Include the following:
- Exact LLC name
- The mailing address of your LLC
- Registered agent name and street address
- Name and address of each LLC organizer
- Whether the duration of your LLC is fixed or unspecified
- Whether your LLC is managed by the members or by designated managers
- Name and address of members (if member-managed) or managers (if manager-managed); if manager-managed, also state the number of initial members
If you want to form a foreign LLC in Hawaii, fill out the Certificate of Authority with the Hawaii Department of Commerce and Consumer Affairs and obtain a certificate of good standing from the initial filing state.
Step #2: File Online or by Mail: You can file your Articles of Organization online through the Hawaii Business Express website or by mailing the completed form to:
Department of Commerce and Consumer Affairs, Business Registration Division
335 Merchant St.,
Honolulu, HI 96810
Step #3: Pay the Filing Fee: The filing fee is $50. You can pay the fee by credit card when you file online. If you file by mail, include a check made out to the Department of Commerce and Consumer Affairs, written out for the exact amount due.
Make sure your form is completed clearly, whether you type it or use black ink if you submit it on paper. After filing, you’ll receive a confirmation certificate, finalizing the formation of your LLC.
Step 4: Prepare Your Hawaii LLC Operating Agreement
An Operating Agreement is a crucial document for your Hawaii LLC. While it’s not legally required, it’s highly recommended. This internal document outlines how your LLC will be managed and owned.
Here are some key components to include in your operating agreement if you choose to prepare one:
- Ownership Structure: Listing all members and their ownership percentages.
- Management Roles: Specify who will manage the LLC. This can be member-managed or manager-managed.
- Voting Rights: Define how decisions will be made. Will all members have equal votes?
- Profit Distribution: Explain how profits and losses will be shared among members.
- Meeting Procedures: Outline how often meetings will occur and how members will be notified.
- Amendment Process: Describe how changes can be made to the agreement in the future.
Drafting an Operating Agreement helps ensure your Hawaii LLC is well-organized and prepared for the future.
It serves as your LLC’s rulebook, guiding operations and avoiding conflicts down the line. Keeping everyone on the same page is even more vital if you have partners.
Step 5: Obtain EIN for Your LLC
The next step in running your Hawaii LLC is to get an EIN, which stands for Employer Identification Number. An Employer Identification Number (EIN) is a unique nine-digit number the IRS assigns. It identifies your business for tax purposes.
You will need an EIN to open a bank account, hire employees, file taxes, and apply for business licenses and permits.
How to Apply for an EIN:
- Online: Visit the IRS website. This is the fastest way to get your EIN.
- By Mail: Fill out Form SS-4 and send it to the IRS. This option takes longer.
- By Fax: You can also fax the completed Form SS-4.
- Phone: U.S. residents can call the IRS at 1-800-829-4933 to apply.
How Much Does It Cost To Get EIN?
Obtaining an EIN is free. However, some services charge $100 or more to help you with the entire process.
How Does it Take to Obtain my EIN?
- Online: Get it immediately.
- By Mail: Expect 4 to 6 weeks.
- By Fax: Usually within four business days.
Step 6: Register for a Hawaii Tax Identification Number
The state requires all LLCs to obtain a tax ID number by filing Form BB-1. This form also registers your business for a General Excise Tax (GET) license, a mandatory tax for companies in Hawaii instead of a traditional sales tax.
You can simultaneously apply for your Tax ID and GET license through the Hawaii Department of Taxation, ensuring your business meets all state requirements.
You can obtain your Hawaii Tax ID Number online through Hawaii Business Express or by mailing the completed form to the state. The registration fee starts at $20, though it may vary depending on your business location and activities.
A State Tax ID is necessary to pay the annual General Excise Tax and fulfill local compliance requirements. The amount of GET owed depends on your specific business type and activities.
The GET typically ranges from 4% to 4.5%, depending on the nature of your business, and the filing fee for the GET license is $20.
Step 7: File Your Hawaii LLC Annual Report
Your Hawaii LLC must submit an Annual Report every year. This report helps maintain your business in good standing with the state.
The filing fee is $15 (print) or $12.50 (online).
The reports contain the following information:
- Company name and mailing address (including any changes)
- Principal office address (including any changes)
- Nature of business (optional)
- Name and address of the registered agent
- Whether the company is member-managed or manager-managed (if manager-managed, include the total number of members)
- Title, name, and address of managers or members
The due date for filing depends on what day of the year your LLC becomes effective:
- For LLCs created between January 1 and March 31, annual reports for the year ending January 1 are due March 31.
- For LLCs created between April 1 and June 30, annual reports are due June 30.
- For LLCs created between July 1 and September 30, reports are due September 30.
- For LLCs created between October 1 and December 31, reports are due December 31.
Setting a calendar reminder is wise so you don’t miss the due date. Failure to file can result in penalties or the loss of your LLC’s good standing.
Stay organized and ensure your Annual Report is filed on time every year. This will help keep your LLC running smoothly and complying with state regulations.
Your LLC could face automatic dissolution if you neglect to submit the required forms to the government. While reinstatement is possible, it will come with additional costs. To avoid this, stay on top of your annual filing deadlines.
What are the Different Methods To Start a Hawaii LLC?
You can choose from several methods to start your LLC in Hawaii. Each method has its advantages and disadvantages, depending on your business needs. Below are the three main ways to form an LLC in Hawaii.
DIY LLC Formation in Hawaii
Starting an LLC can save you money and give you complete control over the process. You must file the Articles of Organization with the state and pay the necessary fees.
All by yourself, no third party!
Pros:
- Cost-Effective: You save money by not hiring anyone.
- Control: You have complete oversight of each step.
- Learning Opportunity: You gain knowledge about the process.
Cons:
- Time-Consuming: It may take longer if you are unfamiliar with the process.
- Complexity: You must ensure all forms are correctly filled out.
- Privacy issue: If you serve as your registered agent, you risk having your address out there.
- Lack of Guidance: You might miss the necessary steps.
Using a Professional/Online LLC Formation Services
Many online services can help you form your LLC. These platforms guide you through the entire process, handling most paperwork.
Pros:
- Convenient: They manage the filing, saving you time.
- User-Friendly: Most platforms have easy-to-understand instructions.
- Support Available: Many offer customer service for questions.
- Privacy benefits: Most services allow you to use their address for free, so your address doesn’t get compromised
Cons:
- Costs: You’ll pay a service fee.
- Variable Quality: Some services may not be as reliable as others.
Hiring an Attorney
Working with an attorney is another option for forming your LLC. This method ensures you have professional legal guidance throughout the process.
Pros:
- Expertise: An attorney knows the legal requirements and can avoid pitfalls.
- Customization: Your LLC can be tailored to your specific business needs.
- Support with Complex Situations: Ideal for businesses with unique circumstances.
Cons:
- Higher Costs: Legal fees can be expensive.
- Dependence on Others: You may rely heavily on the attorney’s schedule.
- Potential Delays: The process may take longer due to attorney workloads.
What is The Cheapest Alternative Way to Form an LLC in Hawaii?
If you want to start an LLC in Hawaii on a budget, the most affordable option is to do it online. By filing the Articles of Organization directly with the DDCA, you can keep costs between $100 and $150, depending on your needs.
This DIY approach helps you avoid the extra fees of hiring a service or lawyer, saving you money for other business expenses.
However, while DIY is cost-effective, it requires some effort. You’ll need to understand all the forms and regulations, and missing a detail could delay your application or create problems later.
Consider using a registered agent if you prefer not to handle everything yourself.
They can make the process smoother by ensuring you receive important documents and helping you stay compliant with state requirements. Although this adds a bit to the cost, it can provide valuable support and peace of mind.
Who Provides the Best LLC Services in Hawaii?
There are a myriad of Hawaii LLC services from which to choose. Choosing the wrong one can affect your Hawaii LLC formation timeline—I know this from my experience using a few and researching a dozen over the years.
Here are some top-rated options you should consider:
| Best Hawaii LLC Service | Google Rating | LLC Formation Cost | Registered Agent Fee |
|---|---|---|---|
| Northwest Registered Agent | 4.7/5 | $39 | Free for 1 year |
| Doola | 4.6/5 | $0 (plus state fees) | $297/year |
| Tailor Brands | 4.4/5 | $0 (plus state fees) | $199/year |
| ZenBusiness | N/A | $0 (plus state fees) | $199/year |
Besides, the fact that other services bill you for their registered agent in the first year, and Northwest offers it for free, is a HUGE plus for me.
Northwest Registered Agent stands out in Hawaii LLC formation due to its commitment to transparency, customer service, and privacy. Using their address helps protect your personal information, making them a reliable choice.
How Much Does It Cost To Form an LLC in Hawaii?
The cost to form an LLC in Hawaii is $70. That is $50 to file the Articles of Organization and $20 to get a GET license. However, there are other fees you need to be aware of.
Here’s a breakdown of what you can expect to pay:
| Requirement | Cost |
|---|---|
| LLC Formation Fee | $50 |
| Name reservation | $10 |
| GET License | $20 |
| Annual Report | $15 (in-person), $12.50 (online) |
| LLC formation service | $39 (via Northwest) |
| Registered Agent Fee | $0 (via Northwest) |
| Total Estimated Initial Cost | $95 – $135 |
When forming a new company in Hawaii, budgeting about $95-$135 for the first year is ideal. Then, if you want to go further, you can get other bells and whistles like a virtual mailbox, custom website, trademark services, premium EIN services, etc.
The most significant (and essential) expense for every Hawaii business owner is filing the Articles of Organization, which costs $50.
You can budget to form and maintain your LLC in Hawaii by keeping track of these costs.
Pros and Cons of Forming an LLC in Hawaii
Hawaii LLC Pros
Hawaii LLC Cons
6 Important Things To Do After Forming Your Hawaii LLC
After forming your LLC in Hawaii, there are several essential steps to ensure your business runs smoothly. Completing these tasks will help you stay compliant with state regulations and set a solid foundation for your business.
1. Research the Best Licenses and Permits for Your Business
Depending on your business type, you may need specific licenses or permits to operate legally in Hawaii. The Hawaii Department of Commerce and Consumer Affairs (DCCA) provides a helpful resource for business licensing.
Some standard permits include:
- General Business License: Required for most businesses.
- Health Permits: Necessary for food-related industries.
- Professional Licenses: Required for certain professions like contractors and real estate agents.
Check local city or county requirements as well. Obtaining the proper licenses can help you avoid fines and legal issues.
2. Create Business Accounts for Your Hawaii LLC
Separate your personal and business finances. Open a business bank account to track your LLC’s income and expenses. This step is crucial for maintaining liability protection and simplifying tax filings.
You will typically need:
- EIN (Employer Identification Number): This is necessary for tax purposes and to open a business bank account.
- Business Registration Documents: Bring your Articles of Organization to the bank.
Consider also getting a business credit card. This can help you manage expenses and build business credit over time.
3. Understanding Hawaii Tax Requirements and Managing Your Taxes
Your LLC must comply with various tax obligations in Hawaii. First, ensure you have an EIN, essential for tax filings and hiring employees.
Hawaii doesn’t have a statewide sales tax but instead imposes a general excise and use tax (GET), which is broader in scope and applies to nearly all business activities. This includes products, services, commissions, rental incomes, and more.
The statewide GET is generally 4%, with a reduced rate of 0.5% for wholesale transactions.
Additionally, Oahu has a 0.5% surcharge on non-wholesale transactions to support the city’s mass transit system. There is no federal equivalent of this general excise or sales tax.
Consider consulting with an accountant for tailored advice and to optimize your tax strategy. They can help ensure you meet all requirements and take advantage of available tax benefits.
4. File Your Annual Report
Hawaii requires LLCs to file an Annual Report each year. This report updates or confirms your business information with the state, ensuring your LLC stays in good standing.
All Hawaii LLCs must file an annual report and pay a $12.50 fee. A late fee is assessed if the yearly filing is not completed on time, and failing to make an annual report for two years in a row can result in automatic dissolution.
The annual report is filed through Hawaii Business Express’s Annual Business Reports page. When submitting it, you can pay with a credit card.
Filing on time helps avoid late fees and penalties. You can file online, which is quicker and more convenient.
5. Get Business Insurance for Your LLC
Protecting your LLC with the right insurance is essential for safeguarding your assets. Common types of business insurance include:
- General Liability Insurance: This protects against claims of injury or property damage.
- Professional Liability Insurance: Important for businesses providing professional services, covering mistakes and legal claims.
- Workers’ Compensation Insurance: Required if you have employees to cover job-related injuries.
Consult with an insurance agent who understands the needs of small businesses in Hawaii to find the best coverage for your LLC.
Consult with an insurance agent to tailor your coverage. This investment can save you from significant out-of-pocket expenses in case of a claim.
6. Setup Your Business Online Presence (optional)
Having an online presence can help attract customers and grow your business. Start by creating a professional website about your products or services. You can also consider creating social media profiles.
Consider using social media to engage your audience. Platforms like Facebook, Instagram, and LinkedIn can enhance your visibility.
Hawaii LLC vs. S Corp vs. Partnerships vs. Sole Proprietorship vs. Corporations
When starting a business in Hawaii, it’s essential to understand different structures, such as LLCs, S Corps, partnerships, sole proprietorships, and corporations. Each one has unique features.
Limited Liability Company (LLC)
An LLC offers limited liability protection, meaning your assets are safe from business debts. Imagine it as a protective umbrella that covers you from the rain of financial troubles. This structure is flexible and easier to manage than other types.
S Corporation
An S corporation allows income to pass through to owners’ tax returns, avoiding double taxation. Think of it like sharing a pizza; the profits are shared among members without extra slices going to the taxman. It has stricter requirements and rules than an LLC.
Partnership
A partnership involves two or more people running a business together. You and your partner are like a team in a relay race, sharing responsibilities and profits. However, you might be liable for business debts if things go wrong.
Sole Proprietorship
The simplest structure, a sole proprietorship, means you run the business alone. It’s like being the captain of a small boat; you make all the decisions but are also entirely responsible for any issues.
Corporation
A corporation is a separate legal entity that limits personal liability. Picture it as a big ship with many crew members. It’s complex and has strict rules but provides strong protection against personal risk.
My Final Thoughts: Forming an LLC in Hawaii
Starting an LLC in Hawaii involves several essential steps:
- Choose a distinct name for your LLC and search for its availability on search records
- Designate a registered agent to handle legal documents.
- File Articles of Organization with the Hawaii DCCA
- Create an operating agreement to outline ownership and management
- Get an EIN from the IRS
- File for a GET license
- File an annual report.
Budgeting is important. The cost to file your LLC in Hawaii is typically around $50. Additionally, you must pay an annual fee of approximately $15 to keep your LLC active.
Following these steps and understanding the costs will help you successfully set up your business in Hawaii. Take your time to ensure you meet all regulations, as these steps lay a solid foundation for your LLC’s future. This process is vital to protecting your assets while running your business.
Learn More About Starting an LLC in Hawaii
If you need additional help to start an LLC in Hawaii, check out these valuable resources:
Frequently Asked Questions
How long does it take to get a Hawaii LLC, and can it be expedited?
Your LLC registration in Hawaii is typically processed in 7 to 10 business days. If you need your LLC faster, you can request expedited processing for an additional fee, which can shorten the time to just a few days.
What if I already have an LLC in a different state from Hawaii?
You can still form an LLC in Hawaii even if you have one in another state. If you have an LLC registered in another state, you can either register it as a foreign LLC in Hawaii or dissolve it and create a new Hawaii LLC.
Can You Form an LLC For Free in Hawaii?
Unfortunately, you cannot form an LLC in Hawaii for free. You must pay the required filing fees necessary for the registration process.
Can I form an LLC in Hawaii without a lawyer?
Yes, you can form an LLC in Hawaii without hiring a lawyer, saving you money. However, having a registered agent with an address in Hawaii would be best for handling legal documents.
What is the process for registering an LLC in Hawaii online?
To register an LLC online, visit the Northwest Registered Agent website. Their step-by-step filing procedure guides you through the process quickly.
Can I change my registered agent in Hawaii?
Yes, you can change your registered agent in Hawaii at any time. You must file the proper forms with the state to make the change officially.
How do I change my Hawaii LLC’s name?
To change the name of your LLC, you must file an amendment with the Hawaii Department of Commerce and Consumer Affairs. Include the new name and pay the associated fee.
How do I renew my Hawaii LLC?
You must file an annual report to keep your LLC in good standing. This report can be submitted online along with the renewal fee.
How do I dissolve an LLC in Hawaii?
You must file a dissolution form with the state to dissolve an LLC in Hawaii. Ensure all debts are settled before proceeding with dissolution.
How do I add a member to a Hawaii LLC?
You should update your operating agreement to reflect the new member’s information so that you can add a member. Include any necessary amendments and notify the state if required.
How do I add a DBA to an LLC in Hawaii?
To add a “Doing Business As” (DBA) designation, file for a trade name with the Hawaii Department of Commerce and Consumer Affairs. This usually involves completing a simple application and paying the fee.
Can a minor own an LLC in Hawaii?
Yes, a minor can own an LLC in Hawaii, but they may need an adult to manage it. It’s important to check local laws for any specific requirements.
What is the Cost of the Hawaii Annual Report?
Filing the Hawaii annual report costs $15 (print) or $12.50 (online). This is required to maintain your LLC’s active status.
Does LLC expire in Hawaii?
An LLC does not expire as long as you file your annual reports and pay any necessary fees. Failing to do so can lead to dissolution.
Can a non-resident open an LLC in Hawaii?
Yes, a non-resident can open an LLC in Hawaii. However, you will need a registered agent located in Hawaii to handle official correspondence.
Can I buy a house or car with my LLC in Hawaii?
Yes, your LLC can purchase a house or a car. However, ensure that the asset purchase aligns with the purpose of your LLC.
Can you have multiple businesses under one LLC in Hawaii?
Yes, you can operate multiple businesses under one LLC. To differentiate them, you may consider setting up DBAs for each business.
Is Hawaii an excellent state in which to form an LLC? Is it worth it?
Depending on your business goals, Hawaii can be a good state for forming an LLC. Consider factors like taxation and local regulations to determine if it is worth it.
Can one person form an LLC in Hawaii?
Yes, one person can form an LLC in Hawaii. This is known as a single-member LLC, allowing complete control over the business.
Disclosure: We may earn commissions if you buy via links on our website. Commissions don’t affect our opinions or evaluations. We’re also an independent affiliate of many platforms, including ClickFunnels, Kartra, GoHighLevel, Podia, Northwest Registered Agent, and others. We’re not employees of these services. We receive referral payments from them, and the opinions expressed here are our own and are not official statements of these companies.
