How to Start an LLC in Hawaii

Starting a Hawaii LLC might seem scary to a first-time business owner. However, with the right information, you will find your Hawaii LLC formation much easier than expected.

By the time you finish reading this article, you will know:

• The steps to forming a Hawaii LLC
• Essential tasks to handle after you register an LLC
• The cost and time required to start an LLC in Hawaii

Read on to learn more about LLC formation in Hawaii!

Last updated: Sep 2024

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Step 1: Name your Hawaii LLC

To start an LLC, you first need to pick a name. You can’t use anything you want as a business name, though. Hawaii state laws limit what is allowed. Certain words are banned, while others are required as part of the legal name.

We’ve explained the rules in more detail below.

Words You Have to Use

Hawaii Revised Statutes Section 428-105 says LLC names must contain one of the following:

• “limited liability company”
• “L.L.C”
• “LLC”

The statute also says you can shorten “limited” to “ltd.” and “company” to “co.”

Words You Can’t Use

Your LLC name can’t make it seem like you are a different type of business entity. Additionally, it should not imply that your LLC is part of the government.

You should also keep in mind that your LLC’s name can’t suggest that you provide services you’re not licensed to provide. If you’re not legally allowed to offer a service, the company’s name can’t hint that you do.

Section 428-105 also says that your LLC name can’t be the same as or “substantially identical” to another registered name. This rule exists to avoid confusion between two businesses with the same name.

Check out the Hawaii Department of Commerce and Consumer Affairs (DCCA) Business Naming Rules for more info.

Research the LLC Name You Want

Once you’ve chosen the name you want to use, you can check to see if it is available with the DCCA’s Business Name Search.

If someone has already registered your name, you can’t use it unless the current owner consents in writing and you add at least one word to make the names different. You can also use the name if you have a court order that says you have the right to do so.

If the name is up for grabs, Hawaii Revised Statutes Section 428-106 lets you reserve it for 120 days. To do this, you must submit an Application for Reservation of Name form and a $10 filing fee to the DCCA.

You can reserve your LLC name online using the Hawaii Business Express portal. Other options include filing by email (breg-doci-filing@dcca.hawaii.gov) or fax (808-586-2733).

You can also mail your application to the address below:

Or, you can file in person at the following location:

Hawaii DBA: Using a Trade Name

Many LLC owners decide to use a “DBA” or “doing business as” name instead of the company’s real name. A DBA is an alternate name that lets you use a different name in your daily business.

With a DBA, you can market your LLC with a less formal name. You can also start using a new DBA as your business evolves.

In Hawaii, DBAs are called “trade names.” If you want to use a DBA for your LLC, Hawaii Revised Statutes Section 482-2 says you must submit an Application for Registration of Trade Name to the DCCA.

You can file this application in person, by mail, fax, or email, or through the Hawaii Business Express online portal. There is a $50 filing fee.

Step 2: Appoint a Registered Agent for your LLC

A registered agent is a person or business that accepts important legal documents for an LLC.

Hawaii Revised Statute Section 428-107 says all LLCs must have a registered agent with a business address in Hawaii. Your agent must be available to receive service of process during normal business hours.

In Hawaii, you can choose between a commercial or a non-commercial registered agent. The primary difference is that commercial agents are “in the business” of serving as registered agents.

Many new LLC owners want to list themselves as the registered agent for their company. This choice does have its benefits:

• It’s cheap: You’re not paying someone else to do it for you.
• It’s easy: The only address and contact information you have to keep current is your own.
• It’s reliable: You will receive all important documents personally.

But even though it might sound like a good idea, it can end up being more trouble than it’s worth.

A few of the issues that might come up include:

• No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information. 
• Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
• No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
• Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
• It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.

You can avoid these problems by using a professional registered agent. Hiring one of these businesses only costs about $100 per year. Plus, your agent will inform you if your LLC receives any documents.

If you want to expand your business outside of Hawaii, we suggest you choose a service that is nationwide. It will make it easier to register as a foreign LLC and keep a registered agent in each state where you plan to do business.

Using a national service provider will let you pay one business, even if you need multiple agents in multiple states.

Step 3: File Your Hawaii LLC Articles of Organization

Articles of organization are a legal document that lists basic details about your business. You must file this form with the DCCA to create an LLC in Hawaii.

What to include in my Hawaii Articles of Organization?

Hawaii Revised Statutes Section 428-203 says that articles of organization must list:

• The LLC’s name.
• The name and address of the registered agent.
• The mailing address of the principal office.
• If the LLC will be member-managed.
• The name and address of the members and/or managers.
• If the LLC’s duration is for a specified term.
• If the members will be liable for the LLC’s debts.

If you use a commercial registered agent, all you need to provide is their name. But if you are using a non-commercial registered agent, you must also list their address.

You can file your articles of organization online through the Hawaii Business Express portal. You can also submit them in person or by mail, fax, or email.

Hawaii LLC Filing Fee

According to the DCCA’s LLC Fees list, the filing fee for a new Hawaii limited liability company is $51.

Read More: How Much Does It Cost to Form an LLC in Hawaii

Hawaii LLC Processing Time

Regular processing takes about 5 to 7 business days after receipt. However, the process can be expedited for a $25 fee.

Step 4: Draft your Hawaii LLC Operating Agreement

Operating agreements are legal contracts between LLC members that detail how the business will be run. They also outline each owner’s rights and duties.

You don’t need to have an operating agreement for your Hawaii LLC. However, making one can help sync up the members’ expectations and prevent future arguments. 

For instance, say that an LLC member wants to sell their share of the business. An LLC operating agreement can lay out the process for selling and how to choose who takes over their duties. This means you don’t have to decide what to do when an issue comes up.

Operating agreements are also useful for new LLCs because:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so. 
• They say what the manager has the right to do. Managers also have special duties to the company and the members. The LLC operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business entity now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

All the owners should create and sign an operating agreement. This will make sure that everyone has a say in how the company is run. It also helps avoid disagreements among co-owners.

If you want to learn more about Hawaii’s rules for operating agreements, check out Hawaii Revised Statutes Section 428-103.

Step 5: Get an EIN (Employer Identification Number) for Your Hawaii LLC

An EIN is a nine-digit number that the IRS issues to businesses. Your LLC can use it as a tax ID number, just like an SSN for people. However, EINs are only given to entities.

Here are the most common times when you need an EIN:

• Does your LLC have more than one member? 
• Does your LLC have any employees? 
• Is your LLC taxed as a C corporation or S corporation?

If the answer to any of these questions is yes, your LLC must get an EIN.

In general, owners of a single-member LLC can use their SSNs to file taxes. But, you’ll still need an EIN to open a business bank account. Using an EIN can also help protect your identity and make some administrative tasks simpler.

You can get your EIN through the IRS website or fill out Form SS-4. Both ways are quick and simple. They’re also free, so there’s no need to hire a service to get an EIN for you.

Read More: How to Get an Employer Identification Number in Hawaii

First Tasks After Registering your Hawaii LLC

Starting your Hawaii LLC is a crucial first step. However, you’ll also need to complete the tasks we’ve listed below to set your business up for success.

Open a Business Bank Account

We strongly suggest using an LLC bank account. This way, your business finances are separate from your personal finances.

Some of the advantages of an LLC bank account include:

• Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
• More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments. 
• Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts. 

The third benefit, personal asset protection, is critical.

An LLC can help to protect your personal assets. This is because the “corporate veil” stops creditors from going after these assets to pay off company debts.

However, make sure to keep your personal and company funds separate. If you mix the two, the corporate veil may get “pierced” in a lawsuit. This means that you can be held personally responsible for any liabilities your LLC incurs.

Opening a business bank account will help to safeguard your personal assets. The business will be treated as a separate entity. So, if it was ever sued, you would avoid legal liability.

Get Business Insurance For Your Hawaii LLC

We also advise you to take out business insurance for your Hawaii LLC. You can choose the coverage you need to protect your company from common risks in your industry.

Some types of business insurance include:

• General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
• Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
• Workers’ compensation insurance: Hawaii law requires most employers to obtain workers’ compensation insurance coverage. You can decide to buy a policy from a private insurance company or get approved to self-insure.
• Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
• Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
• Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.

Keep Your Hawaii Company Compliant

Being an LLC owner comes with responsibilities. For instance, you can’t work in some industries without getting a business license. Your LLC may also need to pay taxes.

It’s important to stay current with the latest local laws and regulations. This way, you’ll be aware of all changes and can be sure to comply.

Hawaii Business Permits and Licenses

The type of business you’re starting may need a certain permit or license. The DCCA’s Business Action Center can provide more info on what you need to get.

Hawaii Tax Requirements

As a new Hawaii limited liability company, you’ll need to register with the Hawaii Department of Taxation (DOT). Check out the DOT’s Licensing Information page for more details.

Federal LLC Tax Filing Requirements

LLCs are known as “pass-through” entities. That means they don’t get taxed. Instead, profits must be reported on Schedule C of the LLC’s owner’s income tax return.

You also need to make sure your LLC pays social security and Medicare taxes, even if you don’t have any workers. And if you do have employees, make sure to withhold payroll taxes from their checks.

Annual Report and other Filing Requirements 

Hawaii Revised Statutes Section 428-210 requires all LLCs to file an annual report with the DCCA. You can file your LLC’s Hawaii annual report through the Hawaii Business Express online portal. You can also submit them in person or by mail, fax, or email. There is a $15 filing fee.

Hawaii Business Formation Quick Links

• Internal Revenue Service — apply for an EIN online
• IRS information regarding the federal tax treatment of LLCs
• Hawaii Business Express (DCCA)
• Business Name Search (DCCA)
• Domestic Limited Liability Company (DCCA)
• Information for Domestic Limited Liability Company (DCCA)
• Registration Forms, Fees and Information (DCCA)
• Frequently Asked Questions (DCCA)
• Starting A Business (DCCA)
• Business Action Center (DCCA)

Statutes:

• Name Requirements: Hawaii Revised Statutes Section 428-105
• Name Reservation: Hawaii Revised Statutes Section 428-106
• Trade Name: Hawaii Revised Statutes Section 482-2
• Registered Agent: Hawaii Revised Statute Section 428-107
• Articles of Organization: Hawaii Revised Statutes Section 428-203
• Operating Agreement: Hawaii Revised Statutes Section 428-10
• Annual Report: Hawaii Revised Statutes Section 428-210