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Hawaii LLC Simple Start Guide

Hawaii LLC Simple Start Guide

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Hawaii LLC Simple Start Guide

If you’re researching how to start a business, you may be wondering about the best way to structure your company. One option is to create an LLC, and while forming your first LLC can be a little intimidating, this guide will walk you through the process step by step.

Related: Guide to starting a business in Hawaii

What is an LLC?

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in Hawaii.  The LLC provides personal liability protection and has the potential to save money on taxes.

Unlike a sole proprietorship or general partnership, where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure that protects the business owner’s personal assets, should the business be sued.

Even though the corporation also provides liability protection, the Limited Liability Company provides several other benefits over other entities, such as multiple tax options, ease of administration, and management flexibility.

To form a Limited Liability Company in Hawaii, file the Articles of Organization with the State of Hawaii, Business Registration Division.  The LLC filing fee for standard processing is $50. Approval for the LLC typically takes 1-2 weeks for mailed-in forms versus 3-5 days for online filings.  Expedited processing is also available for an additional fee.

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Steps To Form A Hawaii LLC

Step 1: Choose an LLC Name

The first step in forming a Hawaii Limited Liability Company is to make sure the name you want is available. This step is important because the name of each LLC has to be different from the other registered entity names in the state of Hawaii. 

The Hawaii Department of Commerce and Consumer Affairs (DCCA), Business Registration Division’s business name database makes it easy to do a Hawaii LLC name search.

In addition, the name of an 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.
  • LLC

A comma may be used after the company name and before the designator.  “Aloha Spirits LLC” and “Aloha Spirits, LLC” are both acceptable.

If there is an LLC name that you want to register but are not ready to file the LLC paperwork, a business entity name may be reserved for up to 120 days. 

You may also want to see if a domain name (also called a URL) is also available to have a matching website address.

Step 2: Appoint a Hawaii Registered Agent

A requirement of all LLCs in Hawaii is to appoint a registered agent. 

The registered agent can either be a resident of Hawaii or a registered agent service.  The agent must be available during normal business hours and have a physical street address in the state to receive service of process (act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc.) on behalf of the LLC.

While many LLC owners opt to fulfill this role themselves, some owners choose to hire registered agent services like Northwest Registered Agent. Utilizing a registered agent service ensures that your LLC adheres to state requirements while offering an added layer of convenience and confidentiality since the owner’s personal address isn’t disclosed in public records.

Related: What is a Hawaii registered agent?

Step 3: File the Hawaii LLC Articles of Organization

The paperwork to create an LLC in Hawaii is called the Articles of Organization. To file, you can either register with the Hawaii DCCA Business Registration Division or download and mail the Hawaii Articles of Organization (Form LLC-1).

Related: How to fill out the Hawaii Articles of Organization

Turnaround for the state to approve the Articles of Organization is approximately 1-2 weeks for mailed-in filings or 3-5 days for online submissions. Expedited processing is available for an additional fee.

If mailing the LLC-1 form, send payment to:
State of Hawaii – Department of Commerce and Consumer Affairs (DCCA)
Business Registration Division
PO Box 40
Honolulu, HI 96810

If you have questions, contact the Hawaii Department of Commerce and Consumer Affairs at 808-586-2727 or breg@dcca.hawaii.gov

Tips for Filling Out the Hawaii LLC Articles of Organization

When filling out the Articles of Organization, there are a few sections that can sometimes trip people up. Let’s go over a few of the most common ones.

Mailing address of principal office: In this section, enter the street address, city, state, zip code, and country of the initial principal office. This address can be the LLC’s physical address, or it can be the address where the business records are stored. This does not have to be an address in Hawaii, but you may not use a PO Box for the registered office.

Organizer information: 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.

At least one organizer has to be listed.

Learn more about who can be an LLC organizer.

Period of duration: Most businesses intend to exist forever and would select “At-will.” If you have a specific end date in mind (typically used for investment-related businesses), choose the close date.

Member-Managed or Manager Managed: This section asks for the names and addresses of initial managers if the LLC is manager-managed or the names and addresses of the initial members if the LLC is manager-managed.

  • Member-Managed LLCs have members (owners) who are active in the day-to-day operations of the business.
  • Manager-Managed LLCs have managers hired by the members to run the LLC, similar to a CEO of a corporation.

Related: What is the difference between a Member-Managed LLC and Manager-Managed LLC?

Most LLCs are member-managed.

Liability: This section has options on whether the members will be liable for the LLC’s debts and obligations.

Most people select “Shall not be liable for the debts, obligations, and liabilities of the company.” Discussing the right choice for the members with an attorney is recommended.

While you can select this option, if the LLC takes out a bank loan, expect the bank to require a personal guarantee from the members that will require them to pay back a loan personally.

If you are worried about making a mistake when forming your LLC, or just don't want to deal with filling out state paperwork, an LLC formation service will help guide you through the process. My top recommended services include:

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What To Do After Starting A Hawaii LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Hawaii LLC 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.

In Hawaii, an operating agreement is not required, 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 fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Hawaii operating agreement template

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to an individual’s social security number, the EIN identifies business entities for tax purposes.

Related: How to apply for an EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • In some cases, a Hawaii Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state. A Certificate of Authority will be needed for a foreign LLC)

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed to start your business. Some common registrations include:

  • Business license: There isn’t a statewide license, but some counties in Hawaii require businesses to obtain licensing before they can start.
  • Professional license: There are certain types of businesses in Hawaii that require professional licensing, such as barbershops, accountants, salons, and others.
  • General excise tax license: To sell products and certain services in the state, a general excise tax license from the Hawaii Department of Taxation will be necessary.

Related: What business licenses are needed in Hawaii?

File the HawaiiLLC Annual Report

LLCs are required to file an annual report with the Hawaii Department of Commerce and Consumer Affairs.  The annual report updates ownership information and other details.

Related: How to File a Hawaii Annual Report

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in Hawaii or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

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Hawaii LLC FAQs

How much does a Hawaii LLC cost?

To start an LLC in Hawaii, you must pay a state filing fee of $50.

Is there a yearly fee for an LLC in Hawaii?

Yes – Each year LLCs will need to file an Annual Report and pay the $15 annual fee.

How long does it take for an LLC to be approved in Hawaii?

It normally takes 3-5 business days for online filing versus 1-2 weeks for forms sent by mail for an LLC to be approved in Hawaii.

For an additional fee, expedited processing is available.

Does Hawaii allow single-member LLCs?

An LLC in Hawaii can be operated by one individual or many. An LLC owned by one person is referred to as a single-member LLC.

What is a Foreign Limited Liability Company?

A Hawaii foreign LLC is an LLC that was formed in another state (domestic Limited Liability Company) but wants to operate physically in Hawaii. Physically operating means having a presence, such as having an office or hiring an employee.

Related: What is a foreign LLC?

What is a Professional Limited Liability Company?

Businesses that require state licensing, such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc., often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.

Related: What is a Professional Limited Liability Company?

Hawaii LLC Simple Start Guide

Hawaii LLC Simple Start Guide

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