Having a Hawaii LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Hawaii.
On this page, you’ll learn about the following:
- How to Start an LLC in Hawaii
- After Starting your Hawaii LLC
- Hawaii Foreign LLC
- Why an LLC in Hawaii
- Best Business Niches in Hawaii
- Hawaii LLC Formation Review
How to Start an LLC in Hawaii
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in Hawaii.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Hawaii, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Hawaii business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Hawaii. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Hawaii. The cost of a name reservation is $7.5 (online) and $10 (by mail).
Important Quick Links:
Department of Commerce and Consumer Affairs
Business Registration Division
P. O. Box 40
Honolulu, Hawaii 96810
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Step 2: Assign a Registered Agent in Hawaii
A registered agent, or business entity, is a person that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, internal documents, a notice of lawsuits, and other official government correspondence in Hawaii. Choosing a Hawaii registered agent for the service of process for your LLC is required for filing Hawaii LLC documents.
Make sure your registered agents are residents of Hawaii or having a physical street address in the state. It could also be a business. Here are the recommended agents and employees for you:
Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Hawaii. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Articles of Organization in Hawaii
A Certificate of Name Reservation is needed to file Articles of Organization for a limited liability company, which costs $50. LLC costs in Hawaii include some more details. You need to make reports of this certificate with the Hawaii Secretary of State. You may file them online or by mail.
Before you start filings, you must already have your LLC name and registered agents or employees. Make sure to check the Hawaii Department of Commerce and Consumer Affairs while hiring employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Hawaii LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county. Check Hawaii Certificate of Formation filing for more details.
How to File by Mail
If you prefer filing real-life forms for your Hawaii LLC registration, then you can download the Hawaii Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature. You may also file in person by visiting the office on business days.
Department of Commerce and Consumer Affairs
Business Registration Division
335 Merchant St.
P.O. Box 40
Honolulu, HI 96810
335 Merchant St.
Honolulu, HI 96813
Fax: (808) 586-2733
Step 4: Create Your Hawaii LLC Operating Agreement
A comprehensive operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to LLC operating agreement Hawaii does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Hawaii LLC later.
Step 5: Filing a Hawaii LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
EIN is needed when the LLC hires employees. Hiring employees in Hawaii LLC requires specific rules and regulations. One should know about them before hiring employees. EIN for Hawaii foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Hawaii LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Hawaii LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Hawaii business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Hawaii LLC annual report or biennial report
- Already existing LLCs that wish to operate in Hawaii must register as Hawaii foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Hawaii Foreign LLC
To register a Hawaii foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Hawaii. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Hawaii Foreign LLC to know more about having a foreign LLC.
Why an LLC in Hawaii
When it comes to Hawaii, people think of a tourist spot. But, it is surprising how over 128,000+ small businesses are operating in Hawaii and created around 3700+ jobs today. The growing economy in this state attracts more businesses than in earlier times. EZ, several business funding options, and tax credits are some prominent benefits of starting an LLC in Hawaii.
Growing Strong Economy
Hawaii is having more than 31,000 active LLCs at this moment. Every year around 7500+ LLCs is being formed in this state. The growing strong economy makes it easy for businesses to create jobs and employment opportunities.
Hawaii Incentive programs
The biggest incentive program available in this state is the Enterprise Zones program. Administered by the Department of Business, Economic Development & Tourism, the program offers tax credits to the LLCs operating in special economic and enterprise zones. Creating more jobs, developing stressful areas, and developing projects gain more incentives in Hawaii.
No Double Tax assurance
Double tax is the fear of every person who is thinking of making an LLC. They always think of how they can save themselves from the double taxes, and their search ends up with LLC in Hawaii. The government ensures that the LLC will be taken through a process that will save their double tax. It increases the potential profits of the member. Read more on Hawaii’s classification of LLC Tax.
Enjoy Benefits of the Corporation
The liability protection is provided to every corporate member, but if one chooses Hawaii LLC, they also get the premium services of the liability protection. If the LLC is under any debt, then the creditors cannot move to the assets of the members of the LLC to recover their money.
Best Business Niches in Hawaii
If a person wants to Start an LLC in Hawaii, they have to find the best niche. There are many industries, but new businesses in the state are left in a few industries. Pick a niche, meet the LLC formation requirements, pay the filing fees, and start your LLC in Hawaii. Here is the list of the best businesses one can consider.
Hawaii apparel maker Business
Hawaii is a beach state which is known for its locally-made apparel. The most sold clothing in the state is Aloha shirts which are made in local manufacturing units. The first manufacturing unit started in the 1960s, and till that time, the demand for these apparel has never decreased. The apparel industry is still booming, giving opportunities to new businesses also.
Vacation renting services
Being a beach state, the state of Hawaii is flooded with tourists every time of the year. The state has noticed a footfall of around 10 million people in 2019, which increased about 5.4% from the previous figure. Now, these tourists need a place to stay when they visit the state. You can plan space and provide renting services to the tourist and provide the best value for reoccurring services.
Tourist Guide Company can also be a profitable business in the state. There many points of attraction in the local area of the state which one can visit for which a tour guide is a must. As mentioned above, the number of people visiting the state is increasing, so the demand for catering to them is the best guide services.
Boat owner and renting companies
Boating in the middle of the sea is still loved by most people visiting Hawaii. That is why you can plan to open a boat renting company nearby the beach. Now all you need to do is start advertising your business among the tourists and earn huge bucks.
Some small businesses that a person can also think of are:-
- Business advertisement companies
- Landscaping business
- Small grocery store business
- Weeding photography
Hawaii LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the simple steps again when forming an LLC in Hawaii. Click on the steps in this list to read the full detail.
- Name your Hawaii LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state
- Choose a registered agent
In Hawaii, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in Hawaii
The first step in forming an LLC in Hawaii is applying for an EIN. This is completely free, and the process usually takes three to seven business days. Once you’ve applied for an EIN, you can then file your Articles of Organization and LLC application with the state. It’s recommended that all members sign an operating agreement, as it will ensure that everyone has a say in the management of the company.
Once the business has formed an LLC, it needs to choose a registered agent. This person will act as the go-between for all legal and state communications. They will handle things like taxes and lawsuits. This person will accept legal documents for the LLC and can be found during normal business hours. However, the Registered Agent can’t be an owner of the LLC. The Registered Agent must have a physical address in Hawaii and be 18 years old or older.
If you’re unsure about the name of your new business, you can always go for an assumed name. This option lets you keep the LLC name while operating under a different trade name. However, the name has to comply with Hawaii Department of Commerce and Consumer Affairs regulations. The Department of Commerce and Consumer Affairs oversees business registration in Hawaii. If you’re planning to use an assumed name, make sure to check the requirements carefully and follow them. A registered agent will make sure your business is registered legally in Hawaii.
If you are a resident of Hawaii, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $50 (domestic LLC) and $50 (foreign LLC), LLC costs in Hawaii include $12.50 for Annual Reports every year. LLCs are liable to pay sales tax of 4% every year
It takes 2 to 5 business days to get a Hawaii LLC if you file it online or via mail.
Every year all the LLC have to submit an Annual Report and pay $12.50 to the Hawaii Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Hawaii at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.