How to Start an LLC in Hawaii
To start an LLC in Hawaii you must file Articles of Organization with the Business Registration Division, pay a $50 filing fee, and get an EIN from the IRS. The complete steps to forming a Hawaii LLC are as follows:
- File Hawaii LLC Articles of Organization
- Pay the Business Registration Division the $50 filing fee
- Wait 10 days (3 expedited) for an approved copy of your Articles
- Get a Federal EIN tax ID for the LLC
- Register with the Department of Taxation and get a Hawaii tax ID
- Create a Hawaii LLC Operating Agreement
- Take these documents to the bank and get a Hawaii LLC bank account
How to File Hawaii LLC Articles of Organization
To form a Hawaii LLC, you file Articles of Organization by following these steps:
- Choose a name for your new LLC
- Decide what address you’d like to list publicly
- Decide if you want to hire a registered agent service to minimize public disclosures
- Choose how long you’d like the LLC to exist
- Decide if your LLC will be managed by members or managers
- Decide if members will be liable for any of the LLC’s debts or obligations
- File online with a credit card, mail to the Business Registration Division (PO Box 40, Honolulu, HI 96810) with a check or money order, or drop off in person (335 Merchant St, Honolulu Hawaii 96810) with cash, credit card, check or money order
HOW LONG DOES IT TAKE TO START A HAWAII LLC?
Standard processing takes the Business Registration Division 10 business days. Expedited processing cuts that time down to 3 business days.
WHAT IS THE COST OF A HAWAII LLC?
The Articles of Organization filing fee is $50, but the average filing actually ends up costing $53.50. There’s a mandatory $1 State Archive fee for each document filed and a $2.50 online payment fee. Need your LLC fast? Expedited processing is an extra $25.
At Northwest, your total out-the-door cost, including state fees, is $278.50 (or $303.50 expedited).
How much does an LLC in Hawaii cost each year?
Hawaii LLCs pay a $15 fee to file the required Annual Report.
What is a Hawaii LLC Annual Report?
Hawaii’s Business Registration Division charges you $15 a year for you to remind them of your LLC’s ownership and contact information in an Annual Report. You have to file a report each year even if nothing has changed. Filing your report can be hard to remember, especially since it’s due at an odd time each year—at the end of the quarter in which you initially registered your business. When you hire Northwest, we’ll help you out by sending you reminders to file. Or, you can set your mind completely at ease and hire us to file your reports for you.
What are the Hawaii LLC taxes?
The Hawaii personal net income tax rates are:
1.4%: $0 to $2,399
3.2%: $2,400 to $4,799
5.5%: $4,800 to $9,599
6.4%: $9,600 to $14,399
6.8%: $14,400 to $19,199
7.2%: $19,200 to $23,999
7.6%: $24,000 to $35,999
7.9%: $36,000 to $47,999
8.25%: $48,000 +
Technically, Hawaii doesn’t have a sales tax—but don’t jump for joy yet. Hawaii instead has a General Excise Tax, which is a tax on “business activities.” Basically, a portion of every business transaction that’s made goes to the state. Although it’s not a sales tax, most businesses pass the tax onto the consumer, so it ends up appearing similar to a sales tax. Most business activities are taxed at 4%. Local governments can tack on up to 0.5% to the GET, bringing the maximum total up to 4.5%.
IS A HAWAII LLC REGISTERED AGENT REQUIRED?
Yes, Hawaii requires LLCs to appoint and maintain a registered agent. And while it’s possible to appoint yourself as your registered agent, it can be a tough position.
Life moves slowly in Hawaii. While the slower pace of life is one of the most fantastic things about the 808, it can simultaneously be one of the most difficult—especially if you’re running a business. Sitting for hours in crawling traffic isn’t easy. Waiting for shipping to finally arrive isn’t easy. Sitting behind a desk from 9-5 with the beach just out the door isn’t easy. When it comes to registered agent service, let Northwest do the sitting and waiting, the worrying and hurrying. We’ll scan and send any service of process the same day, so you can run your business on your time.
DO I NEED A TAX ID NUMBER (FEIN) FOR A HAWAII LLC?
Yes—Hawaii’s Department of Taxation mandates that all businesses (except sole proprietorships with no employees) have a FEIN. You’ll need to get your FEIN before you file your Basic Business Application and receive your Hawaii tax ID. You can get a FEIN for free by applying for one directly from the IRS. Or, hire Northwest to complete the application for you.
DOES A HAWAII LLC NEED A BUSINESS LICENSE?
While Hawaii doesn’t have a general business license, LLCs are required to file a Basic Business Application (Form BB-1) with the Department of Taxation in order to get a Hawaii tax ID and a General Excise Tax license ($20).
Some cities and counties require local business licenses or permits as well. For instance, Maui County charges $500 a year for a license to operate a bicycle tour business.
HAWAII LLC VERSUS HAWAII CORPORATION:
The costs to start and maintain either an LLC or corporation in Hawaii are the same: $50 to file and $15 a year for the annual report. And while the standard LLC is taxed as a partnership, LLCs can elect to be taxed as S or C corporations, diminishing any significant tax advantages.
So which one’s better? It depends on how you want to run your business. Many small businesses opt for an LLC because they’re typically easier to manage—they don’t require directors or officers. Businesses with dreams of Wall Street, on the other hand, might opt for Hawaii incorporation.
DOES A HAWAII LLC NEED AN OPERATING AGREEMENT?
The law doesn’t require your LLC to have an operating agreement, but you absolutely should. Starting a business may very well be the biggest, riskiest undertaking of your life (unless maybe you hike the Kalalau Trail). The last thing you want to do is shortchange yourself by taking shortcuts. Taking the time to complete an operating agreement may be a bit annoying in the moment, but it’s the most important internal document of your LLC. It says who contributed what, how voting works, how profits and losses will be allocated, and what happens if everything falls apart. Your members and managers will want this information in writing. Future business partners and investors will want this information in writing. Your bank will want to see this information in writing as well. Heck, if you hope to apply for one of Hawaii’s accelerators for startup companies, you’ll need to provide evidence of clear, organized business operations.
At Northwest, we strongly believe every LLC should have an operating agreement—that’s why we include one for free with every order. We provide loads of other free forms as well, from resolutions to membership certificates. Your business is only as strong as your documents—and we’re proud of our forms at Northwest. We’ve spent years revising and improving our forms, and as a result, over 1 million LLCs and counting have used our free LLC forms:
WHAT IS THE HAWAII LLC STATUTE?
HAWAII LLC ARTICLES OF ORGANIZATION REQUIREMENTS:
- Company Name: Your name has to include “Limited Liability Company” or an abbreviation like “LLC.” You can’t pick a name already in use.
- Principal Office: The Articles of Organization ask for a LOT of addresses—principal office address, registered agent address, organizer address, etc. When you hire Northwest, you can keep things simple and use our address information throughout your Articles—it’s much less annoying than having to file amendments every time you need to update an address.
- Registered Agent: You can choose to list an individual Hawaii resident, or you can hire a business that provides registered agent service—like Northwest.
- Registered Office: This address must be the street address in Hawaii where your registered agent will be regularly available. Hire Northwest, and our address will go here.
- Hawaii LLC Organizer: You’ll need to include the name and address of your organizer. The organizer forms and files your Articles of Organization—but it doesn’t have to be anyone in your LLC. By now, you can probably guess whose address will go here when you hire Northwest.
- Duration: Most LLCs are “at-will,” which means they continue to exist unless they are dissolved. If you’d like your LLC to end on a certain date, you can put that date in your Articles.
- LLC Management: You’ll have to decide whether members or managers will make all the decisions for the company. Most LLCs are member-managed, but if you don’t plan to run the day-to-day operations of your business, you can hand that power over to management.
- Initial Members or Managers: You’ll need to list the names and addresses of either the initial members (if your LLC is member-managed) or managers (if your LLC is manager-managed).
- Liability: This section asks whether or not the LLC will be liable for debts and obligations. Since a Limited Liability Company is usually formed to limit liability (it’s in the name!), most people tick the first box in this section, choosing not to be liable.