This guide on starting an LLC in Hawaii outlines the steps required to file documents, get tax IDs, and create company records.
The most used business structure, LLCs, are very affordable and allow owners to be flexible. Legally forming your LLC will establish your business, limit personal liability, give you tax flexibility, and create a legal entity. The steps that follow will assist you in this process.
Instructions for forming a Hawaii LLC
Check Name Availability
Your LLC’s legal name must not conflict with any other registered names. A name search can help you find out if your name is available.
Name Search Hawaii Business Registration Division Name Reservation Optional Suffix: A limited liability company name must include the words “limited liability corporation” or “L.L.C.” or “LLC.” The abbreviations for “Limited”, or “LLC” are “Ltd.” and the “company” abbreviation is “Co.” The English alphabet must be used for the letters in the name a limited liability company.
Appoint a Registered Agent
Before you register to form your Hawaii LLC LLC, you’ll need to identify your Hawaii registered agency. A registered agent can be described as a company’s legal appointee for receiving notices of lawsuits or other legal and government notices.
The state law requires all LLCs to have a registered administrator. The Hawaii Business Registration Division will designate the registered agents when you file Hawaii articles.
Hawaii Certificate of Formation
Fill out the articles of incorporation to establish your limited liability company.
Agency: Hawaii Business Registration Division Form:
Articles of Organization
Instructions: Formula LLC-1 Instructions and Format LLC-INFO : Information for Domestic Limited Liability Company Filing Method Mail, fax and online Agency Fee $51 + optional $25 expedite fees Turnaround: 7-14 businessdays by mail 3-5 businessdays by fax. 1-3 business hours if you file online with the $25 expedite cost. Law:
Hawaii Statutes: Chapter 428 Uniform Limited Liability Company Act
Establish Company Records
Your LLC must maintain correct and complete records. Your LLC’s original articles of organization will be the first document you keep. Your LLC will create many other official documents such as:
- Minutes of the meeting
- Operating agreement
- EIN verification letter
- Amendments and other filings made during the LLC’s lifetime
Create an LLC Operating Agreement
Draft an LLC Operating Agreement. It is the governing document for the LLC. It specifies the legalities of the LLC’s operation, such as holding an Annual Meeting. The agreement will then be approved by you at your organizational meeting.
Hold the Organizational Meeting
The organizational meeting, which is the initial meeting of LLC members, is the most important. In order to hold this meeting, you’ll need your operating agreements and your filed articles. Keep minutes from this meeting and save them in your company record.
Get a federal employer identification number (EIN).
EINs must be obtained if the LLC has more members or plans to hire employees. EIN is often required to open a bank or other financial account.
Agency: Internal Revenue Service Form:
IRS form SS-4
Filing Method Mail, phone and fax. online. IRS fee $0 Turnaround: You can get your order immediately online or by calling. By fax, it takes 4 business working days. 4-5 weeks via post Notes: The IRS website cannot be accessed outside of certain hours. Before you close your session print your EIN. For additional guidance, visit IRS Publi 1635: Understanding the EIN.
Get Hawaii State Tax Identification Numbers/Accounts
Hawaii offers a centralized state tax registration process. This application simplifies starting a Hawaii company by allowing for registration for various state tax licenses and permits.
- Submit to
- Department of Taxation, State of Hawaii
Formula BB-1 State of Hawaii Basic Businesses Application
- Filing Method
- Mail or
Consider Electing C-Corp and C-Corptaxation
Your LLC will be subject to passthrough taxation by default. The majority of LLCs do not change this tax classification. Some LLCs are eligible to choose S-Corp or C-Corp tax treatment.
- S-Corp can help owner-employees making more than $75,000 a year save on self-employment income taxes.
- C-Corps face double taxation. First, the corporation pays income taxes and then members pay distribution taxes. C-Corps can offer lower tax rates to retained earnings.
How to get a Business License & Permit
It is necessary to obtain the required licenses and permits in order for your business to be legally operated. Searching for your business type, location, and license requirements using the Small Business Administration Business License & Permit lookup tool will make it easy to navigate the large number of state and federal requirements.
Hawaii Business License
Hawaii does NOT require licensure as a general business license.
Hawaii does have a local license for business, but not a state-level license.
To Maintain Your LLC, You Need to File Ongoing Filings
You must file your federal and state taxes returns.
A lot of states require business entities to file an annually required report in order to maintain good standing before the secretary. Check out the table below for information on whether an annual report should be submitted for LLCs in Hawaii.
Domestic Hawaii Corporation Annual Report Requirements:
Agency: Hawaii Business Registration Division Form:
Form d1: Domestic Profit Corporation Annual Review
Filing Method Mail or . Agency Fee Online filing fee is $12.50 and $15 for mailing fees Due: Annual reports should be filed in the quarter with the anniversary date. If you were registered on February 14, you must file your annual return between January 1 and 31. The due dates are March 31, 2013, September 30, and December 31. Law:
HI Rev Stat SS 414-472.
Penalties: $100 for each month that is late. Dissolution after two years. Notes:
- Original signatures are not necessary.
Hawaii LLC FAQs
How much does an LLC cost in Hawaii?
The state fees to form a Hawaiian LLC vary depending on factors like whether you reserve your business name. You should always check the Hawaii Department of Commerce and Consumer Affairs website to see the most current filing fees.
What are the benefits of an LLC in Hawaii?
For broad protection, Hawaii offers an LLC filing procedure. You can avoid liability but not the restrictions that corporations have. Hawaii LLCs allow you to expand your business in a flexible manner without putting your personal assets at stake. There are many benefits to forming a Hawaiian LLC:
- Your personal liability and debts should be kept separate from your business.
- Filing is easier than for corporations
- Corporations have less freedom than individuals
- Avoid double taxation. When filing a personal tax return, LLC owners are only required to pay federal income taxes on the profits of their business.
What is the processing time to form my Hawaii LLC?
In Hawaii, LLC applications are processed in 7-14 business days.For an additional fee, Hawaii offers options to expedite your filing. We can help you speed up your LLC formation if you are in a rush and don’t want the hassle of state expedited filing procedures.
Do I need to file an operating agreement with the state of Hawaii?
No, Hawaii does not require an operating agreement with the state.
How is a Hawaii LLC taxed?
An important benefit of setting up an LLC is the fact that your personal returns will not be subject to income tax, but that your business will. This is a significant financial perk and the reason why many business owners choose to form an LLC. As a business owner, however, you need to be aware of any additional taxes that may be due. Your industry will have different taxes.
A general excise tax is one such tax that Hawaii’s government must pay. Businesses are charged GET based on their gross earnings, not a state sales tax. The tax rate for insurance commission is 0.155% and 0.5% respectively for manufacturing, wholesaling, producing, wholesale and imports for sale. Other businesses pay 4% Other counties may also charge fees, such as:
- From now through 2030, the city and county Honolulu will be 0.5%
- Kauai County: 0.5% to 2030
- Hawaii County: 0.5% to 2030
Registering your business with the Hawaii Department of Taxation is required. You will need to complete and submit Form BB-1 online or by post.
Self-employment tax must also be paid to the IRS.
What tax structure should I choose for my Hawaii LLC?
You’ll receive your EIN and be informed about the tax classification options available to your Hawaii LLC. Most LLC owners choose to tax their business the default way. This is either as a sole proprietorship for single-member LLCs or as a partnership for multi-member LLCs. This only means that LLC members will have to pay taxes on their share of the profits.
The LLC is not subject to tax. This avoids “double taxation” for corporate shareholders, where profits are both taxed at the business and personal levels. You can also choose to be taxed like a corporation. This is a good option for large LLCs with high earnings. Before making a decision to become a corporation, there are some drawbacks.
Does Hawaii allow a Series LLC?
No. Series LLCs are not allowed in Hawaii. A Series LLC is a group of multiple LLCs that are part of a single LLC. Hawaii business owners must file separate LLCs. These can then be combined into one holding company.
Which licenses and permits are required for an LLC in Hawaii?
It is important that your LLC obtains all licenses and permits required by law. Because licensing is subject to change by industry and location, and can take place on the federal, state, and local levels, it’s not possible to find a central point to verify that you have the right permits and licenses. It’s up to you to research.
When do I file my Hawaii LLC annual report? An annual report must be submitted by those who file a Hawaii LLC. It must be filed no later than the end of the quarter in the which your company was formed. If you file in February (Q1) you must submit your annual report by March 31st of that year (the end of the quarter). You must pay a fee when you file your annual report. There are two ways we can assist you in filing your annual report.
How do I dissolve my Hawaii LLC? You will need to file your Articles of Termination with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division in order to dissolve your Hawaii LLC. You will need to pay a fee in order to file.