Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Hawaii are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Hawaii has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Hawaii LLC dissolution process? Are there different processes for businesses based in Hawaii and those expanded from other states? When do you need to dissolve your LLC? We’ll answer all of these questions and more in this article.
How Do You Dissolve a Hawaii LLC?
When closing a business registered as an LLC in the state of Hawaii, you’ll need to take care to dissolve your business exactly as the state outlines. The most important part of this process is filing the correct paperwork with the relevant legal entities, but this is far from the only vital step.
In addition to filing documentation of your Hawaii LLC dissolution, you will need to liquidate the assets of your business, notify all individuals and business entities that have an interest in your company, and resolve any outstanding liabilities with vendors, suppliers, or clients.
There are potentially severe penalties for failing to comply with the Hawaii LLC dissolution process, and you as a business owner could be personally responsible for your LLC’s liabilities and debts. Therefore, it’s extremely important that you complete each step outlined in this guide to ensure an effective and compliant dissolution.
As for the question of when you should dissolve your LLC, you should do this as soon as you’re certain you will no longer conduct business through this entity. This gives you an opportunity to close up shop with the knowledge that you’re not transacting any business after you start the dissolution process.
Dissolution for Domestic Hawaii LLCs
Is your LLC based in Hawaii, and registered as a domestic entity in this state? If so, you’ll start your dissolution process with a document known as the Articles of Termination. This form will include some crucial information about your business, so you should fill it out carefully and accurately.
Among the info you’ll need to complete this form is the official business name of your LLC, which newspaper your notice was published in, the date of your publication, the effective date of your LLC’s termination, your name and signature, and the date.
After you’ve filled out the form, you will need to send it to the Hawaii Department of Commerce and Consumer Affairs, along with your $25 filing fee. The state does not accept personal or business checks, so you’ll need to pay with cash, cashier’s check, money order, or credit card.
With standard processing, the state will usually process your termination within five business days. If you’re in a hurry, you can expedite your order for $25, which will speed up your expected turnaround times to roughly 1-3 business days.
But what does this process look like for a business that was formed outside the state and then expanded to Hawaii?
Dissolution for Foreign LLCs in Hawaii
If you operate a foreign LLC in the state of Hawaii, the dissolution process looks quite different than it does for domestic entities. In fact, it’s actually technically called a cancellation rather than a dissolution.
To dissolve a foreign LLC in this state, you’ll first complete the Application for Certificate of Cancellation document. Much of the information for this form is the same as the info provided for the Articles of Termination, but there are some differences for the foreign version.
This form requires your LLC’s official business name, the jurisdiction it was originally formed in, contact information for any potential future service of process deliveries, the newspaper where the LLC published its intent to cancel, the date the publication occurred, your signature and printed name, and the date.
This filing has the same $25 fee that the domestic version carries, and the processing speeds and expedited options are also exactly the same.
Involuntary Dissolutions in Hawaii
We should also discuss the potential for an LLC to be involuntarily dissolved by the state. There are several reasons this could happen, and most of them revolve around significant mistakes made by the LLC’s ownership group.
For instance, Hawaii could involuntarily dissolve your LLC if you fail to pay any legally required fees, fail to file an annual report for a period of at least two years, fail to appoint or maintain a registered agent for your LLC, or if you fail to file a change document when changing registered agents.
It’s obviously never advisable to operate your LLC in a way that leads to the state dissolving it against your will. Once the state decides to administratively dissolve your LLC, you have a period of 60 days to respond to their claims. If you do not respond, or if the state refuses your request, your LLC will not be allowed to conduct any business that is not directly related to winding up your affairs.
In addition, if you keep operating your business after the state involuntarily dissolves it, you could open yourself up to all sorts of legal issues due to the continued operation of a non-compliant entity. In general, you should be as careful as possible when it comes to following the rules and regulations in this state.
It’s not that the process for dissolving or withdrawing your LLC in Hawaii is terribly difficult. However, it is a process that you need to take great care to complete in a compliant fashion, or you could expose your business to a wide variety of potential legal complications and financial penalties. Trust us when we say it’s much smarter and easier to simply follow the directions with care to avoid any issues.
Do you need more information about operating an LLC in Hawaii? Take a look at the following resources: