You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Hawaii.
Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Hawaii startup fees here.
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Overall Hawaii LLC Formation Costs
LLC Name Reservation Fee
Reserving a business name is not required to start your LLC, although it can be helpful if you aren’t ready to file your Articles of Organization but want to keep other companies from using your name.
The fee is $10 whether you file online or by mailing a hard copy. However, if you’re ready to start your business, it’s more efficient to simply get started on your Articles of Organization, which will officially register your LLC name.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead.
Remember, whether you reserve a name or not, you should always perform a Hawaii business name search to make sure the name you want is available!
Articles of Organization Fee
This is the big one, the most important form that you’ll file to start your Hawaii LLC. It’s the document that makes your LLC legitimate and functional in the eyes of the state, on which the rest of your business operations hinge, and it will cost you $50 to file ($75 if you request expedited processing).
But since you only file the Articles of Organization once, you won’t have to worry about this fee again after your filing is accepted.
The information you’ll need to file your Articles of Organization includes the name of your LLC, the mailing address of your LLC’s principal office, the name and address of your registered agent, the name and address of your LLC organizer, an indication that your business will be managed by its members or by a manager, the names and addresses of all your LLC’s members or managers, an indication of your LLC members’ liabilities, the date, and your LLC organizer’s signature.
Certain businesses need to be licensed with the state or their particular city before conducting business in Hawaii. Public accountants, for example, need to seek licensure from the Board of Public Accountancy. Your LLC might need more than one license, or it might not need one at all.
It depends on the type and location of your business. Check out the D.C.C.A.’s Professional & Vocational Licensing page to determine which ones you will need.
What are some of the most commonly required business licenses for Hawaii LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Service
Starting an LLC in Hawaii can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC setup website. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like ZenBusiness and LegalZoom) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with services like Employer Identification Numbers, operating agreements, and expedited filing.
Registered Agent Service
Appointing a Hawaii registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Hawaii business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer. But there are a lot of lawyers, all with different locations, rates, and areas of expertise. How can you choose the best one for your LLC? Try Avvo, which offers a huge database, so you can compare and contrast Hawaii business attorneys and find the right fit.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Hawaii. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Hawaii. In this case, you wouldn’t file the Articles of Organization, but rather the “Application for Certificate of Authority.”
All foreign business entities are required to foreign qualify in Hawaii, or they could incur some pretty severe penalties. File your Application for Certificate of Authority either online or with a hard copy. Both methods come with a $50 fee, but like the Articles of Organization, this is a one-time fee as long as your application is accepted.
LLC Annual Fees
The Hawaii Department of Commerce and Consumer Affairs requires all in-state LLCs to file an annual report. It’s due each year in the same quarter in which the LLC was initially formed, and it costs $12.50 to file online or $15 to file on a paper form. You can pay an additional $25 fee to expedite the process. Annual reports are available both online and on a paper form.
The information required to file your annual report includes the name of your LLC, your LLC’s mailing address and principal address, a brief description of the nature of your LLC’s business, the name and address of your registered agent, an indication that your business is managed either by its members or by a manager, the names and addresses of your LLC’s managers or members, the date, and your printed name and signature.
For more info on annual reports for Hawaii LLCs, check out our full article on this topic!
When it comes to federal taxes, LLCs are classified as “pass-through” entities, which means that the business itself doesn’t need to file a tax return, only the individual members do. Plus, the state of Hawaii doesn’t impose a “franchise” or “privilege” tax on its businesses. But it does require all business entities to pay a General Excise Tax of 4% on gross business income.
There are specific circumstances that would cause your LLC to owe additional taxes. For example, if you hire employees, you may owe withholding and unemployment insurance taxes.
You can find out more about the taxes you’ll need to pay for your Hawaii LLC by visiting the state’s Department of Taxation website.
What if I Don’t Pay?
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Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
The most common missed filing is the annual report. Fail to file your annual report and you’re looking at a maximum $100 fine per 30 days that the filing is outstanding. If you don’t file it for two years, your LLC may be administratively dissolved. But missing any filing, tax, or fee can cause your LLC to lose its good standing with the state.
If that happens, you won’t be able to obtain a Certificate of Good Standing, which means that you won’t be able to foreign qualify in other states, apply for business loans, and make other business transactions in Hawaii. But keep up with your filings and taxes and it will save you from trouble and stress down the road.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Hawaii.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like annual reports and General Excise Taxes — so your business doesn’t fall out of good standing.
Key Steps for Starting a Hawaii LLC
- The first step to forming a Hawaii LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Hawaii, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $50 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Hawaii LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Hawaii Department of Taxation, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Hawaii!
Key Steps for Maintaining a Hawaii LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are potentially harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Hawaii.
What are the state business tax rates in Hawaii?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 1.4% and 11%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Hawaii’s 4.4-6.4% corporate income tax on your business revenue.
How quickly does Hawaii process LLC formations?
It’s difficult to determine how long it takes the state of Hawaii to form an LLC. The state provides no guidelines for turnaround times on its website, and repeated efforts to contact the Department of Commerce and Consumer Affairs via phone were unsuccessful. Skimming various LLC formation service websites presents estimates ranging from just a few days all the way up to a month-plus. In general, you should form your LLC well in advance to ensure that the state processes your documents in time for you to start conducting business.
How many small businesses are there in Hawaii today?
The state of Hawaii is home to more than 105,000 small businesses. Entrepreneurs of all backgrounds and business types find that Hawaii is a great place to own and operate a small business.
What are the top small business resources and websites in Hawaii?
The Hawaii chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Hawaii LLCs. The U.S. Small Business Administration’s Hawaii District Office is another valuable resource, and the state’s Business Development and Support Division also has plenty of good info.
Should I form my LLC in Hawaii, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.
Cost to Start an LLC in All 50 States
We break down the LLC costs in detail in all 50 states. View all of our State LLC Costs guides below.