How to Form an LLC in Hawaii in 7 Steps
Forming a limited liability company (LLC) in Hawaii involves many steps including naming your LLC, appointing a registered agent, filing articles of organization, creating an operating agreement, applying for an EIN, and setting up business and tax accounts.
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A limited liability company (LLC) is a business entity that many small businesses choose as a way to organize themselves when they are just getting started. An LLC is a great option for business owners looking to grow a small business and provide liability protection for their personal assets. If you have decided to form an LLC in Hawaii, here is a step-by-step guide for how to create a fully operational Hawaii LLC.
7 Steps to Form an LLC in Hawaii
Name Your LLC
Creating a legally proper Hawaii LLC name and then protecting it is one of the first actions in LLC formation. This is a process that can be complex and time-consuming but is essential for the LLC to operate legally in Hawaii.
The first thing you have to do is create a great name. Hawaiian law HRS §428-105 requires that the business name be unique and different from any other company’s name. You should do a name search on the Hawaii Business Registration Division’s business name availability search page to make sure that your chosen name isn’t already in use for an existing business.
This search is just a preliminary step to the state filing. You still need to go through the registration process to get your name approved by the state. Under HRS §428-105, the name you use to register must contain “Limited Liability Company” or one of these abbreviations:
- L.L.C.
- LLC
The name of the LLC cannot use any variation of the word “corporation.” It cannot use language considered obscene or that claims a profession or business affiliation that does not exist.
Under HRS §428-106, Hawaii also allows you to reserve your business name through the Hawaii Business Express website for 120 days while the formation process is going forward. Reserving a name is not a guarantee that your name will be approved but prevents anyone else from using it for that time.
Get a Registered Agent
The State of Hawaii, under HRS §428-107, requires an LLC to have a registered agent for service of process before formally filing with the state. A registered agent is designated to receive process (legal documents) on behalf of the LLC. A Hawaii registered agent can be an individual or a company (domestic or foreign), but it must have a physical street address in Hawaii. New LLCs often choose to use a professional registered agent service.
File Your Articles of Organization
To register your new business in the state of Hawaii, you must file Articles of Organization for Limited Liability Company (Form LLC-1) with the Hawaii Consumer Affairs Business Registration Division (BREG). You can sign up for an eHawaii.gov account and file and get information through the Hawaii Business Express website. You can also file by mail or in person.
Articles must be typewritten or printed in legible black ink. If you need additional space, use an attachment that is typewritten or printed in black ink on 8-1/2 x 11 white bond paper, printed only on one side. The articles must be signed in black ink and certified by at least one organizer of the company.
Per HRS §428-203, your Hawaii articles of organization must contain the following information:
- LLC name and mailing address
- Name and physical address of the registered agent
- Organizer name
- Additional members and their addresses
- Organizer signature(s)
The filing fee is $50 ($25 additional fee for expedited service). For mail or walk-in filings, payment by check or credit card is accepted. Checks should be made payable to the Department of Commerce and Consumer Affairs.
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Draft an Operating Agreement
Although not required under Hawaii law, you should consider preparing an LLC operating agreement for your new business. This is not required under Hawaii law, but it is a good idea to keep everybody’s interests clear.
An operating agreement can come in handy in the event of a dispute between members. An operating agreement typically includes the following points:
- Percentage of members’ ownership
- Voting rights and responsibilities
- Powers and duties of members and managers
- Distribution of profits and losses
- Holding meetings
- Procedures for transferring interests
Get an EIN
You must apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) if your LLC will have employees or has more than one member. You can apply online through the IRS website. An EIN is similar to a Social Security number but assigned to businesses. You will be subject to all federal tax withholding rules.
Set Up Business and Tax Accounts
Your Hawaii LLC may need to apply for tax licenses from the Department of Taxation and register as an employer with the Department of Labor and Industrial Relations. You can register your LLC with Hawaii Tax Online to get a State Tax Identification Number (BB-1), file tax returns, make payments, and manage your accounts. You can check with Hawaii’s Professional & Vocational Licensing Division (PVL) to find out if you need specific professional or vocational licenses to operate. You should also contact the county government where your LLC is located for information on special local permits and licenses that may be required.
Check for Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
Business and Tax Requirements in Hawaii
LLCs in Hawaii are subject to specific business and tax requirements. To ensure your LLC’s compliance with these requirements, be sure to familiarize yourself with the state’s taxes, licenses, and permits.
State Business Tax
Businesses operating in Hawaii are required to register with the Hawaii Department of Taxation to obtain state licenses, permits, certificates, registrations, and exemptions.
State Employer Tax
If your LLC has employees, you need to withhold state income taxes on employee wages for services performed in Hawaii. For services performed outside of Hawaii, employers withhold if:
- Services are performed by an employee whose regular place of employment is in Hawaii
- Wages are paid out of an office in Hawaii or a field office of an LLC whose head office is in Hawaii
Sales and Use Taxes
Your LLC is subject to Hawaii’s general excise tax if it receives income from conducting the following business activities in the state:
- Wholesaling
- Retailing
- Farming
- Services
- Construction/contracting
- Rental of personal or real property
- Business interest income
- Royalties
Business Licenses and Permits
Your LLC may be required to obtain certain federal, state, and local business licenses and permits depending on the type of business it conducts. A table summarizing the types of business licenses in Hawaii can be found on the Tax Department’s website.
You should complete and submit the State of Hawaii’s Basic Business Application to obtain a tax license for your LLC. Once received, you should display your tax license at your place of business.
Check with Hawaii’s Professional and Vocational Licensing Division to confirm licensing requirements if you plan on providing a professional service. There are also local licenses and permits that you may need to get from the city or county government where your LLC is located.
Registration in Other States
If you want to do business in another state, you will likely have to apply to do business as a foreign LLC. You may need to show a certificate of good standing as part of the application process or provide some other proof of your LLC’s valid existence and compliance with Hawaii law.
Annual Filing Requirements in Hawaii
Each year your Hawaii LLC is active in Hawaii, you must file an annual report with the Department of Commerce and Consumer Affairs, Business Registration Division. The date your annual report is due depends on the date your LLC was organized as follows:
- Between January 1 and March 31, on or before March 31 of each year
- Between April 1 and June 30, on or before June 30 of each year
- Between July 1 and September 30, on or before September 30 of each year
- Between October 1 and December 31, on or before December 31 of each year
A $15.00 state fee must be paid upon the filing of your annual report by mail. The fee is $12.50 if filing online. You should use the annual report to notify the state of any changes to your LLC’s address. Annual reports must be signed by a manager of a manager-managed company or by a member of a member-managed company. Failure to file annual reports can result in a $10 annual penalty.
FAQs About Hawaii LLC Formation
Once you pay the filing fee to form your LLC in Hawaii, the cost of having an LLC in Hawaii can vary depending on the type of business it conducts and the taxes, licenses, and permits it is subject to. A list of common fees associated with LLCs in Hawaii can be found on the Business Registration Division’s website.
The fee for filing articles of organization (Form LLC-1) for a domestic LLC is $50, with an additional fee of $25 for expedited service. The fee for a certified copy of a filing is $10 plus $0.25 per page. There is an additional state archives fee of $1. The filing fee is nonrefundable. A $25 fee will be assessed for returned checks.
You should register with the Tax Department and apply for a business license. The amount of your registration fee depends on the types of licenses your LLC is required to have. You must file annual reports to maintain your LLC in Hawaii and pay the $15 filing fee if by mail. You can file the annual report online for $12.50. You may also pay application and renewal fees for certain licenses and permits. You will be responsible for paying any applicable federal, state, and local taxes.
The type of business structure you want for a Hawaii LLC can vary depending on how many owners or members you want and the type of business or service your LLC provides.
- Single-member LLC: A single-member LLC has one owner or member who is in control of the business. For tax purposes, it’s treated similarly to a sole proprietorship where the LLC is a “disregarded entity" that does not separate the business from its owner.
- Multi-member LLC: A multi-member LLC is owned by two or more members who share control of the business. Members can choose to be member-managed and retain decision-making authority over the business themselves. Or they can opt to be manager-managed and surrender the operation of the business to an outside management.
- Professional LLC: Hawaii law does not specifically allow for a professional LLC (PLLC) designation. However, it does allow for Professional Corporations.
No, but you may need a certified copy of your Articles of Organization for Limited Liability Company if you want to open a business bank account or apply for financing. Articles of Organization show the date your LLC was legally registered in the state of Hawaii and can be used to prove the validity of your business registration. You should receive a copy of your Articles of Organization as part of your initial filing. If you require a certified copy, the fee is $10.
A Certificate of Good Standing verifies your LLC is properly registered as a business in Hawaii and is in compliance with state law and requirements. You may need a Certificate of Good Standing if you want to register your business as a foreign LLC in a different state, apply for a business loan, enter into contracts with other entities, or secure investors. Good standing certificates, copies, or certified copies can be ordered online through Hawaii Business Express by searching under your LLC’s name, opening the selected record, and selecting “Buy Available Documents." You can also request a good standing certificate by phone, email, mail, fax, or in person. The fee is $7.50.
These are the basic requirements to form an LLC in Hawaii:
- Choose a business name and confirm availability
- Select a registered agent
- File Articles of Organization and pay filing fee
- Prepare an operating agreement (not required)
- Submit the Basic Business Application (Form BB-1) to the Department of Taxation and pay the registration fee
- Apply for an EIN
- Obtain any required business licenses or permits
Some of the advantages of forming an LLC include:
- Limited personal liability for business debts and lawsuits
- Fewer reporting and recordkeeping requirements than other kinds of entities, including corporations
- Avoiding the double taxation—business and personal—of corporations if taxed as a pass-through entity
Your LLC must continuously maintain a registered agent that has a physical business address within Hawaii. Annual reports must be filed each year and you must pay the filing fee. You should be sure to register, report, file, and pay any required business taxes with the IRS and Hawaii Department of Revenue. Be sure to obtain and renew all applicable state and local business licenses or permits.
No. Articles of organization must be filed with the Department of Commerce and Consumer Affairs, Business Registration Division, to register an LLC in Hawaii. An operating agreement is an optional document between members of an LLC that is not required to be submitted to the state.
Yes. If your LLC is doing business as (DBA) a name different from the name registered with the state, you can file an application to register a trade name. The filing fee is $50. Registering your trade name provides notice to others that you are claiming the right to use that name, and the registration process can help you find out if anyone else is claiming the right to use that name. Once approved, your trade name will be registered for five years. You have the option to renew six months before your trade name expires.
Your LLC will likely need to apply for various licenses and permits depending on its type of business and location. You can submit a BB-1 form to the Hawaii Department of Taxation to register for applicable tax licenses and permits. You should contact the county government to obtain local business and occupation licenses.
Yes. You can create an eHawaii.gov account and use the Hawaii Business Express tool to file online. To register your LLC online, you must file the articles of organization and pay the $50 filing fee. Once you’ve created your eHawaii.gov account, you can use the Business Express tool to manage your other business filings. Many businesses choose to use an LLC formation service to handle their LLC registration.
The Hawaii Department of Commerce and Consumer Affairs oversees business formation and filing. The address is:
State of Hawaii
Department of Commerce and Consumer Affairs
Business Registration Division
335 Merchant Street
P.O. Box 40
Honolulu, Hawaii 96810
Yes. You can use a registered agent service for service of process. The benefits of using this service include privacy protection, keeping your LLC compliant, and ensuring receipt of legal documents, notices, and other important mail.
An LLC is “domestic" to the state in which it was formed. A domestic LLC in Hawaii means the business was originally created and registered in the state of Hawaii.
LLC owners can operate their business in other states, often by registering as a foreign LLC. You should contact the Secretary of State in that jurisdiction to find out what’s required and the amount of the filing fee. You will likely have to include a certificate of good standing from your home state with your application to register as a foreign LLC in the new state.
An out-of-state LLC that wants to register as a foreign LLC in Hawaii must file Form FLLC-1 and pay a $50 filing fee to the Department of Commerce and Consumer Affairs, Business Registration Division. Registrations can be filed online, or by email, mail, or fax. An original certificate of existence or some other authentic proof of the LLC’s good standing (not dated more than 60 days prior to the application) must be attached.
An LLC can terminate its registration in Hawaii by filing articles of termination (Form LLC-11) and paying the nonrefundable filing fee of $25. It must be signed and certified by at least one manager of a manager-managed company or by at least one member of a member-managed company.
An anonymous LLC does not disclose the names of its LLC in the formation documents which are a public record. The names of your registered agent and the LLC organizer appear on the articles of organization. Only a few states offer anonymous LLCs (Delaware, Nevada, New Mexico, and Wyoming). Entrepreneurs in Hawaii who want to protect their privacy can use a registered agent service for their service of process.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
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