How to start an LLC in Hawaii in 2024

Setting up an LLC in Hawaii is a straightforward process and a relatively low-cost endeavor compared to other states. If you live in Hawaii and operate a local, community-based business, filing for an LLC can provide adequate limited liability protection to separate your personal assets from business liabilities. 

In addition to liability protection, starting an LLC in Hawaii can have other benefits. Jon Zahaby, an estate and small business attorney based in Honolulu, says residents tend to be “local-conscious,” taking extra care to pay patronage to small businesses over larger corporations based in the contiguous U.S. 

If establishing an LLC in Hawaii sounds like a match for you, we’ve put together eight steps to guide you through the process.

8 steps to start an LLC in Hawaii

1. Select or reserve a business name

The first step to setting up your LLC is selecting your business name. To get started, brainstorm some acceptable business names. Then, use Hawaii’s search tool to determine if they are already in use. If you find your name is unavailable, you can tweak it to make it different from the one already in use. However, keep in mind that you cannot distinguish a name by:

• Changing a number to its written form. 
• Changing the spelling of a word (“Kids” to “Kidz,” for example).
• Adding a business entity suffix or “partner” to the name. 
• Changing “and” to a variant of the word, such as “‘n” or “&”.
• Add a preposition or article. 
• Adding or removing punctuation, spaces or symbols. 
• Changing a word in the existing name to its plural or singular form.
• Changing a word in the existing name to an abbreviated version. 
• Adding “Hawaii” or “Hawaiian.” 
• Adding a number. 

Some ways to distinguish your name include changing a word in the name to a different word with a different meaning or changing the sequence of the words in the existing name.

In addition to ensuring the name is different from already-registered business names in Hawaii, do a search of your name using the U.S. Patent and Trademark search database. This will ensure the name is not nationally protected from infringement. Finally, so you can successfully market your name, search for the name in its domain and social-media-handle forms to ensure another company is not already marketing the name. 

If the name is available but you’re not ready to register your business, it’s a good idea to pay the $10 fee (plus an optional additional $25 for expedited review) to reserve the business name for up to 120 days (with the option to renew). You can do so online by clicking “get started” under “reserve a business name” using Hawaii business express. 

Zahaby stresses that reserving a name may be particularly important in Hawaii. Because so many businesses in the state are community-centered, they tend to be named after community landmarks or linguistic features of the Hawaiian language. This results in higher competition for specific business names than in other states. “For example, ‘Aloha LLC’ isn’t likely to be available,” says Zahaby.

2. Designate a registered agent

In Hawaii, you must designate a registered agent for your LLC. Registered agents receive legal notices and other official documentation on your LLC’s behalf via mail or delivery. While you can serve as your own registered agent, it may be better to outsource the responsibility to a professional company.

To serve as your own registered agent, you must meet the following criteria: 

• Be at least 18 years of age. 
• Be available at the listed registered agent address during all regular business hours throughout the year without leaving for sick leave, paid time off or business travel. 

The benefits of outsourcing your registered agent services include the fact that you won’t have to be available in person during all regular business hours to receive documents, you won’t have to list your personal or business address in registered agent public databases and you won’t have to worry about embarrassing legal documents being delivered to your business in front of clients or customers. In the end, hiring a registered agent service protects your flexibility, privacy and reputation. 

Read our best registered agent services guide to find the right service for your business.

3. File your articles of organization

Now that you have a business name and have designated a registered agent, it’s time to officially register your LLC with the state. In preparation to file, gather the following information: 

• Your company’s name. 
• Your LLC’s mailing address. 
• The name of your registered agent. 
• The street address where your registered agent will be available to receive official documents. 
• The name and address of each of your LLC’s organizers. 
• If applicable, an expiration date for your operations. 
• Whether your LLC is manager- or member-managed.
• If member-managed, the number of your initial members. 
• If manager-managed, the names and address of your initial managers. 
• If member-managed, the names and address of your managing members. 
• The debts, obligations and liabilities for which your managers or members will be liable. 
• The signature of at least one of your LLC organizers. 

Use the Hawaii business express website to file your articles of organization. You will find that Hawaii’s department of commerce and consumer affairs (DCCA) has set up a straightforward process to help you file this paperwork online. 

The filing fee is $50; you can pay an additional $25 if you want expedited processing. Hawaii has a general excise tax for all businesses, whether you’re a sole proprietor, corporation or LLC. When you file your articles of organization, you can create your state tax license simultaneously. But if you don’t, it’s perfectly fine to do so later in the process.

New LLC reporting requirement alert 

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has implemented a new reporting requirement for all non-exempt LLCs starting on January 1, 2024. 

The requirement is called the Beneficial Ownership Information (BOI) report and it is estimated to only take about 20 minutes to complete. 

Here’s what you need to know:

• LLCs formed before January 1, 2024 have until January 1, 2025 to file.
• LLCs formed between January 1, 2024 and January 1, 2025 have 90 days to file from the confirmed date of the businesses’ registration.
• New LLCs formed after January 1, 2025 will have 30 days to file from the confirmed date of formation.

For all details, FAQs and to file, visit FinCEN’s BOI website. 

4. Obtain an EIN from the IRS

The next step in the process is securing an IRS-issued employer identification number (EIN). An EIN is required to file federal taxes for your business, report employee wages and withholdings, open a bank account, obtain business loans and do other financial tasks. Fortunately, getting an EIN is a quick and free process. 

To apply for an EIN, you must be a responsible party within your LLC. The IRS defines a responsible party as “the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity.” If you are the responsible party, when you apply for an EIN, come prepared with: 

• Your Social Security number.
• Your LLC’s name.
• Your LLC’s business address. (Depending on where the business operates, this may be the same as your personal address.)
• Your LLC’s formation date.

You can fill out this paperwork online in 15 minutes or less. Once it’s completed, you’ll immediately be issued a confirmation that includes your EIN. Download and print the confirmation document and keep it with your business records. 

5. Draft an operating agreement

Hawaii doesn’t require you to file an operating agreement with the state, but it’s still an important document that can help you avoid legal headaches further down the line. Here are some benefits of having a signed operating agreement in your business records: 

• Limited liability protection: An operating agreement not only outlines how your LLC will operate, but it can also further reinforce your limited liability status, protecting your personal assets from future lawsuits. For example, it may state the ownership percentages of each member, thereby limiting their tax obligations to that recorded percentage. 
• Dispute prevention and resolution: By outlining and having all your members sign your operating agreement, you ensure all members agree on an operating direction, reducing the likelihood of operational-related disputes. In addition, you can refer back to this document to resolve disputes that arise among members. 
• Legal control: Without an operating agreement, your LLC’s operational policies must align with Hawaii’s default LLC statutes, some of which may contradict your operational needs or wishes. An operating agreement allows your LLC to override these rules.

Your LLC operating agreement should include the following information: 

• Members’ ownership percentages. 
• Members’ voting rights and decision-making powers. 
• Members’ initial contribution amounts. 
• Your LLC’s management structure. 
• Your LLC’s bookkeeping and accounting methods and procedures. 
• How new members can be inducted. 
• How the LLC can be dissolved. 
• How profits and losses will be distributed. 

To create an operating agreement, download a basic template for free through LLC formation services like Rocket Lawyer or Northwest Registered Agent. However, we strongly recommend having a business lawyer review the document before your members sign it because this is a legally binding document that could affect the success and continuity of your LLC. Both Northwest Registered Agent and Rocket Lawyer offer legal consultation services to meet this need. 

6. Apply for your Hawaii state tax ID number

If you didn’t file for your state tax license when you filed your articles of organization, do so now. Regardless of structure, all businesses must file form BB-1 and pay a one-time $20 registration fee to get a state tax identification number. You can register online via the Hawaii department of taxation’s “register new business” page. Click “BB-1 basic business application” to get started. 

To file, you are required to provide the following information:

• Your LLC’s EIN. 
• Your LLC’s legal name. 
• Your mailing address. 
• Your LLC’s physical address. 
• The date of your LLC’s formation. 
• The state where your business operates. 
• Your LLC’s accounting year (calendar year or fiscal year ending) and accounting method (cash or accrual). 
• Your business’s phone number, email address and fax number (if available). 
• Your LLC’s NAICS number. 

Read the instruction section at the end of the BB-1 PDF form for information on how to obtain this information. 

The general excise tax for all businesses, including LLCs, varies based on the business’s industry and location. Statewide, industry-based general excise taxes include: 

• 0.15% on insurance commissions.
• 0.50% on wholesale, manufacturing, producing services and use tax on imports for resale. 
• 4.00% for all other business activities, including service-based companies. 

The county where your LLC is based also influences your general excise tax rate. “On certain islands, you’ll have projects that will add in a county tax to the general excise tax,” says Zahaby. “On Oahu, we recently built a significant rail system that added to the tax.”

Currently, the additional tax for each county is as follows through 2030: 

• City and county of Honolulu: 0.50%
• County of Kauai: 0.50%
• County of Hawaii: 0.25%

This additional tax only applies if you work in the 4.00% category, not to insurance commissions or wholesale and manufacturing businesses. Currently, there is no additional tax for the County of Maui. 

7. Apply for a business license (if applicable)

Select businesses are required to obtain a Hawaii business license before opening to the public. A good place to explore the requirements for your industry is the professional and vocational licensing section of DCCA’s website. It will direct you to the appropriate government agency for your licensure.

For example, if you’re an accountant, you must file for a Hawaii-certified public account (CPA) license with the Hawaii board of public accountancy. If you’re establishing an LLC for an auto repair shop, you need to apply for licensing with the motor vehicle repair industry board. Licenses do come with additional fees, which vary greatly by industry. For example, CPA licensing filing fees range from $139 to $215, depending on the year in which you file. 

8. File your annual report

You do need to file annual reports to keep your Hawaii business in good standing. Failing to do so for two or more years will result in your LLC’s involuntary dissolution. The purpose of an annual report is to provide current information about your businesstor the public. The fee associated with these filings is $12.50 if you file online or $15 for paper filings. You can pay an additional $25 for expedited service to process your paperwork within one to three days. 

To file your report, you need your business name or file number. You can obtain this number by searching for your business in the Hawaii business express “search for business and buy documents” database. Once you’ve selected your business, the information provided will include your file number. In addition, to file your annual report, you must provide the following information: 

• Your legal business name.
• Any new trade names or trademarks associated with your business. 
• Your LLC’s mailing address.
• Your LLC’s principal office address.
• The nature of your business (i.e., products or services sold).
• Your registered agent information.
• Your managers’, officers’ or directors’ names and addresses.
• Credit or debit card information to pay the filing fee.

To file your annual report, use the search box on the DCCA business portal to search for your business using its name or filing number. Select your business name and click the button to start your annual report. 

Warning: You should always file your annual report directly with the state. Over the past several years, Hawaiian businesses have been subject to several scam attempts associated with annual report filing requirements. The scam involves a mailed letter related to your Hawaii annual LLC filings that looks official. It reports that you must pay a fee breaching $100 to remain in good standing with the state. 

These scams have been so prolific that the governor issued warnings to small business owners on the island. To avoid being taken advantage of by scammers, do not file your annual report with a third-party company but directly through your own account in the DCCA business portal. 

Find the best LLC services for Hawaii : Best LLC services of 2024.

Frequently asked questions (FAQs)

Can I set up an LLC for free in Hawaii?

No, you cannot set up an LLC for free in Hawaii. To legally establish your LLC, you must file articles of organization and submit a $50 filing fee. You may also choose to reserve your name as you go through the formation process, which costs $10. If you choose to hire a registered agent, expect to pay between $0 to $300 per year, depending on whether you bundle services and the provider’s offerings. Applying for a Hawaii state ID number also costs $20. Finally, additional fees apply for any industry-specific business licenses. 

Hiring an LLC formation company can help you keep costs at a minimum. Many, including ZenBusiness, will help you form your LLC and take care of your registered agent service requirements for one year for free.

Do Hawaii LLCs pay taxes?

Yes and no. All businesses in Hawaii pay a general excise tax, regardless of structure or industry. However, there are no additional taxes for an LLC versus operating as a sole proprietorship. In most cases, like sole proprietors, LLCs are treated as pass-through entities, meaning members pay income tax on revenue earned based on their ownership percentage in the LLC.

Do I need a registered agent in Hawaii?

Yes, you need a registered agent for your Hawaii LLC. You can serve as your own, but hiring a registered agent service can help you avoid certain obligations and inconveniences, like the requirement to be present at the listed registered agent address to receive documents during all regular business hours throughout the year, with no legal permission to leave the premises for business travel or sick leave.

Do Hawaii LLCs need to file an annual report?

Yes, Hawaii LLCs do need to file an annual report. Hawaii’s fees are some of the lowest in the nation, dipping as low as $12.50 if you file online. Be sure to file your annual report directly with the state rather than a third-party organization, regardless of what official-looking paperwork you may receive in the mail.

How do I dissolve an LLC in Hawaii?

To dissolve an LLC in Hawaii, you must follow the dissolution guidelines in your LLC operating agreement. You must also fill out Form LLC-11 articles of termination. The filing fee is $25, with the option to pay another $25 for expedited services. For this particular form, payment must be made in cash or by a certified check, cashier’s check, money order or credit card.