How to Form an LLC in Hawaii

Co-authored by Clinton M. Sandvick, JD, PhD

Last Updated: January 31, 2023 References

A Limited Liability Company (LLC) provides its members the limited liability of a corporation with a partnership’s tax requirements and flexibility. Members include one or more owners of the LLC. Each member has some share of profits and losses determined by the LLC Operating Agreement. Profits and losses are reported on personal federal tax returns.^{[1]
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Go to source} Statute 23A-428-203 dictates how to form an LLC in the State of Hawaii and is valid for any individual that is a resident of the state who wishes to operate a business.

Part 1

Part 1 of 3:

Creating an LLC

1
Know the advantages of an LLC. A Limited Liability Company allows members and personal assets to be protected from personal liability for debt or suits against the business. There is less paperwork to fill out to register the business and lower start-up costs. Members decide how to distribute profits and take on various proportions of capital and sweat equity.
- Your liability under an LLC is limited, so wrongful acts by the business or its employees may not be protected.
The business may be dissolved if a member leaves, and the remaining members will be required to fulfill the legal and business obligations required to close the business. However, provisions in the Operating Agreement can dictate that the LLC will continue if a member leaves. LLC members pay self-employment taxes, and the net income of the business is also subject to this tax.
3
Choose your company name. Choosing your company name is an important part of the LLC formation process. Make sure your name reflects what your business does so that customers can remember it easily. The name cannot be the same as an existing LLC in Hawaii and must reference its limited liability status (such as “LLC”, “L.L.C.” or “Limited Liability Company”). You can abbreviate Limited as Ltd. and Company as Co.
- Some words are restricted or prohibited for inclusion in your LLC name. If you wish to use a restricted word in your business name (ex. Banc, Bank, Banque, ect.), you will have to do more paperwork and may need licensed members as part of your LLC (ex. Doctor, Engineer, ect.).
- Prohibited words are any words that refer to a federal or state agency (ex. FBI, Secret Service, Treasury, ect.).
- The business name is registered with the state of Hawaii when you register the business.^{[2]
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4
Make sure the name you pick is not already registered. To do this, search the Hawaii business name database. The name you choose must be distinct from other names in the database. If you need further assistance, you can call the Business Action Center (BAC) in Honolulu at (808) 586-2545.
- Name checks are also performed when you file your LLC documents.
5
Reserve your name. If the name for your business is available but you’re not ready to file for your LLC, then you should reserve your business name. Fill out the application form, Application for Reservation of Name. Follow the instructions, include the $10 filing fee and then fax or mail it to:
- DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
  - Business Registration Division
  - 335 Merchant Street
  - Mailing Address: P.O. Box 40,
  - Honolulu, Hawaii 96810
  - Fax: (808) 586-2733
- After your name is approved, it will be reserved for up to 120 days.
6
Check for a business domain URL. See which URL domain names are available for your business. You will likely use the name of your business plus .com (ex. billyssurfshop.com). If the exact name for your business isn’t available, try different abbreviations and add or remove words until you find a unique URL (ex. billyssurf.com or billysurfllc.com, ect.). Be sure not to make the URL too difficult to guess or remember for customers who might be searching for your website.
- If you don’t want to make a website right away, buying the domain name can prevent you from losing it to others.
- If someone else has your domain name, you may want to consider contacting them to see if you can purchase it from them.
Your email address is usually the name of an employee plus your company or domain name (ex. employee@yourcompanyname.com or Jen@billyssurfshop.com) but you can set it up however you please. Your domain provider should offer email options. You may also get a professional email through Gmail, Yahoo, Hotmail or another email provider for free.

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Part 2

Part 2 of 3:

Filing For an LLC

1
Get a registered agent. Nominate a person or business to officially receive and send legal paperwork and filings for the LLC. The registered agent you choose is required to be a Hawaii resident or authorized to conduct business in the state. Any member of your LLC, including yourself, can be nominated as the registered agent as well.^{[3]
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- If you choose a business to represent your LLC, then look for one that offers reminders when your filings are due, manages all your documents and provides them to you for quick access online, is available to address any questions or concerns you might have and can provide registered agent services in any state.
2
Use the Hawaii Business Express (HBE). The HBE website makes filing for a new business in the state of Hawaii easy. You can register your business, file with the Department of Commerce and Consumer Affairs (DCCA), get a Taxpayer ID from the Department of Tax as well as file with the Department of Labor by answering just one set of questions. You will need to create an eHawaii.gov account with your email and password.^{[4]
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- The Wizard is a multi-agency interface that will guide you through registering your business and use your answers to populate several different agency applications. This is a quick and easy way to file your business paperwork.^{[5]
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- You can also select the Quick File interface, which will provide the information and forms that you will need to file individually.
3
Fill out a Hawaii Articles of Organization. This document legitimizes your LLC. You will need to fill out information, such as your business name, address and the names of LLC members. Fill out the Articles of Organization and submit with a filing fee of $50.00 made to the Secretary of State.^{[6]
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- Mail the document and fee to:
- DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS,
  - Business Registration Division,
  - 335 Merchant Street,
  - P.O. Box 40,
  - Honolulu, Hawaii 96810
- Add an extra $25 for expedited processing.
- if you have questions about how to fill out any portion of the Articles of Organization, then speak with an attorney.
- To contact the DCCA, call (808) 586-2727.
4
Apply for an IRS EIN Number. If you have more than one member in your LLC, want to hire employees or need to open a bank account for the business, you will need an Employment Identification Number (EIN).
- To get your EIN, you will need to make sure you are eligible and apply online. Check the IRS.gov site for requirements.
5
Create an Operating Agreement. An Operating Agreement states the rights and responsibilities of the members in your LLC. It provides valuable rules, regulations and an organizational structure for your business, dictating what activities the LLC is involved in and how decisions will be made. This document often states who receives profit and at what percentage as well as the percentages of cost, interests and other provisions each member is responsible for or entitled to.
- If you decide not to create an Operating Agreement for your LLC, then your business will fall under the state default regulations set out in the Hawaii statute. Be sure that you have read and understand how the statue will govern your LLC.
6
Obtain licenses and permits. After you register your business, you may need to get licenses and permits, depending on your location and industry. For example, if your LLC engages in activities regulated by a federal agency, such as selling alcohol, firearms, aviation, agriculture, fish and wildlife, transportation, mining and drilling, nuclear energy or radio and television, then you will need to apply with specific forms for each agency. Check this site for information on applying.^{[7]
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- You will need to check with your local Planning & Permitting department for more information on what other licenses or permits you may need to get in your county or city.
- Know that you may have to pay a fee to obtain your license or permit.
7
Hire employees. If your business is doing well but you are having trouble keeping up with all the work by yourself, then it may be time to hire help. In order to hire, you will need to use your EIN, keep track of employment wages, taxes and tax withholding and check that potential employees are eligible to work in the United States. Visit SSA.gov/employer for more information.
- You will need to report all new hires to the Hawaii Child Support Enforcement Agency (CSEA) within 20 days of hire by faxing or mailing a copy of the employer’s IRS Tax Withholding Form (Form W-4) to:^{[8]
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- Child Support Enforcement Agency
  - New Hire Reporting Directory
  - 601 Kamokila Blvd., Suite 251
  - Kapolei , HI 96701
  - Telephone: (808) 692-7029
  - Fax: (808) 692-7001
- Purchasing Workers Compensation Insurance is necessary and can be obtained through a commercial carrier or Hawaii’s Workers' Compensation Insurance program.
- Make sure employees understand their rights and employer responsibilities according to labor laws. You must post information on this in the workplace. Visit the Workplace Posters page for the federal and state posters you will need to display.
- Check the Department of Labor’s Employment Law Guide for the most current information regarding employee statutes and regulations, such as minimum wage, child labor laws and overtime.
- Also, you should check out the Equal Employment Opportunity Commission and Fair Labor Standards Act to familiarize yourself further with these laws.^{[9]
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8
Set up record keeping. In order to run a successful business, you need to keep track of various information regarding your LLC. This can include tax and reporting obligations, payroll, employee benefits, business information, legal paperwork, labor laws, inventory and accounting. Always keep copies of original documents.
- If you can’t manage all the paperwork yourself, then hire a bookkeeper or accountant to help you out.
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Part 3

Part 3 of 3:

Complying With Tax Requirements

You can do this at the same time you apply for and form your LLC using HBE or a tax form from QuickFile. If you do file separately, know that the tax registration is usually due by 60 days after your LLC is registered. Your EIN is required for tax filing.
2
E-File with the state. You may electronically file Hawaii state tax returns online via e-filing. Your business can file multiple tax returns on the website, including Hawaii income tax, general excise/use tax and withholding tax returns. You can also make payments electronically using the site.
- It is free to e-file but making payments requires a fee.^{[10]
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- To use e-filing, you will need a browser with Secure Socket Layer (SSL) encryption, an email account as well as an EIN and Hawaii state identification numbers.
3
E-file using commercial software. You may choose to purchase tax preparation software to manage your taxes in Hawaii instead of using Hawaii’s e-file website. Fees for using the software, filing and making payments vary. The State of Hawaii Department of Taxation provides a list of approved vendors for tax preparation software.
- Check with the software vendor for more information or regarding any problems you might have with the software.
If you want to verify tax permits, licenses or accounts in Hawaii, check the Hawaii Tax License Search database. It maintains information on business taxpayers with names and numbers. Ensure that your information has been entered correctly.
5
File quarterly taxes. Hawaii requires that you file quarterly reports and make payments. You will need to file Form UC-B6, which is mailed to the employer address on file, and pay all contributions and assessments by end of the month after the calendar quarter. Hawaii offers an online service for filing, Hawaii Unemployment Insurance (HUI) Express.
- You will need to register and download the free QWRS program in order to calculate the total, taxable wages and contributions due.
- The 1st quarter runs from January-March, 2nd is April-June, 3rd July-September and the 4th quarter is October-December.
- You can file by paper if you prefer. However, if you have more than 9 employees, use HUI Express to file online. Completed paper reports and payments must be mailed to:
- State Tax Collector
  - P O Box 3223
  - Honolulu, HI 96801
- You may request wage or contribution layouts at: dlir.ui.qwrs@hawaii.gov.
6
File annual reports. State law requires all LLCs operating in Hawaii to file a report with the DCCA every year. The earliest you can file is the quarter that your annual tax report is due as determined by your registration date. You can file online on DCCA’s Annual Business Filing website.
- You can only file late annual reports due in the previous 3 quarters online. If you need to file a report that is over a year late, then you must send it in by mail, fax or you can walk-in to do it.
- To file online, you will enter your file number (found above your mailing address on the postcard you received from DCCA). Afterward, click “Begin Filing”.
- If you have questions about filing, contact the Department of Commerce and Consumer Affairs at breg@dcca.hawaii.gov or (808) 586-2727.
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You must be at least 18 years of age to form an LLC.

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Contact a Hawaii business attorney who can help guide you through the process of forming and maintaining an LLC.

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