Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
Step by step, the following will help you get started with a new Hawaiian LLC. LLCs are the most popular business structure because they offer limited liability protection and tax flexibility. LLCs provide a cost-effective alternative to corporations and should be considered for those who want to operate their business flexibly but do not need all of the inflexibility of an S corporation or C corp.
Step 1: Name Your Hawaiian Company
The first step to starting an LLC is choosing a company name. You must follow Hawaii’s naming guidelines during this step. Therefore, you’ll want to double-check that your business name follows guidelines before completing the search.
Be sure to choose a name that complies with requirements set by the state. Then, it should be searched by potential clients. An example of a problematic LLC name to search would be ‘My Business, LLC.’ Try to make your name unique enough that potential customers can find it among the thousands of other businesses online.
Here are some naming guidelines to follow:
- Your company name must include “limited liability company” or one of its abbreviations to register.
- For your LLC, you cannot provide a name that is too similar to any government agency.
- Additional paperwork and a licensed individual, such as a lawyer or doctor, may be required for restricted words (such as an attorney, bank, or university) to be part of your LLC.
Once you understand the basic guidelines, you’ll need to perform a Hawaii business name search.
To find out the availability of a company name in Hawaii, you can use the State of Hawaii’s Business Entity Search. First, type the name you would use, but exclude identifiers like “LLC.” All entities using the same or similar names will be returned.
You can search for just the first two words if your name has more than one word, which will bring up more potential matches.
Once you have found one or two promising names, you’ll want to ensure a corresponding domain name is available before deciding. A relevant web domain name can significantly impact your company because it’s the first thing customers see. Therefore, when selecting a business name, check whether or not the desired web domain name is available for a price you are willing to pay.
Search for your desired domain online using a domain registry, such as GoDaddy, to determine if your desired domain is available.
Next, you will want to reserve your ideal Hawaii LLC name. Hawaii’s Business Registration Division handles LLC naming queries, accepts requests for reserving a business name, and secures it for 120 days.
You’ll need to file your name reservation application with the Hawaiian Business Registration Division if you want to file online. Conduct a comprehensive search before applying to bypass rejection.
You will have to pay a filing fee when you reserve your name. You can pay this fee by check made out to the Hawaii Department of Commerce and Consumer Affairs.
Step 2: Find a Hawaii Registered Agent
The next step to forming your LLC in Hawaii is to find a registered agent.
Registered agents receive legal paperwork on behalf of your LLC, for example, a subpoena or state compliance documents. The registered agent is authorized to do business in Hawaii and must be a resident of Hawaii.
A registered agent service for Hawaii could handle business registration duties for you and alleviate the need for always being available during regular business hours.
Other benefits of using a registered agent include:
- They can receive legal paperwork discreetly.
- They keep your LLC compliant with regulations.
- The freedom to leave the office whenever you want — for meetings, holidays, or sick time.
- You can move your office location without having to update paperwork.
Step 3: Obtain Your Hawaii Business Licenses
You will need to register with the state if you operate a business in Hawaii, but the specific licenses required will depend on how the company will deliver goods or services.
Common registrations include:
- Business Licenses: There’s no general business license in Hawaii. However, many cities have requirements for business licenses.
- Hawaii Tax Identification Number: The Department of Taxation provides a Hawaii Tax Identification Number to those who want to register. This number registers you with many different tax licenses, including the GET license, comparable to sales tax.
- Professional Licensing: some professions require special licensing in Hawaii. While this licensing isn’t on the business, it is a prerequisite to operation. The Department of Commerce and Consumer Affairs, or DCCA’s Professional and Vocational Licensing Division, is responsible for licensing the different professions, such as accountants and contractors.
Step 4: Filing Your Hawaii LLC’s Articles of Incorporation
You can file your Articles of Incorporation online at the official Hawaii government website. You’ll file the Articles using Form DC-1 and will need to include the nonrefundable filing fee. These will all be submitted to the DCCA, Business Registration Division.
Your incorporation date is when you file your Articles of Incorporation as outlined in the Hawaii Business Corporation Act.
Before submitting, double-check that the information is entered correctly and that the form is complete and legible. If you turn in a paper filing, it must be typewritten or printed in black ink. Scanned, faxed, and photocopied documents are accepted if they are legible. Pages must be on standard letter-sized paper, and if the signatures on these copied documents are not readable, you must type them below each signature.
When you’re ready to pay, you can make your check payable to “The Department of Commerce and Consumer Affairs.” Make your check out for the exact amount. The fee for filing your Articles of Incorporation for a Domestic Profit Corporation is $50. If you choose expedited services, an additional $25 fee is required. If you need a certified copy of your filing, that will cost $10 plus $0.25 per page. Additionally, the State Archive fee is $1.
If you’re submitting an email or fax filing, you must include your credit card information. Most major cards are accepted, including Visa and Mastercard. In addition, you can use the Business Registration Division Credit Card Transaction form.
You can send email filings to firstname.lastname@example.org.
You can send fax filings to (808) 586-2733.
Step 5: Drafting a Hawaiian LLC’s Operating Agreement
A standard operating agreement outlines a company’s operation procedures, policies, and other essential things. All decision-making members of the LLC need to agree on decisions unanimously.
The State of Hawaii does not require any business to have the document. However, the LLC members could face personal liability without the document if the company were to face litigation. In addition, the document provides a separation of personal assets from those of the company. Implementation of the document will also provide tax benefits that would typically be unavailable without the form in place.
Review the document to ensure that all members understand it. Then, consult with a knowledgeable attorney if there is any confusion.
Step 6: Choose Your Tax Entity
Taxation is a significant concern when choosing a suitable legal form for your business.
Before deciding, it may be beneficial to speak with a lawyer or business accountant, which can help you to most fully benefit from the tax structure of your LLC, which could pay off in the first year.
Hawaii’s DDCA offers a helpful Guide to Choosing the Right Legal Form For Your Business. Before meeting with your lawyer or accountant, this form is worth reviewing to decide on your tax entity. The document compares ownership, management, liability, taxation, and more.
By default, a single-member LLC is considered a disregarded entity by the IRS, while a multi-member LLC is treated as a partnership.
Step 7: Get Your EIN
You can apply for an Employer Identification Number, or EIN, online via the IRS website.
- First, you should determine your eligibility. If your principal business is located in Hawaii, you will be eligible if you have a valid Taxpayer Identification Number, like a social security number, ITIN, or EIN.
- Then, you should research the online application and get your answers ready. You must complete it in one session; you can’t save it and return to finish it later as the session will time out if you’re inactive for 15 minutes.
- Last, once you have your answers ready, fill out the application and submit it to the IRS. You’ll receive your EIN immediately after submission. Don’t forget to download and save your EIN confirmation letter.
This step is simple enough to complete independently, although some online registration companies may include the service in your package.
Step 8: Remember to File Your Annual Report
A Hawaiian LLC must file an annual report with the Hawaii Department of Commerce and Consumer Affairs, Business Registration Division, or BREG.
Filing your annual report has three simple steps:
- First, you need to determine your LLC’s filing due date and fees.
- Download the proper form or fill in the form online
- Submit your report and pay the filing fee
Your annual report’s due date is determined by the LLC’s date of formation.
Your Filing Due Date is either:
- Mar. 31 — For LLCs formed between Jan. 1 and Mar. 31
- Jun. 30 — For LLCs formed between Apr. 1 and Jun. 30
- Sept. 30 — For LLCs formed between Jul. 1 and Sept. 30
- Dec. 31 — For LLCs formed between Oct. 1 and Dec. 31
Both foreign and domestic LLCs cost $12.50 to file online and $15 by mail.
Visit the Hawaii Business Express – Annual Reports Page and search for your business name to file online. Once you find it, select it and click the button to begin your annual report.
Cost to Start an LLC in Hawaii
It only costs around $50 to start an LLC in Hawaii. However, a lot of work goes into the paperwork and compliance regulations. Therefore, many people choose to pay just a little extra and employ the help of a professional online registration service to take care of the details.
Often, these companies can provide as much or as little help as you like, leaving you to handle whichever aspects of the business you prefer to manage on your own.
What To Do After Forming Your LLC in Hawaii
After you have successfully formed your Hawaiian LLC, you’ll want to make sure you maintain your compliance. You wouldn’t want to lose the privilege of operating in Hawaii.
Besides this, you’ll want to start on your company’s marketing and web presence plan.
Consider implementing things like logos and by-lines. You may decide to take actions like creating a blog and social media sites to reach more customers online. Additionally, you may choose to make online ads and paid marketing events.
How to Keep Your LLC Compliant in Hawaii
Ensure that you do certain things each year on an ongoing basis to maintain your Hawaii LLC’s federal compliance.
Some of these ongoing requirements include:
- Annual Reports: You’ll need to file your annual reports with the Hawaii Department of Taxation before their deadline.
- LLC Taxes: Be sure you stay up-to-date on all your LLC’s tax requirements.
- EIN: If you begin to hire employees, make sure you have an EIN.
Having a professional service agency handling your LLC is convenient to ensure your LLC remains compliant with both federal and Hawaii state regulations.
Tax Filing Requirements for LLCs in Hawaii
Hawaii requires all LLCs to file an annual report. You can file online at BREG’s website or file via mail. You should receive an annual reminder from the state of Hawaii.
Frequently Asked Questions
Here are a few commonly asked questions about Hawaii LLCs:
How long does it take to register an LLC in Hawaii?
If you file online, it can take as little as three to five business days. If you file by mail, it commonly takes one to two weeks. It is possible to expedite your registration for an additional fee.
What tax structure should I choose for an LLC in Hawaii?
If your LLC has several members, the partnership tax status may be suitable. However, if you are the only member, consider the disregarded entity.
Alternatively, you can consider classifying your LLC as either an S Corporation or a C Corporation. These are considered “pass-through” entities, meaning that the LLC income isn’t directly taxed, and taxation is passed through to the owners.
Should you hire an LLC formation service in Hawaii?
While it’s entirely possible to form your LLC without help, many business owners hire an LLC formation service to assist in creating their business. Head over to our top picks for the best LLC services today if you need some suggestions.
Filed under: Hawaii Business Guides