Think about your LLC a year from now: raking in profits and taking Hawaii by storm. 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.
While you’re making plans and dreaming big, 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.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Hawaii
Optional: LLC Name Reservation Fee
- $11 for an online or hard copy filing
Required: Articles of Organization Fee
- $51 for standard processing, $76 for expedited processing
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 $11 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.
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 $51 to file ($76 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.
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.
LLC Formation Service
Starting an LLC 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 formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) 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 premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a 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 and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
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 $500-2000.
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.
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 by the month during which the LLC was initially formed, and it costs $16. You can pay an additional $25 fee to expedite the process. Annual Reports are available both online and as a paper form.
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 sell merchandise, you might need to pay a use tax, and if you hire employees, you may owe withholding and unemployment insurance taxes.
You can use this form to register for taxation with the appropriate departments. It carries a $20 filing fee.
What If I Don’t Pay?
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 $100 fine per 30 days that the filing is outstanding. If you don’t file it for two years, your LLC will be administratively dissolved. But missing any filing, tax, or fee will cause your LLC to lose its good standing with the state. 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.