Many Hawaii entrepreneurs choose to form a limited liability company (LLC) because of the many benefits of this business entity type. An LLC provides liability protection, for instance, so your assets are not at risk if your business is sued or you cannot pay debts.
An LLC is a “pass-through entity” for tax purposes, meaning that the LLC itself is not taxed. Instead, income passes through the business to the LLC owners or members, who report it on their tax returns. LLCs also offer flexibility in terms of management and taxation.
Creating an LLC is relatively straightforward, but ensuring it’s done correctly is crucial to getting your Hawaii business on the right foot. The most critical step is filing articles of organization.
What Are Articles of Organization for an LLC?
The articles of organization is a legal document filed with the Hawaii Department of Commerce & Consumer Affairs to form an LLC officially. It will include your business name, address, registered agent information, and more, as detailed below.
First, Select a Registered Agent for Your Hawaii LLC
Hawaii requires LLCs to appoint a registered agent, a person or company authorized to accept and respond to official business correspondence, such as legal, tax, or financial documents.
The registered agent ensures all required notices and documents are received. In Hawaii, the registered agent can be an LLC member, individual, or entity that meets state requirements. In Hawaii, a registered agent must:
- Be 18 years or older
- Have a physical address in the state
- Be available during regular business hours
- Be registered to operate in the state, if it’s a business
Many business owners hire a registered agent service to ensure their LLC stays fully compliant and for convenience.
If you choose to be your registered agent, you must be at your registered agent’s address for all business hours. A registered agent service allows you to be wherever you need to be to run and grow your business.
How to Submit Articles of Organization in Hawaii
To start, visit the Hawaii Department of Commerce and Consumer Affairs website and create an account to access the articles of organization online.
In Hawaii, the articles of organization require the following information:
- LLC name
- Principal office address
- Registered agent information
- Registered office address
- Organizer name and address
- Management structure
- Names and addresses of members or managers
After you sign in, you’ll be on the “Start a New Business” landing page. First, you’ll select “I would like to register a new business in Hawaii.”
Then you’ll be asked whether or not your business is based in Hawaii and the type of business entity you’re forming. Finally, you’ll be taken to the initial business filing page, where you’ll enter all the required information.
You’ll have an opportunity to review all your information before payment.
The filing fee is $50. You should receive confirmation in three to five business days if you file online. The turnaround time for filing by mail can be up to 10 business days.
Some entrepreneurs hire an LLC formation service like ZenBusiness to handle this step, saving time and ensuring the process is done correctly.
Draft an Operating Agreement
Hawaii does not require an operating agreement, but it’s a crucial document that defines members’ ownership percentages and profit allocations. Those are the two key elements, but it should also include the following:
- Each member’s rights and responsibilities
- Management structure and roles
- Voting rights of each member
- Rules for meetings and voting
- What happens when a member sells their interest, becomes disabled, or dies
You can find operating agreement templates online, but it’s best to have them drawn up or reviewed by an attorney. The language of an operating agreement is crucial and can often help determine how member disputes will be resolved. Here you can obtain a free operating agreement template for your Hawaii LLC.
Contact Information for the Hawaii Department of Commerce and Consumer Affairs
Business Express – Hawaii Department of Commerce & Consumer Affairs Website
Department of Commerce & Consumer Affairs
King Kalakaua Building
335 Merchant St Rm 201
Honolulu, Hawaii 96813
There’s only one way to create an LLC in Hawaii: successfully filing articles of organization. If you make any mistakes, you’ll likely have to refile, so be sure to do it right the first time and set your business up for serious success!