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Last updated on: March 29th, 2019

Free Guide to Start an LLC in Hawaii

Starting a business in Hawaii can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.

The guide below will show you the DIY process of forming an LLC in Hawaii. However, you can also use an online LLC service that will handle the paperwork for you. We reviewed and ranked the 7 best available.

 

The Top 2 Worth Considering:

  • Northwest Registered Agent is a great option if you are looking for premium customer support.
  • IncFile is ideal if you are looking for the best pricing with excellent features.

 

Step 1: Name Your LLC

Selecting a name for your Hawaii LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.

The name should indicate the product or service. It should also follow guidelines set forth by the state of Hawaii.

The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.

Hawaii law requires that the business name includes the words “Limited Liability Company,”  “LLC,” or “L.L.C.” It can also use the abbreviations “Ltd.” or “Co.”

The name must also be different than other names already registered. Names that are not “substantially identical” and therefore acceptable contain the following features:

  • Key words are different, unless the name is still likely to be confused during oral communication.
  • A name contains a letter(s) making the word different, except plurals or possessives.
  • A key word includes the addition or deletion of a suffix, prefix or affix.
  • The words are in a different order or arrangement.

In addition, a name should not:

  • Defraud, confuse, or mislead the public.
  • State or imply an association with the government (unless one exists).

A substantial list of rules regarding names that are “substantially identical” to other registered names and therefore not acceptable are stated in Hawaii statutes. For more information, read Business Naming Rules.

For Example

Let’s imagine that someone is considering opening a flower shop in Honolulu, Hawaii. The name she is considering, Flowers by Fanny, is already in use. Instead, she decides to legally name her business Fanny’s Florals, LLC.

Determine if the Name is Available

Following the selection of a name but before filing the Articles of Organization, check to ensure that your name is unique on the Search for Business Entity and Documents page on the Hawaii Business Registration Division website. Searching in other places, such as online, is also a good idea.

After you have determined that your chosen name is “not substantially identical,” the name can be reserved, but it is not required.

Optional: Name Reservation

Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork for an LLC. In this case, a name can be reserved for 120 days in the state of Hawaii.

An Application for Reservation of Name can be filed online or by hard copy through the mail or in person. The filing fee is $11 and is nonrefundable. If filing a hard copy application, black ink must be used.

Applications can be mailed to the following address:

State of Hawaii Department of Commerce and Consumer Affairs

Business Registration Division

P.O. Box 40

Honolulu, Hawaii  96810

Applications can be delivered in person to the following address:

State of Hawaii Department of Commerce and Consumer Affairs

Business Registration Division

335 Merchant St.

P.O. Box 40

Honolulu, Hawaii  96810

Processing time is between three and five business days. Expedited processing (between two and three business days) is available for an additional $25 fee.

 

Step 2: Choose a Registered Agent

Every LLC in Hawaii is required to have a registered agent. This agent can be an individual or a company.

The role of the registered agent is that of a contact person between the LLC and the state. As stated on the website of the Hawaii Department of Commerce and Consumer Affairs: “In general, the duty of the registered agent is to receive service of process, notice or demand on behalf of the business the agent is hired to represent and to inform the business of such service.”

Simply put, the registered agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC. The name and address of the registered agent must be filled in on the Articles of Organization.

Some may wonder why a registered agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a registered agent is especially important if a physical office does not exist in Hawaii.

Individual as Registered Agent

The individual must be a resident of the state of Hawaii, have a physical mailing address (not a P.O. Box) and maintain regular business hours. You can act as your LLC’s registered agent in Hawaii. On the other hand, using a third party might ensure that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend.

Registered Agent Service

If using a service, we recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your LLC formation.

 

Step 3: File the Formation Documents with State

Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Articles of Organization) that actually creates Fanny’s Florals, LLC in Hawaii.

This step can be completed either online, by mailing a hard copy through USPS or by delivering in person. The filing cost is $51 for standard processing and $76 for expedited processing. Certified copies are available for $10. The fees are non-refundable. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed in the time frame in which you need it.

Online Filing

In order to file online, you must first set up an eHawaii.gov account.

Hard Copy Filing

A hard copy application needs to be completed in black ink. If mailing it, the application needs to be accompanied by a personal check, certified check or money order, payable to the Hawaii Department of Commerce and Consumer Affairs. A $25 fee will be charged for a dishonored check.

The Articles of Organization application can be sent to the following address:

State of Hawaii Department of Commerce and Consumer Affairs

Business Registration Division

P.O. Box 40

Honolulu, Hawaii  96810

If delivered in person, the following address can be used:

State of Hawaii Department of Commerce and Consumer Affairs

Business Registration Division

335 Merchant St.

P.O. Box 40

Honolulu, Hawaii  96810

You can expect standard processing time of three to five business days and expedited processing time of two to three business days .

 

Step 4: Create an Operating Agreement

An operating agreement in the state of Hawaii is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.

All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.

The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.

For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.

The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.

The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.

 

Step 5: Get an EIN

An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:

Online

Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.

Fax

Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.

Mail

If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

Think you’re ready to open up shop now? Guess again!

 

Step 6: Taxes, Licensing & Income Reporting

Businesses like Fanny’s Florals, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.

Taxes

On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.

The state of Hawaii does not place a tax or fee on LLCs for the privilege of doing business in the state. However, all businesses are required to pay the general excise tax (GET) which is a tax on gross business income.

If selling merchandise, your LLC may need to also pay a use tax which taxes imports from unlicensed sellers.

If your LLC is an employer, withholding and unemployment insurance taxes are required.

Registration with various agencies in order to pay the above taxes is required. All businesses (except sole proprietorships) must register with the Hawaii Department of Commerce & Consumer Affairs (DCCA). In addition, all businesses are required to register for a Hawaii Tax Identification number through the Department of Taxation (DOTAX). For employers, registration is also required with Hawaii Department of Labor & Industrial Relations (DLIR).

Online registration for all three agencies is recommended using the Hawaii Business Express (HBE). HBE is one-stop registration for DCCA, DOTAX, and DLIR. Filing a hard copy with DOTAX either through the mail or in person is another option. A one-time $20 registration fee is included with hard copy filing. In addition, if you are an employer, you will need to register with (DLIR) separately. Use Form BB-1. See below for appropriate addresses:

Department of Taxation

P.O. Box 1425

Honolulu, HI 96806-1425

 

Department of Taxation

830 Punchbowl St.

Honolulu, HI 96813

 

Department of Labor and Industrial Relations, Unemployment Insurance Division

830 Punchbowl St., Room 437

Honolulu, HI 96813

Licensing

To determine if a professional license is required for your business, visit the professional and vocational licenses page on the DCCA website.

In addition,some cities or municipalities will require various licenses or permits. Visit the local government’s website in the area where your LLC will be located.

Reporting

Hawaii requires LLCs to file annual reports. The report costs $16 to file either online  or through hard copy. Regular processing varies. Expedited processing is available for an additional $25 fee.

Delinquent reports will cause an LLC to fall out of good standing with the state. A $100 penalty will be charged for every 30 days a report is delinquent. If a report is more than two years delinquent, the LLC will be dissolved.

The filing due date is the end of the quarter in which you originally filed your Articles of Organization. The quarterly due dates are March 31, June 30, September 30, and December 31.

When all of the mechanics of setting up an LLC in Hawaii have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo… or purchasing flowers!

 

Need Help Creating Your LLC?

We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.

Can you do it yourself? Absolutely.

However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.

As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.

 

IncFile vs LegalZoom or Northwest Registered Agent vs LegalZoom