Starting an LLC in Hawaii gives its members the limited liability offered by a corporation without the rigid corporate structure. It's available for any resident of the state who wants to operate a business and not expose their personal assets to a lawsuit if one ever happens. 

Overview of Forming an LLC in Hawaii

Forming an LLC in Hawaii is easy and relatively inexpensive. Keep in mind that the state has requirements that are unique to itself. 

Begin by deciding on a name for the company, then performing a name search on the Department of Commerce & Consumer Affairs (DCCA) website. You need to make sure that the name you have chosen is not in use by another company. Also follow the naming guidelines in order to avoid your application from being rejected. 

Hawaii requires the company name to include:

  • Limited Liability Company
  • L.L.C.
  • LLC

Some words are restricted and require approval by the state for their use in the name of an LLC. Some of them include:

  • Bank
  • Banker
  • Banking
  • Certified Public Accountant
  • Credit Union
  • Escrow
  • Exchange
  • Olympic
  • Trust
  • Underwriting

If you are not sure if a word in your name is allowed by the DCCA, check with the department's website to find the list of restricted words. 

In the event the name is available but the company is not ready to file for its LLC, it can reserve the business name by filling out an application form called Application for Reservation of Name. Follow the instructions on the form and mail, fax, or apply online with the DCCA. Once the name is approved, it is reserved for up to four months. 

Select a Registered Agent

Businesses are required to select a Registered Agent for its LLC. The Registered Agent is a person or business entity who is authorized to conduct business in Hawaii. They agree to accept service of process if the LLC is sued, and are able to accept legal papers on behalf of the LLC during normal business hours. The business can elect someone in the company including the owner, but the LLC cannot be its own Registered Agent. 

Filing the Articles of Organization

In order to register the LLC with the state of Hawaii, the applicant has to file the Articles of Incorporation with the DCCA. This can be done by online or mail. It costs $50 to file the Articles of Incorporation and the fee is non-refundable. All LLCs have to submit the Articles of Organization for Limited Liability Company (Form LLC-1). Expediting the filing costs an extra $25. Information required on the form includes:

  • LLC name and address
  • Registered Agent's name and address
  • Organizers' name and addresses
  • Statement identifying whether LLC is manager or member-managed
  • If the LLC follows an at-will lifespan or specified timeframe
  • Dissolution date if applicable
  • Payment of required fees

The fees are payable by cashier's or certified check, money order from a bank or the post office, cash, and credit card. You can register online or by mail. It takes about three to five business days for the Articles of Organization to be processed by the DCCA.

Creating an Operating Agreement

Hawaii does not require LLCs to have a Limited Liability Company operating agreement, but it's a good idea to have one in place especially if the LLC has more than one member. The operating agreement outlines the ownership and operating procedures of the company. 

Getting an EIN

The EIN, or Employer Identification Number, is given by the IRS to identify a business entity. It acts as a Social Security number for the LLC even though the LLC may never have an employee. The EIN is necessary when filing state and federal taxes. Banks may also require an EIN to open a checking account for the business. The IRS gives the EIN free of charge to those who apply either by mail or online. 

Separate Personal Assets from the LLC

It's important to open a business bank account so as to separate personal assets from those of the company. This also makes accounting and taxes easier to handle. Separating the personal assets from the company gives the company a separate status from the personal and protects the members from liability. 

If you need help with starting an LLC in Hawaii you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.