How to Form an LLC in Hawaii

When beginning a new company, selecting a business organization is critical. For many factors, creating an LLC is a safer choice for a business with several owners. An LLC is an essential business arrangement that offers legal security to the corporation by separating personal assets from business debts. Also, relative to companies, LLCs would pay a lower income tax rate. It is best for a start-up. Due to the procedure, legal responsibilities, filing forms, fees, etc., one might assume that creating an LLC is a hassle. Even you won’t have to think about any rough conditions or high filing fees if you form your LLC in Hawaii. The creation of a Hawaii LLC follows a standard procedure. If we look at the whole process, it will consist of the following steps: choose a name, choose a registered agent, file articles of incorporation, operating agreements, obtain an EIN, and pay taxes.

If you follow all of the measures outlined here, you will be fully prepared to launch your business by the end of the article. Let us take a look at each step one by one. 

Step 1: Select a name for your LLC in Hawaii

This move is essential because the company’s name would be known everywhere. The name you will select will become your company’s face, and it is going to be around; on your website, logo, business card, and more. When it comes to naming your company, there are two rules to follow:

• The name of your LLC must be distinct from the names of other LLCs in Hawaii.

• In the name, the terms Limited Liability Corporation, L.L.C, or LLC must appear.

You can reserve a name with the Business Registration Division if you want it. The first step in this process is to search for availability in the Business Registration Division’s business name database. If your preferred name is available, you can submit an Application for Reservation with a $10 reservation fee to place a hold on your desired name.

In certain states, businesses that use a doing business as (DBA) name must register their DBA and business name. This clause does not exist in Hawaii. It is the responsibility of the business owner to file their DBA name. A trademark is a legitimate claim to the company’s logo, title, and other elements. As a result, you might want to register a trademark in your name. You should fill out the form and submit it to the following address:

Department of Commerce and Consumer Affairs

Business Registration Division

PO Box 40

Honolulu, Hawaii 96810

Step 2: Appoint a Registered Agent 

The next move is to choose a licensed agent, which is a legal necessity for Hawaii limited liability companies.

What is the job of a registered agent? The licensed agent serves as a liaison between the owner and the State. The LLC’s legal documents are delivered to the offices. Taxes, permits, and other state enforcement records are included in the report. The registered agent has to get the correspondence in place of your LLC. Anyone may register as long as they have a Hawaii postal address and are allowed to do business in Hawaii. The owner, associates, relatives, interested parties, or a business agency may all serve as registered agents. In short, we can say that the registered agent acts as the LLC’s point of contact.

You can serve as your registered agent for your company, but it might not be the best decision. Being your company’s agent will make your details public, and you must be available in the office during business hours. You may also employ a licensed agent service to protect your details.

The benefits of becoming a licensed agent include: 

  • receiving legal paperwork and being able to stay out of the office during business hours.
  • The agent supports the organization in staying compliant.

Who is qualified to act as your company’s registered agent?

A citizen of Hawaii or any company situated here can work as a registered agent. The owner, another boss, or a dedicated Registered Agent service may all fill this role. The licensed agent should have a street address in Hawaii and collect essential documents during regular business hours.

We’ve already mentioned how a person can act as the LLC’s registered agent, but you can also use business entities to fulfill your agent services. They can manage all of your business registration needs and provide registered agent service for free.

Step 3: Register the Articles of Organization

After registering the Articles of Organization with the Consumer Affairs Business Registration Division and the Hawaii Department of Commerce, the LLC is officially established in Hawaii.

The following details must be included in the LLC’s Articles of Organization: 

  • The LLC’s name and address
  • Registered agent’s name and address
  • The LLC organizers’ name and address
  • If the LLC is only temporary, you must state the length of the LLC
  • A statement defines whether or not LLC members are responsible for the company’s debts
  • An invoice stating whether the LLC is run by members or by managers
  • The signature of the LLC’s organizer.

The majority of LLCs are managed by the members, which means that they run the business and decide. On the other hand, an LLC controlled by the manager is when the owners appoint managers to run the company. 

The Articles of Organization form is easy to complete and understand. You can file the article online, via postal mail, hand-delivery, fax, or email for a $50 filing fee:

Filing Forms Online

The online Hawaii business express filing portal allows you to fill out the form online. After opening the site on the home page, you have to make an account; if you don’t already have one, you’ll require to generate one. After logging in, you must complete the filing by following the instructions.

Filing form via mail

For postal mail, you must first download the paper application and then complete it before submitting it along with the fee to the following address:

State of Hawaii Department of Commerce and Consumer Affairs

and Business Registration Division

PO Box 40 

Honolulu, Hawaii 96810

Filing by hand-delivering

If you live in Honolulu, hand-deliver the paper form and the fee to 335 Merchant St.

What’s more! You can even apply via email. Your completed form can be emailed to breg-docifiling@dcca.hawaii.gove. Your credit/debit card details must also be included.

Filing via fax

If you prefer the fax method, fax your document along with your credit card details to (808) 586-2733.

You have successfully registered for the Articles of Organization; it’s time to move to the next step.

Step 4: Formulate Your Hawaii LLC Operating Agreement

This move is not needed by law. However, it is also worth noting that it is an essential step in forming an LLC. Adopting an operating agreement is a sound corporate practice.

What is the meaning of this?

The LLC’s business arrangement is outlined in the agreement, and the member’s duties and obligations to the LLC are retained. It defined the operational details of the LLC. Most significantly, the LLC may face severe legal and operational difficulties if it does not have an operating agreement that sets out its members’ responsibilities. An LLC Operating Agreement lists the company’s members and establishes procedures for dissolving the company, adding new members, and selling its name. Any other considerations may be used to keep all LLC members on the same page and accountable.

We may call it a business outline since it defines what is required of all parties involved. The operating agreement is not required to be submitted with the Articles of Organization, but it should be held with your other business records. It would be best to have all of the participants sign the document and notarize it for future use.

If you agreed to draft the operating agreement, you can either write it yourself or hire someone to do it for you. You would think that how I’m going to write it is going to be difficult. However, this is not the case; for your convenience, several free models are available online. You can pick any of them, and they will assist you in producing a successful text. If you are unsure about writing it, you can always hire a lawyer or an attorney who is well-versed in this area and a good choice for this sort of stuff. He or she will not overlook any specifics and ensure that all information is included in the records to circumvent the State’s default rule.

Step 5: Obtain an EIN (Employer identification number)

All newly created LLCs must obtain an EIN (Employer Identification Number) from the Internal Revenue Service, as tax filing is a critical move that can never be overlooked. For a company, an EIN is a nine-digit number similar to a social security number. It is necessary to pay income tax, open a business account, file tax returns, and perform various other essential tasks. LLC’s are generally exempt from filing corporate income tax returns. However, the owners must report their actual profits and expenses on their tax returns. However, this does not mean the LLC is exempt from paying federal taxes under such cases, such as when it hires workers, is classified as a company, or sells goods. You can obtain the Employer Identification Number on the IRS website or one of the following methods:

Applying online

On the IRS website, you can file your tax return online. It is the quickest and most effective method available. Monday through Friday, from 7 am and 10 pm, you must apply. The number will be sent to you right away. You must also have a valid taxpayer number when completing the form.

Applying via fax

You can also fax your completed form by downloading Form SS-4 and faxing it to (855) 641-6935. The EIN will be sent to you within four working days after that.

Applying via mail

You may also submit a hard copy of the application to the office. However, this method is the most time-consuming of all the procedures. However, if you want to proceed, you must first download Form SS-4 and mail it to the following address:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

You’ve met all of the criteria for forming an LLC up to this stage. Is it time to commence a company? No, because we haven’t completed our work yet. Few more points are there; you should be aware of them. Before going on with your ventures, few things are there that you should remember.

Step 6: Additional legal obligations

It’s time to look at the legal provisions now that you’ve successfully registered your LLC. Annual reports must be filed with the State’s Company Registration Division. On the anniversary of the company’s founding, the information is due every quarter. If your LLC was created in May, for example, you must file the report in the second quarter of April, May, or June. The reporting procedure is straightforward; you can either file it electronically or mail the completed Domestic Limited Liability Company Annual Report form. The cost of filing is $15. The Hawaii Department of Taxes needs you to enroll. You must be cautious in filing the report on time, as failure to do so will result in a problem. So, please put it on your calendar and set a reminder because failing to do so could result in your LLC violating the law. If you don’t file the report for two years, your LLC will be administratively dissolved.

Step 6: The Taxes and Licensing 

The Hawaii Department of Taxation requires LLCs of workers or those who collect general excise tax to register. This is a must-do move if you want to get the requisite business licenses and permits. Depending on the form of business and venue, LLC may be required to obtain one or more state or local business permits, certificates, or licenses. Check out the State of Hawaii’s business information site for more details. There you can find specific information about business licenses and permits issued by the State. For updates on local permits and laws, you may also contact the local government. Each county, State, and local government has its own set of rules.

Take a look at the following possible LLC requirements before you start your business:

Federal Income Taxes

We know that LLCs are not required to file income taxes straight to the central government. The company owner has to record all expenses and gains on their income tax returns. You can also recognize your company as a corporation and file a different tax return for it.

State and Local Taxes

Hawaii’s income tax is the same as the federal one: company owners must disclose profit and losses on their income tax returns instead of a corporate tax. Any enterprise working in Hawaii, however, is required to pay a General Excise Tax. This tax is measured based on total business income, and you have to request a license for the General Excise Tax. So, be updated about the state and local taxes. 

Other taxes

If your LLC follows some specific criteria, it may be required to pay certain conditional state taxes. For example, if you recruit workers, you must pay withholding taxes and unemployment taxes, and you have to enroll with the Department of Labor and Industrial Relations; if you sell goods, you must pay Sales and Use Taxes.

The Department of Commerce and Consumer Affairs has made it compulsory for the business to register with them. With the help of the online portal, you could register with different departments. Alternatively, you can send Form BB-1 to the following address:

Department of Taxation

PO Box 1425

Honolulu, HI 96806-1425

Department of Taxation

830 Punchbowl St.

Honolulu, HI 96813

Obtaining a license

Your LLC will need to get a license/permit before it can start doing business. Even though your company is now legal due to the Articles of Organization, you will also need a special request or permit. The nature of your market determines this criterion. E.g., if you want to open a grocery store, you’ll need a permit from the Agriculture department. To see if your company needs a professional or procedural license, go to the government’s Licenses tab. You can also consult with your local authority since some counties and cities have their license. It is always better to check beforehand so your LLC does not end up in any trouble with the State. 

Finally, we’ve concluded. It’s a long process, but it’ll all be worth it in the end. You’re all set to launch your business. Congratulations on your achievement! You can form an LLC in Hawaii, run a campaign, make a significant profit, and so on. But, before we go, there are a couple of things we’d like you to remember. You must also maintain your company, as opening it is only the first move. There are a few steps you can take to guarantee that your LLC runs smoothly.

Essential Steps after the formation of LLC

Make a distinction between personal and business properties.

If your LLC is sued, personal properties such as a vehicle, house, and other valuables would be at risk if you combine professional and personal affairs. How are we going to hold them apart? There are several options:

  • Open a business checking account: Having a business account would allow you to distinguish your assets from those of your company, critical for personal asset security. It also makes tax and accounting filing a lot simpler.
  • Make a website for your business: It’s one step toward establishing the company’s legitimacy. You are aware that any company requires a website. It makes no difference if the business is small or large or only operates in the offline world. You’re losing out on potential clients if you don’t have a website. Customers can quickly check out your company by visiting your website. You’ve decided to create a website, but you’re worried that you won’t be able to do so because you’re a novice with no website-building experience. Okay, I accept that this concern is understandable, but not right now, considering the rapid advances in web technology in recent years. There are many options available to assist you in the development of your website. To help you, you can use a website builder app.
  • Apply for a company credit card: Your company credit card will help you separate personal and business expenses. It also helps establish your LLC’s credit history, which can help you apply for business loans.
  • Receive Commercial Insurance: One of the most critical strategies is insurance, which allows you to increase your company rather than thinking about risks. If you are covered, you will not be responsible for any losses that occur. You will work without any tension when you know that you are insured if anything terrible happens. 

Benefits of an LLC in Hawaii

Finally, let’s take a look at the advantages it provides. Starting an LLC in Hawaii is advantageous because it offers a quick filing process with comprehensive security. The owners are not subject to the same liabilities that companies are subject to. In Hawaii, an LLC provides a flexible way to expand a company. The following are some of the benefits of creating a Hawaii LLC:

• Your assets are protected since personal liabilities and debts are kept separate from the company.

• The filing procedure is quick. It also gives people more rights than companies do.

• The owners would not be subjected to double taxes.

So, we have to end. If you have reached here, that means you are ready to start your company. Congratulations!

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