If you have a limited liability company (LLC) in Hawaii, you may need to shut down the business at some point. On the other hand, maybe you’ve started another company or decided to relocate to another state— whatever the reason, you’ll need to follow the somewhat complicated LLC dissolution process.
If done incorrectly, you’ll still be responsible for annual reports and fees and could face penalties down the line. But, lucky for you, this handy guide explains how to dissolve an LLC in Hawaii.
Properly shutting down an LLC involves several crucial steps, as detailed below.
1. Vote for Dissolution
If your operating agreement doesn’t specify when you can dissolve, you must take a dissolution vote among your LLC owners, known as members. Hopefully, you have an operating agreement that details the process to do so. Once you do so, you’ll need to draft a resolution to dissolve the LLC, which you’ll keep in your records.
2. Cancel Business Licenses and Permits
If you were required to get licenses and permits for your business, you’d need to contact the issuing agencies to cancel them so that you’re not charged renewal fees. If you have any outstanding fees, you’ll likely need to pay them before you are allowed to cancel.
3. Notify Creditors
If you owe money to any creditors, you’ll need to notify them in writing of the dissolution and give them detailed instructions on filing claims for the outstanding debt. In Hawaii, your notice must provide a mailing address for claims and a deadline of at least four months for claims to be received.
In Hawaii, this must be done before you formally terminate your LLC with the state.
4. Notify Tax Departments
Notify any relevant tax authorities of the dissolution and pay any outstanding taxes due.
5. Cancel Contracts and Settle Financial Obligations
If you have contracts with vendors, lessors, or any other outstanding financial obligations, you’ll need to ensure all your obligations are fulfilled and all contracts are canceled.
6. Distribute Assets to Members
If the LLC has any assets remaining in any form after all financial obligations have been settled, they must be distributed to members based on LLC ownership percentages. If the assets are equipment, property, or other non-cash assets, they’ll need to be sold first so distributions can be made in cash.
7. File the Dissolution Papers with Hawaii
In Hawaii, you can file your Articles of Termination online or by paper. The fee is $25.
To file online, go to the Hawaii Business Express website and either log in or create an account.
Search for your business, and click on it to view your LLC’s page.
Near the top, select “Forms.”
Scroll down to “LLC-11 Articles of Termination”. Then, click “Fill out Form.”
Fill out the form. Be careful not to confuse the “Publication” section for the creditors’ notice from earlier— it’s asking if you published a termination notice in a local newspaper.
On the next page, review your information, and click “Confirm” to file and pay for your Articles of Termination.
To file by paper, go to the Hawaii Department of Commerce and Consumer Affairs page for Domestic Limited Liability Company Forms, scroll down, and select “Articles of Termination.”
Fill out the Articles of Termination. Notice that you must confirm that all your debts, obligations, liabilities, and suits have been settled, that your properties and assets have been distributed, and that your business has been fully wound down.
If you printed out the form by hand, you must fill it out in black ink.
You can pay the $25 filing fee by cash, certified/cashier’s check, bank/postal money order, or credit card.
Make checks or money orders payable to “Department of Commerce and Consumer Affairs” and mail them to:
Department of Commerce and Consumer Affairs
Business Registration Division
PO Box 40
Honolulu, HI 96810
Or deliver them to:
335 Merchant Street, Room 201
Honolulu, HI 96813
Or you can scan them and email or fax them with a credit card payment to:
Regardless of the reason, LLC dissolution must be done right to avoid legal issues and financial penalties. Therefore, it’s highly recommended that you employ the services of an attorney to ensure everything is done correctly and all bases are covered.
How much does it cost to dissolve an LLC in Hawaii?
It costs $25 to file your Articles of Dissolution in Hawaii.
How long does it take to dissolve a Hawaii LLC?
Normal filings will be processed in three to five business days. You can also purchase expedited one-day filing for an additional $25.
Should I close an unused LLC in Hawaii?
If you’re not using your Hawaii LLC, you should close it to avoid unnecessary fees, filings, and responsibilities, such as your Annual Report.
What happens if I don't dissolve my LLC in Hawaii?
Suppose you don’t dissolve your Hawaii LLC, and there wasn’t an automatic dissolution date in your Articles of Organization. In that case, your LLC will exist perpetually, and you’ll be held accountable for all fees, filings, and claims it might incur.
What is the difference between the dissolution and termination of an LLC in Hawaii?
Dissolution is the decision and process of closing your LLC. Once you decide to dissolve, you can only operate in a limited capacity for the purpose of winding up, liquidizing assets, and settling claims. Once these are done, file your Articles of Termination with Hawaii to officially close your LLC.