To form a Limited Liability Company in Hawaii, you will have to file the Articles of Organization with the State of Hawaii, Business Registration Division. Articles of Organization filing fee is $50, but there is a mandatory $1 State Archive fee for each document filed with the state. You’ll also pay an additional $2.50 if you file online.
In Hawaii, the Limited Liability Company (LLC) is a popular business entity choice structure for many businesses just starting. Note that this business structure provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Hawaii without an attorney.
Also, unlike the sole proprietorship or partnership business structures where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.
But aside the liability protection, the Limited Liability Company offers several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration and management flexibility.
How to File an LLC in Hawaii
The steps for filing online or by mail are largely the same. To get started, register with the Hawaii DCCA Business Registration Division. Alternatively, you can download the Hawaii Articles of Organization (Form LLC-1) and file by mail. Here are the steps you need to take to form an LLC in Hawaii;
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Pick the name you want for the LLC
Note that any name you choose will have to differ from other entity names in the state of Hawaii. The name of the LLC must include one of the following designators at the end of the business name: Limited Liability Company, Limited Liability Co., Ltd. Liability Company, L.L.C., and LLC etc. A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable. Also, before finalizing a name, you may also want to see if a domain name is also available to have a matching website address.
To have an LLC in Hawaii, a Registered Agent must be identified. The Registered Agent is either a resident of Hawaii (select Individual under Agent Type) or registered agent services (select Entity under Agent Type and enter their state of incorporation from the State drop-down menu).
Life moves slowly in Hawaii. While the slower pace of life is one of the most fantastic things about the 808, it can indeed be one of the most difficult—especially if you’re running a business. Sitting for hours in crawling traffic isn’t funny one bit. Waiting for shipping to finally arrive isn’t easy. Sitting behind a desk from 9-5 with the beach just out the door isn’t easy. So you can let a Registered Agent do the sitting and waiting, the worrying and hurrying.
File your Article of Organization
A Hawaii LLC is formed by filing Articles of Organization For Limited Liability Company with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division. However, you will need an Organizer to file this document in Hawaii. The LLC Organizer is someone who is involved with the formation of the Articles of Organization. The Organizer may or may not be a member, such as a mentor, attorney or accountant, but the initial members could be listed as an Organizer. Your articles must include:
- The LLC’s name
- The LLC’s address
- The name and address of the LLC’s registered agent
- The names and addresses of all the LLC’s organizers
- The duration of the LLC if not perpetual
- A statement whether the LLC will be managed by members or managers
- The names and addresses of the initial managers if the LLC is Manager-managed, or the initial members if the LLC Member-managed.
- A statement whether the LLC’s members are to be liable for the company’s debts and obligations, and
- Signature of the LLC’s organizer.
Prepare an Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed and more. Agreeably, most states do not mandate an LLC to have an operating agreement but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit
- Member’s personal liability protection may be diminished
- Members may not have a full understanding of their roles and responsibilities which could lead to costly disputes in the future
Fulfill Other Tax and Regulatory Requirements
Additional tax and regulatory requirements may apply to your LLC. These may include:
Obtain an EIN: The EIN or Employer Identification Number is a unique 9-digit number for a business. Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be required in order to open a bank account, register for business licenses and permits, file tax returns, and pay payroll taxes and more.
Open an LLC Bank Account: Opening a bank account for your LLC is imperative for liability protection as the account separates the business’s funds from the member’s personal funds.
Apply for Business Licenses and Permits
In addition, depending on what your business does and where it is located, there will likely be a variety of business licenses and permits to register for before starting. Some common registrations include:
- Business License – Some counties in Hawaii expect businesses to obtain licensing before they can start. In some cases, even home-based businesses must have licensing in order to legally operate.
- Professional License – Certain services such as barbershops, accountants, salons and others must be licensed.
- General Excise Tax License – In order to sell products and certain services, registration with the Hawaii Department of Commerce and Consumer Affairs will be necessary.
File Annual Reports
LLCs are required to file an annual report with the Hawaii Department of Commerce and Consumer Affairs and pay a $15 filing fee. The report may be filed online or you may print out the Domestic Limited Liability Company Annual Report form (Form C5) and file by mail.
The state will send an annual report reminder to your LLC. The annual report is due during the calendar quarter of the anniversary month of your LLC’s formation. For example, if your LLC was formed on October 21, then your report would be due each subsequent year between October 1 and—at the latest—December 31.
Forming an LLC in Hawaii is something most people can do on their own, but it’s nice to have some support in case you have questions or get stuck. The LLC filing fee for standard processing is $51. Approval for the LLC typically takes 1-2 weeks. Expedited processing is available which shortens the approval process to 2-3 business days and is an additional $25.