How to Start an LLC in Hawaii
For entrepreneurs, the process of starting a new company can feel complex and intimidating. Fortunately, it doesn’t need to be. If your goal is to start an LLC in Hawaii, this guide will help walk you through the process!
An LLC is a good choice for many businesses, and it’s certainly a popular choice in Hawaii. This business entity structure helps shield your personal assets from liability associated with your business. For example, if your company is sued, your personal assets will be protected if you use an LLC. Also, LLCs are typically simpler to set up and manage, compared to corporations.
In Hawaii, new LLC formation is handled by the Hawaii Department of Commerce and Consumer Affairs. The guide below provides a step-by-step method to follow to get your business formed efficiently and accurately.
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Consider using an LLC service
To save time and hassle when starting your new company, we recommend using an LLC formation service like ZenBusiness or Northwest Registered Agent.
These services make it much simpler to form a new company and help walk you through every step of the process. They use all online systems and apps to make the process more efficient, and they also offer complementary services (like Registered Agent services – more on that later).
LLC formation services are inexpensive. ZenBusiness starts at just $49 + state fees, and the small cost is definitely worth the time savings.
You definitely can do all the required steps on your own. However, if you want to save some time, while ensuring everything is done correctly, using a service is well worth it.
Recommended services
Select a name for your LLC
The first concrete step that you will need to take is naming your new company. You can’t choose just any name, however, as it will need to meet all the requirements. Hawaii lists its full business naming rules here (click on the “Business Forming Rules” tab). Some key requirements include:
- The name must be unique (different from other companies in Hawaii)
- The name must include “limited liability company”, or an approved abbreviation like “LLC” or “L.L.C.”
- The name cannot include government-related words, like “FBI”
- The name cannot contain certain restricted words like “Doctor” or “Lawyer”, unless you qualify for these terms and can provide documentation
To confirm if a name is available, you can use the online business search tool at Hawaii.gov. It may seem difficult to find an original name that’s not taken – but you don’t need to worry too much about finding the perfect name, because you can use trade names.
Using trade names in Hawaii
Hawaii allows LLCs to use “trade names”, which can also be called “doing business as” names or DBAs. These are add-on names that can be registered in addition to the primary business name. For example, DCCA, LLC could register a trade name for “DCCA Manufacturing”, allowing them to do business under that name. An LLC can have multiple trade names, as well.
In Hawaii, trade names are registered with the Department of Commerce and Consumer Affairs. The filing cost is $50, and instructions can be found at the link above.
Elect a Hawaii registered agent
Each LLC in Hawaii is required to elect a Registered Agent to represent their business. The main role of a Registered Agent is to receive legal documents – and notice of lawsuits – for the business. It’s an important role, and you’ll need to select an agent before you move forward with your application.
A Hawaii registered agent must be either:
- A Hawaii resident, or
- A Hawaii corporation
The Agent must provide a physical mailing address (no PO boxes) to receive documents. This address will become public record.
You can be your own agent, or appoint one of your employees. The alternative is to use a Registered Agent service, like ZenBusiness or Northwest Registered Agent. These professional firms ensure everything is done accurately, and also protect your privacy. Expect to spend around $50 to $150 per year for a Registered Agent.
Create an operating agreement (optional)
Note: This step is optional, but recommended.
An operating agreement is a document that most LLCs should have on file. It’s an internal document (meaning that you don’t submit it to any government agency). As such, it’s optional – but strongly recommended.
Operating agreements lay out key details about your business. The most important is typically the ownership structure of the company. This is especially important for multi-owner LLCs, as it helps prevent future ownership disputes.
To create your operating agreement, you can use a service like ZenBusiness, which provides templates. Alternatively, you can use the services of a local attorney.
File Hawaii Articles of Organization
The LLC Articles of Organization are the main paperwork document that will need to be submitted in order to apply for an LLC. This can be done online here, or you can file by mail by filling out Form LLC-1 and mailing it to:
Department of Commerce and Consumer Affairs
Business Registration Division
335 Merchant St.
P.O. Box 40
Honolulu, HI 96810
Hawaii also allows this form to be submitted via fax or email at:
Fax: (808) 586-2733
Email: [email protected]
The filing cost is $50, whether you file online or by mail. Processing time can take up to 3-4 weeks but is usually quicker. For most businesses, we recommend filing online for the quickest service.
The Articles of Organization ask for key information about your new company. You will need to list the Registered Agent information – so you need to complete step #3 before moving on to the filing of the LLC Articles.
Wait for your documents
Once your application is submitted, you will need to wait for Hawaii to process the application. This can take up to several weeks. You will be notified when the process is complete – or if there are any errors that need to be resolved.
Apply for an Employer Identification Number (EIN)
Most businesses should obtain an EIN, or employer identification number. This federal tax ID is required to hire employees. Once obtained, it will become the primary tax number for your company on a federal level (it’s like a social security number for your business).
The IRS makes it easy to obtain an EIN. You can apply online, and there is no cost. Once you get your EIN, you will be able to hire employees, open a bank account, etc.
Obtain business permits, tax IDs, etc.
The steps above will form your LLC – but you’ll also need additional permits, licenses, etc. Alternatively, services like ZenBusiness can help with obtaining certain permits and licenses.
For instance, Hawaii businesses are required to obtain a General Excise Tax number. You will also likely need to obtain local permits or licenses for your city or county. Contact your local government to learn about details.
That’s all you need to know about starting a limited liability company in Hawaii! The HI government does make things relatively straightforward, but with a guide like this, it’s even easier.
Keep your company in good standing
There are various ongoing requirements and tasks that are important to keep up with. In Hawaii, here are just a few of the items to keep in mind:
- Hawaii General Excise Tax
- Hawaii Seller’s Permit (for businesses selling physical goods)
- Hawaii Annual Reports (due every year)
- Hawaii employer taxes, like payroll taxes
- Federal payroll taxes
- Federal income tax (form 1040 schedule C for most LLCs)
- Local tax returns
- Permit renewals, business license renewals, etc.
- Registered Agent (required for the life of your business)
- Other requirements – be sure to research your requirements for your business
There are a lot of things to keep track of when you’re a business owner. We recommend investing the time now to get ahead of the game and really understand your requirements. Add key dates to calendars to remind yourself of when filings are due, and research or ask experts to help you satisfy those requirements.
Another thing to keep in mind is that you will need to have a Registered Agent appointed for the life of your business. If you use a professional Registered Agent service, like ZenBusiness the service can remind you of key dates, and even help with certain filings. This is another benefit of using a service vs. serving as your own Registered Agent.
About BOI Reports…
To legally operate an LLC, owners need to understand BOI reporting laws from the Corporate Transparency Act and provide accurate owner details to the Financial Crimes Enforcement Network (FinCEN) to avoid penalties. Find out more about BOI reporting here.
Open a business bank account
As a new business owner, it’s important to understand that business finances should be completely separated from personal finances. This is both for accounting purposes, and to protect your personal assets in the case of a lawsuit.
As such, all businesses should open a dedicated business bank account. To do so, you’ll need an EIN (see above), your business license, and other key documents. Contact the bank for details on what you will need.
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