This article will help entrepreneurs looking to start an LLC in Hawaii. An LLC is an abbreviation for a limited liability corporation.
As a general rule, an LLC offers small businesses better protection and benefits.
They also don’t require the major costs and commitments that incorporating brings with it. Hence, it’s a necessary step for growing a business that can be done easily following this outline.
|LLC Filing Fee||$50||$70||$100||$200||$130.38|
|LLC Annual/Biennial Fee||$15 (every year)||$800 (every year) + $20 (every 2 years)||$100 (every year)||$60 (every year)||$89.34 (every year)|
|Corporate Tax Rate||4.4-6.4%||8.84%||6.6-7.6%||0%*||5.60%|
|Nominal GDP per capita||$62,474||$85,546||$62,867||$86,265||$64, 773.08|
|Overall Rating for Starting an LLC||4/5|
Before You Set Up An LLC In Hawaii
First, let’s review the general requirements you need to meet:
- The name of your LLC must contain the phrase “Limited Liability Company” or its abbreviation, LLC. Alternatively, the word “Limited” can be abbreviated as Ltd. and be accompanied by the word Company, abbreviated as “Co.”
- The name of your LCC cannot be the same as another LLC already registered in Hawaii and must be recognizable.
- Your LLC must have a registered agent, an individual or business, authorized to do business in Hawaii. Said agent must have a physical address in Hawaii.
- If your LCC has or will have more than one member or employee, then it must have an EIN tax identification number for tax purposes.
- You must file an annual report for your LLC every year on the anniversary month of its founding.
How Much To Start An LLC In Hawaii?
You might be wondering how to start an LLC in Hawaii for free – but starting an LLC will inevitably cost you some money, just like any business entity would. Luckily, the cost of starting an LLC in Hawaii isn’t high:
- First, you will have to reserve a name for your LLC. The filing for this reserving will cost you $10.
- Next, you’ll need to register your chosen name with the Hawaii Department of Commerce and Consumer Affairs. This will cost $50.
- You will need to file the Articles of Organization. This will cost another $50.
- There will be an annual filing fee of $15, which won’t be due until the following year.
All told the total cost of starting your LLC will be $125.
Steps To Start An LLC In Hawaii
So, now that we know what the requirements for starting an LLC in Hawaii are, what’s next? How exactly do you go about creating an LLC in Hawaii?
- Name the LLC: Start by choosing a name for your LLC. Remember, your chosen name must be unique, as in distinctly different to LLCs already registered. Once you’ve chosen your name, you can reserve it before you start your LLC and register it when you’re starting it.
- Find a Registered Agent: Hawaii requires you to have a registered agent who is authorized to do business there and has a physical street address in the state. The registered agent must be an individual or business that will agree to handle legal paperwork on your LLC’s behalf in the event that it is sued.
- File Your Articles of Organization: When you file an Article of Organization with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division, you will be officially forming an LLC in Hawaii.
4. Create an Operating Agreement: While this isn’t required by law, an LLC should create an operating agreement. This is a document that outlines the structure of your LLC, its main policies, and how it will be run. It will explain the rights and responsibilities of all its members and managers.
5. Obtain an EIN: If your LLC has more than one member or employee, you must obtain an Employer Identification Number (EIN) for tax purposes.
6. File Your Annual Report: Every LCC registered in Hawaii must submit an annual report on the anniversary of the LCC’s formation, every year.
Pick A Name For Your LLC
When picking a name, you’ll have to search the database of registered businesses to ensure that it’s unique. Remember to include the words “Limited Liability Company” in that name as you’re filing the necessary forms.
Once you have determined the name, you’ll need to reserve it at the Hawaii Department of Commerce and Consumer Affairs Business Registration Division. You can do this using the application form (X-1). The filing fee will be $10.
If you plan to use a trade name or DBA, then you should register the trade name with the Hawaii Department of Commerce and Consumer Affairs to protect it. To that end, you need to file the (T-1) application form. The fee for this will be $50.
Find A Registered Agent In Hawaii
According to state law, all LLCs must have a registered agent with a physical address in Hawaii. Your registered agent can be an individual or even a member of your LLC, as long as they live in Hawaii.
Choosing an individual can save you money, but it will have some drawbacks. For one, your agent’s address must be a public record. They must be available to accept papers during business hours and must notify the state of any address changes. Because of these requirements, many LLCs prefer to use registered agent service companies.
Most such companies can charge you an annual fee between $100 — $300 for their services. They receive any papers sent to your LLC on its behalf and keep private information confidential. As such, this tends to be the better option for businesses with more than 10 members, businesses whose members do not reside in Hawaii, or businesses that want to clearly separate members’ roles.
When choosing an agent, you may turn to the registered agent database offered by the state of Hawaii. The state charges $2 per list.
|ZenBusiness – $49 + state fees to register your LLC (read review)|
|Incfile – $0 + $50 state fees to register your LLC (read review)|
Get An EIN
An Employer Identification Number (EIN) is to an LLC what a social security number is to an individual.
Getting EIN helps you to open a bank account for your LLC, apply for certain permits and licenses and handle employee payroll. Filing for an EIN with the IRS is easy and free online. If you prefer, you can also apply for an EIN offline.
LLC Taxes In Hawaii
How Much Do LLCs Have To Pay In Taxes In Hawaii?
Taxes are always a complicated business. So, let’s go into this in a little more detail. If you’ve chosen to have your LLC classified as a corporation, you will be subject to the Hawaii Corporation Income Tax:
- Income up to $25,000 will be subject to a 4.4% rate.
- Income between $25,000 and $100,000 will be subject to a 5.4% tax rate, minus $250.
- Income over $100,000 will be subject to a 6.4% tax rate, minus $1250.
How Do Federal Taxes Work In Hawaii?
As the owner of an LLC, you’ll have to pay both a federal income tax and a self-employment tax. Both of these taxes can be levied as “pass-through taxation”.
All members of an LLC who take profits out of that LLC must pay self-employment tax as well. The current self-employment tax rate in Hawaii is 15.3%. Here’s a general example of how this would work with your profits:
- For profits up to $60,000, you’d pay a self-employment tax of $9,180.
- For-profits up to $90,000, you’d pay a self-employment tax of $13,770.
- For profits up to $120,000, you’d pay a self-employment tax of $18,360.
How Do State Taxes In Hawaii Fare Compared To Other States:
To recap, Hawaii currently has a 4% state tax rate. Hawaii’s tax system ranks 41st, compared to all other states. The state with the lowest state tax is Alaska, whose tax rate is 5.06%. The state with the highest tax rate is California at a whopping 13.30%.
Is Hawaii a good place to start an LLC, then? It is, as the state offers broad protection. It frees you of liability without issuing the usual requirements that are placed on corporations. As such, Hawaii gives LLCs the flexibility they need to grow comfortably.
How Much Does It Cost To Run An LLC In Hawaii?
Starting and running an LLC requires you to file a number of forms. At a minimum, you’ll have to file the Articles of Formation, which will cost you $50 to file. All told the total cost of starting your LLC will be $125.
What To Do After Formation?
So, you’ve formed your LLC. Congratulations! But registering your LLC is just the first step. Now the real work begins:
- Create a logo. Your logo is essentially your calling card. It’s the face that you present to the world and a summation of your brand. As such, it’s important to create one that embodies who you are and what you aim to achieve.
- Build a website/e-Commerce store. In the age of the internet, any successful LLC must have either a website or an e-commerce store. This is the surest way of reaching as broad an audience as possible. Create a clean, aesthetically engaging website that defines who you are and what your vision is.
- Bank account. Now that you’ve officially founded your LLC, it’s time to open up your bank account. This is incredibly helpful in keeping your personal finances, and business finances separate, which you need to do for tax purposes.
- Business insurance. While getting business insurance isn’t required, it is highly advisable. You always want to make sure you’re protected, and taking this extra measure can help you immeasurably in the future.
- Annual reports. Don’t forget that you’ll have to file your annual reports on the anniversary month of your LLC’s founding. Fear not, the state will send you reminders a couple of months in advance, so you don’t skip this obligation.
Start Marketing Your LLC In Hawaii
One thing you need to plan once you’ve founded your LLC is how you’re going to market your product and services.
So make sure you have a good marketing plan in advance. Research the market you’re going into beforehand and identify the needs, lacks, or problems that you see.
How can your products and services address these? Once you’ve figured that out, create and start implementing your marketing plan around this.
How To Dissolve An LLC In Hawaii
One additional thing to know before starting your LLC is how to dissolve it, should you want to.
In order to do this, you’ll need to file form DC-13, otherwise known as Hawaii Articles of Dissolution with the Hawaii Department of Commerce and Consumer Affairs. You’ll need to file this with the department’s Business Registration Division (BREG). You need to do this in person or via fax.
You may not take care of it online. Make sure the documents you file have legible signatures, the charge needed to file them, and any required contact information.
We’ve gone through the steps needed to start an LLC in Hawaii. You know everything you need to know to form an LLC in the island state.