An Ultimate Guide to filing an LLC in the State of Hawaii
What is a Hawaii LLC?
If you have made up your mind to start your own business, then LLC business entity is the best business structure for you. Limited liability Company (LLC) is a business structure that allows you to start a business in Hawaii and other states. An LLC provides protection to the business with the help of flexible and organizational tax structure of a partnership.
- The owners are called “Members” in an LLC. Members are not liable for financial or legal obligation.
- A “manager” is the person who manages the company.
What is a Hybrid Entity of Hawaii?
Limited Liability Company is also called hybrid entity because LLC possesses both features of partnerships and corporations.
Why setting up an LLC in Hawaii?
Getting an LLC in Hawaii means you are going to reduce your taxes, time, effort, and the most important personal assets. Why people open an LLC in Hawaii because it gives you liability protection through taxation of a partnership.
How to file an LLC in Hawaii?
All Hawaii LLCs are required to be filed with the state of Hawaii legally to open a business.
Following are the requirements to set up an LLC in Hawaii:
- Hawaii LLC Name Search
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Check the name availability with the Hawaii Division of Corporation Data Base to ensure the required business name is available to register an LLC. Reserving the business company name does not allow to start your business.
You are required to write following information while filing articles of organization Hawaii:
- Write the name of the LLC
- Write The mailing address of the initial principal office
- The name of a registered business agent who has business address in the state of Hawaii
- An agent with a foreign entity or a domestic entity is authorized to transect business in the state.
- You will provide the street address of the business and the person who is responsible to receiving notices and other documents.
- Write the name of organizers
- Either the company is Manger managed or a member managed?
- Write the names and address of initial managers and members.
- Write if the members of the company are not liable for liabilities of the company, obligation, and debts.
- Write if the members are liable for liabilities of the company, obligations, and debts.
- The articles of LLC must be certified and signed by at least one organizer of the company.
How long does the state of Hawaii take to file LLC?
The state of Hawaii takes 24 to 48 hours (Standard processing time) to approve your article of the organization.
What is a Manager Managed Hawaii LLC?
An LLC that is run by one manager is called Manager Managed Limited liability Company.
What is a Member Managed LLC?
A Limited liability company that is managed by its members or owners is called member managed LLC. The members of LLC appoint a manager to hold the day to day operations of the business.
EIN to set up an LLC in Hawaii
Employer identification number is the identity of your business tax. It is a social security to your business entity. An EIN helps you to open a business account and it can also be used for obtaining licenses, filing taxes or bank accounts.
Can a Non-US resident open a Hawaii LLC in the USA?
Yes, a non-US resident can open an LLC in the state of Hawaii, and ITIN will be given to each member of the LLC to file taxes. Form W7 is submitted to the Internal Revenue Service to apply for the Individual Taxpayer Identification Number.
Filing Elections to Treat LLC as an C or S Corporations Hawaii
An election must be filled with IRS (Internal Revenue Service) department to give your LLC as a C or S corp for the tax purpose only.
Hawaii S Corporations Elections Form 2553
These corporations elect to pass losses, deductions, corporate income, and credits through the shareholders for the federal tax purpose.
If you want to qualify for S corporation status, must submit Form 2553 Election by a Small Business Corporation. It should be signed by all shareholders.
- It should be a domestic corporation
- Should not have more than 100 shareholders
- Should have only one class of stock
- It should have only allowable shareholders
Hawaii C Corporation Election form 8332
An eligible entity uses “Entity classification election form” to classify the procedure for federal tax purposes. Such as:
- A partnership
- A corporation
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An entity cleared as separate from the owner
Operating Agreement for the HI LLC
Operating agreement is not necessary to file an LLC in the state of Hawaii. An Operating Agreement is a list that provides information about the members, their limitations, and financial and legal obligations. Organizations and banks may request you this document.
Filing Annual Report Filing Hawaii
Business entities should renew every year to run a business in the state of Hawaii, File it with the Department of Commerce and Consumer Affairs.
General Excise and Use Tax Hawaii (GET)
Hawaii does not have a sales tax. The GET is different from a sales tax because:
a. A sales tax is a tax on customers whereas GET is a tax on businesses; and
b. Businesses are required to collect sales tax from their customers whereas businesses are not required to collect GET from their customers.
Taxable activities include:
Wholesaling goods, manufacturing, producing, providing wholesale services, business activities of disabled people.
Selling retail goods and services, renting, leasing real property,construction contracting, earning commissions.
Income Tax Withholding Requirements for Hawaii
Your business is required to register for the employee(s) withholding registration, if hiring employees and must obtain workers' compensation insurance and disabilities to protect with any accident.
How to move a company to Hawaii and the benefits?
- You can move the company from your state to the state of Hawaii, if you home state allows.
- You will not lose the age of the home state company.
- You will use same Employer identification number, unless you are changing the structure of the original company. For example, you have a corporation in the sate of Massachusetts and moving to the state of Hawaii as a Limited Liability Company, in this case, you will apply for a new employer identification number, because the structure is changed. You will mention in the Form SS4 "Change of Entity".
- Once it is moved, you will dissolve the home state company.
- State of Hawaii gives you a choice to change your business structure from a limited liability company to a corporation or vice versa, while moving from one state to another.
Can you convert a domestic limited liability company to a corporation or vice versa in Hawaii?
Yes, you can change the business structure in Hawaii, and you are responsible to get a new EIN for the new business structure.
Domestication Vs Foreign Entity Hawaii
- Company Domestication means move company from home state to the other state permanently and dissolve the home state entity. You can change the business structure from corporation to an LLC or vice versa.
- A foreign entity is a branch office to get an authority from the other state to expand business, and the original state company cannot be terminated. A business structure cannot be changed such as a corporation to limited liability company or vice versa.
