How to Form a Hawaii LLC in 10 Steps
One of the most common types of business structures is the Limited Liability Company (LLC).
One of the main purposes of such a business structure is to limit exposure to liability for owner(s). LLCs can also pass down profits to each member. They do not need to file taxes separately (as is the case with corporations). Lastly, one or more individuals can own portions of an LLC.
If you are thinking about forming your own LLC in Hawaii, the process is fairly simple. Here are the steps you should take:
1. Choose Your Company Name.
You are required to choose a company name that no other business can have, especially in the state of Hawaii. We recommend having a filing service like SunDoc run your name search or reserve your LLC name. This costs a nominal fee.
Finally, it is recommended that you check to see if there are any registered trademarks on the name that you've chosen.
2. Understand the LLC Organizer Requirement.
The next step is to choose an LLC recognizer. This name will be put on your Articles of Organization document.
It's important to remember that anyone can be your LLC organizer. By preparing on-line with us, SunDoc Filings will be your organizer. If you choose to prepare and upload your filing with SunDoc, you can name your own organizer.
3. Designate a Registered Agent.
Choose a registered agent next. To learn what a registered agent does and why all companies need to have one, we've created this article: Registered Agent Service.
Basically, you need a designated registered agent (can be a firm or a person) to be listed on your Articles of Organization form.
4. Decide Your Ownership and Management Structure.
You will be asked how you want your LLC to be managed on your Articles of Organization form. You can be managed by:
- One manager
- Multiple managers
- All the members
You need to decide whether you want to be a member-managed or a manager-managed LLC.
5. Create an Operating Agreement.
Nearly all LLCs require having an operating agreement. Your operating agreement is a crucial document when creating your new LLC. It will:
- Outline business provisions, rules, and regulations
- Drive your business in a legal sense
- Pays out profits
- Lay out financial and functional decisions on your business's behalf
- Manage voting, liability, and fiduciary constraints
- Manage working capital
Most of all, the job of an operating agreement is to govern internal operations for your new LLC. All of these operations should meet the overall needs of your LLC owners.
If you have questions about operating agreements, you may also wish to consult an attorney for advice.
6. File the Articles of Organization.
Your state will probably require you to file a form called the Articles of Organization, providing your company details. The acceptance of your Articles of Organization by the State of Hawaii is the moment of your company's creation.
In order to file your Articles of Organization, you will need the name and address of your company, your LLC organizer, your registered agent, and your management method. You may require the member names to be filed.
SunDoc can file the Articles of Organization for you if time is an issue or if you'd prefer to have a filing service handle your paperwork.
7. Obtain an EIN and Open a Business Bank Account.
Congratulations! You are now a registered Hawaii LLC. Any LLC with more than one member must file with the IRS for an EIN, Employer Identification Number, whether or not you have employees. You can file with the IRS yourself, or SunDoc can file for you.
An EIN is also required by most banks in order to open a business account. If you've been paying business expenses out of a personal account up until now, this is a good time to set up your company's fiscal management. Make sure you keep all receipts for reimbursement no matter the account you’ve used for payments. At this point you may also want to find an accountant for help with business matters.
8. Pay Hawaii State Taxes.
Generally speaking, all LLCs must pay taxes and some necessary fees. These will likely be charged by the state of Hawaii in your first year of business operations and every year from then on. If you plan to sell goods, collecting sales tax may be required as well. If you have additional questions about taxes in Hawaii, check out the State of Hawaii’s tax web site.
9. Determine Necessary Licenses and Permits.
Most states require companies to have one or more business licenses or permits to operate at the city or county level. Use your state's business website to find the requirements for your business. It’s important to check this website even if you think your business is exempt. You may be surprised to discover what’s required. Operating without the proper license or permit can result in expensive fines.
10. File an Annual Report (Biennial Report or Initial List).
The final step of this process is filing a document called the Biennial Report or the Annual Report. Time is of the essence when it comes to your Annual Report. If you're limited on time, simply ask SunDoc to file on your behalf. We are always on time and reliable.
In any case, if you do not file this document on time, you risk incurring a harsh late fee.
Your first Annual Report needs to be filed soon after the formation of your LLC. From there, you'll have to file again every one or two years, and you also need to file if you make any significant changes to your company throughout the year.
The key role of the Annual Report is simply to keep the state updated on your company. Head to the Hawaii business web site to find this form and all other LLC forms you may need.
Important Notice: It is beyond the scope of this article to discuss your potential insurance needs, or matters relating to employees. You should consult an attorney or accountant with any questions about legal or financial matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.
For additional learning, please visit our LLC FAQs.
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