- Step 1. Naming Your Hawaii LLC
- Step 2. Choosing a Registered Agent
- Step 3. File Your Articles of Organization
- Step 4. Create an Operating Agreement
- Step 5. Get an EIN/Tax ID Number
- Step 6. Keeping Your LLC Running
- Hawaii LLC Resources
- Hawaii LLC FAQs
Step 1. Naming Your Hawaii LLC
The first step to officially setting up your LLC is choosing a name that is different and distinct from all other businesses in the state. There are also a few naming rules that you will need to follow.
Legally Required Designation
In accordance with Hawaii LLC regulations, your LLC name must contain either the phrase “limited liability company” or one of the abbreviations below:
The name that you use for your LLC must be distinctly different from every other LLC name in the state. To find an available name, you can perform a business name search using the Hawaii Business Registration Division database search tool.
It is also a good idea to conduct an available domain name search while you are looking for an LLC name. Reserving a name for a business website ahead of time can save future hassle even if you aren’t sure that you want a website immediately.
Additionally, if you want to reserve an LLC name ahead of time, you can fill out the Application for Reservation of Name. This form will hold your LLC name for up to 120 days. There is a $10 filing fee, and you can file the form online or by sending it to the following address:
Department of Commerce and Consumer Affairs
Business Registration Division
335 Merchant Street
P.O. Box 40
Honolulu, HI 96810
When choosing an LLC name, keep in mind that you are not able to include any words that run the risk of confusing your business with a government entity. This can include words like “FBI,” “IRS,” “Treasury,” or “State Department.”
You should also be aware that using words such as “bank,” “attorney,” or “cosmetologist” may require the presence of a properly licensed individual in your LLC, and you’ll be required to file additional paperwork.
Using an Assumed Name
In Hawaii, you are allowed to conduct business under a name that is different from your LLC’s officially-registered name. This is referred to as an assumed, or DBA (doing business as), name.
If you want to register for a DBA, you can immediately start using your chosen name for your LLC in public (keep using the registered name on all official forms). Registration of the trade name isn’t necessary but is a good idea as it will notify others that you are using the name.
To register, you will need to file the Application for Registration of a Trade Name with the Hawaii Department of Commerce. There is a $50 filing fee associated with this form and an extra $20 fee if you want to expedite the processing. You can file the form online or by mailing it to the address on the form.
Step 2. Choosing a Registered Agent
A registered agent is required for every LLC established in Hawaii. You can appoint either yourself as a registered agent, any member of your LLC, or a registered agent service that is authorized to conduct business in Hawaii. As long as your registered agent has a valid Hawaii address and is available during regular business hours, they are eligible to be your registered agent.
Your registered agent will be responsible for receiving all legal documents, government communications, and necessary tax documents, acting as a contact point between your LLC and federal agencies or the state of Hawaii. They will also be the responsible party that is contacted in the event of a lawsuit against your LLC.
Step 3. File Your Articles of Organization
Once you have your LLC’s name picked out and a registered agent appointed, you can file the Articles of Organization. This document is what will legally establish your LLC as an operating business in Hawaii. Below, you can find some of the information that the form will ask you to include.
- Your LLC’s name and address
- Your LLC’s registered agent’s name and address
- The names and addresses of all your LLC’s organizers
- Your LLC’s duration, if not perpetual
- Whether your LLC will be member-managed or manager-managed
- The managers’ names and addresses if manager-managed, or the members’ names and addresses if member-managed
- Whether or not the LLC’s members will be liable for debts and company obligations
- Your LLC’s organizer’s signature
This form will need to be filed with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division. There is a $50 filing fee associated with the form and it can be filed either online or by mail. You may pay an additional $25 fee if you wish to expedite the processing.
To file your Articles of Organization online, you can visit the Business Registration Division website here. The portal will allow you to file the form and make your payment completely online.
If you want to file your Articles by mail, print off this form and fill it out completely using black ink. Once it is completed, place it in an envelope with a check for $50 made out to the Department of Commerce and Consumer Affairs and then mail it to the address below.
Department of Commerce and Consumer Affairs
Business Registration Division
335 Merchant Street
P.O. Box 40
Honolulu, HI 96810
Step 4. Create an Operating Agreement
The state of Hawaii does not require you to create an operating agreement for your LLC, but you may want to consider creating one anyway. This document sets clear guidelines for how exactly your LLC is managed, the rights that members or managers have, and what to do in the case that your LLC dissolves or experiences a lawsuit.
Most business bank accounts, loan applications, and other business services will require you to have an operating agreement on hand to show that your LLC is a legitimate separately operating business entity.
If you choose not to create an operating agreement, Hawaii and federal law will dictate how your LLC is to be treated in the event of dissolution, conflict, or lawsuit. This will generally not be in your best interest, so creating an operating agreement is a good idea to protect yourself and your assets.
Step 5. Get an EIN/Tax ID Number
Once your Articles of Organization have been processed, your LLC is legally established. You will then need to apply for a Tax ID number, also known as an EIN (Employer Identification Number), through the IRS.
Any LLC that has more than one member, any single-member LLC that wants to hire employees, and any LLC that chooses to be taxed as a corporation is required to apply for an EIN.
Your EIN will be used to identify your business to the IRS on all tax documents and necessary government filings; the number acts much like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts, or apply for business funding, you will need an EIN.
It is free to apply for your EIN with the IRS, and you can file the application online or by mailing it in. Keep in mind that if you are a foreign filer or do not have a social security number, you will need to file for your EIN through the mail.
The quickest and easiest way to apply for your EIN is online. You will receive your number immediately, once your application is completed. Visit the IRS website to apply for your EIN for free.
You will need to fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below. You can follow up on any questions with the IRS at (267) 941-1099.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 6. Keeping Your LLC Running
Now that your LLC is officially up and running, you will need to keep up with several federal and state requirements in order to keep your business legally operating without issue.
Pay Annual Registration Fees
Every LLC in Hawaii must file an annual report and pay the accompanying annual registration fee. The report is due each year during the calendar quarter that your LLC was filed in. Calendar quarters are as follows:
- Quarter One: January, February, March
- Quarter Two: April, May, June
- Quarter Three: July, August, September
- Quarter Four: October, November, December
This means that if your LLC was formed on April 15th, you would need to file your annual report any time between April 1st and June 31st of the following year (calendar quarter two). The fee is $15 and must be paid when you file the form; you can pay an extra $25 to expedite the processing.
Failure to file your annual report may result in late fees or in your LLC being dissolved by the state.
Separate Your Business Finances
A business credit or debit account can help keep your LLC’s finances separate from any personal ones, establishing the LLC as an independently operating business. It is not required by Hawaii law to open a separate business bank account, but it may be a good idea to establish one anyway.
You will most likely need to show your Articles of Organization, Operating Agreement, EIN, or possible other LLC documents to open a bank account for your LLC. Compare all of your options before making a choice on which bank account to open, as different banks will have different minimum required balances or credit spending limits; you want to be sure that you select something that is the best for your LLC’s needs.
Keep up With Federal and State Taxes
While operating your LLC, there are certain federal and state taxation policies that you will need to adhere to in order to avoid any tax penalties.
Federal Tax Requirements
There are several different tax structures you can choose from to use in your LLC that may meet different company needs; each tax structure comes with its own unique type of federal taxation. This article can help you gain an in-depth understanding of the differences between each type and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means that you will be expected to file Schedule C along with your individual income tax return to declare any income that you receive through your LLC.
When using this tax structure, you should keep in mind that you will most likely need to pay self-employment tax (which has a rate of 15.3%), in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS fines. The IRS website gives more details on this.
If you want, you can choose to have your LLC taxed as a corporation, like an S Corporation or a C Corporation. You will need to fill out IRS Form 8832 and IRS Form 2553 to make this election. After these forms have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Hawaii State Business Taxes
After your LLC is set up, you will need to register for a Hawaii Tax ID. This number is separate from your EIN (the EIN is used for federal filings) and will be used to identify your LLC as you pay business taxes in the state. You can file for your Hawaii Tax ID online here through the Hawaii Department of Taxation.
Your LLC will be required to pay a General Excise Tax to the Hawaii Department of Taxation. This tax is a flat 0.5 percent of the income your business receives in the state each year. You will use your Hawaii Tax ID to identify your business as you pay this tax. Payments should be made on a periodic basis (whether monthly, weekly, or annually depends on your individual business).
It is important to note that the General Excise Tax takes the place of sales tax in Hawaii. You can read more about registering your business for this tax, calculating your tax amount, and other general information on the Department of Taxation website here.
If your LLC is taxed as a corporation, you may also be liable for an additional corporate income tax. This has varying tax rates that start at 4.4 percent and go up to 6.4 percent. You can register for the corporation tax here, where you can also find more information about which LLCs are liable for corporation tax and how to calculate your owed amount.
State Employer Taxes
If your LLC has employees, you will likely be required to pay withholding taxes. These taxes are also handled through the Hawaii State Department of Taxation. This booklet will give you more information about the taxes, who is liable to pay, and how to calculate your taxes, and you can register to pay the tax online here.
Unemployment insurance taxes are also required of employers and will need to be paid to the Hawaii Department of Labor and Industrial Relations. You can register for this tax online here and find more information about paying this tax through the Department’s website here.
Acquire Necessary Permits and Licenses
All LLCs that are conducting business in Hawaii will need to register for a General Excise Tax license. There is a one-time $20 fee associated with this form and you can file for it through the Hawaii Department of Taxation. The state recommends that you print out the form, complete it, and mail it in to the below address.
Department of Taxation
P.O. Box 1425
Honolulu, HI 96806-1425
There may also be local permits and licenses that you need to obtain for your LLC, including professional licensing. You can check with your locality’s clerk’s office or with the Hawaii Small Business Development Center for more information and help in figuring out which licenses your LLC may need.
Additionally, you may be required to obtain certain permits and licenses for your LLC on a federal level. Whether this is needed depends mostly on the type of business you are running and the services you are offering. For help determining if you need to meet additional federal licensure requirements, you can use the directory on the US Small Business Administration’s website.
Hawaii LLC Resources
This list of resources can help you every step of the way as you begin setting up and running your Hawaii LLC.
- Available LLC name search
- Available domain name search
- Reserve an LLC name
- Apply for a Trade Name
- Articles of Organization online file
- Articles of Organization form
- IRS EIN online application
- Annual Registration online file
- IRS Form 8832 and Form 2553 to elect corporate taxation
- File for a Hawaii State Tax ID
- Hawaii State Department of Taxation
- Hawaii Department of Labor and Industrial Relations
- Hawaii General Excise Tax registration form
- Hawaii Small Business Development Center
- US Small Business Administration
Hawaii LLC FAQs
Below, we answer some of the most frequently asked questions about starting your Hawaii LLC and work to put any remaining worries to rest.
In Hawaii, it will cost you $50 to file your Articles of Organization and set up your LLC. You may also need to pay the $25 expedited service fee, or a $10 LLC name reservation fee. If you want to register an assumed name for your LLC, that will cost an extra $50.
The cheapest way to start your Hawaii LLC is to file your Articles of Organization with the standard processing fee without reserving a name ahead of time or filling for a trade name. Doing this will only cost you $50 to set up your LLC.
How much your Hawaii LLC pays in taxes depends on which tax structure you have decided on for your business. In addition to any federal taxes, you may also need to pay the Hawaii General Excise Tax or state employer taxes.
In Hawaii, you will need to file reports for your LLC annual. The report is due each year during the quarter that your LLC was established and has a $15 filing fee associated with it. You can file the report online or through the mail.
If you are done conducting business under your Hawaii LLC, you will need to file the Articles of Termination by mail with the Hawaii Business Registration Division. You can find the form and extra instructions here. There is a $25 filing fee for this form.
You will also need to check your operating agreement for the agreed-upon actions between you and your LLC members or managers in order to fully wind down and close the business.