Every year, roughly eight million small businesses open their doors in Hawaii. They’re ready to start earning big bucks and taking advantage of the thriving island economy.
However, anyone planning to open a business in Hawaii should consider setting up an LLC operating agreement. Doing so helps to protect their LLC in Hawaii from legal trouble.
Let’s take a look at everything you need to know about how to start an LLC in Hawaii.
Is an LLC Operating Agreement Required in Hawaii?
An LLC operating agreement is not required in Hawaii.
However, just because it’s not required by law isn’t to say that you shouldn’t have one. Having an operating agreement in place helps protect your business and allows you to conduct your company the way you want.
Hawaii Operating Agreement Laws
Even though operating agreements aren’t required in Hawaii, the Hawaiian government has a few laws in place for people who do choose to create these types of agreements – you can find them in § 428-103.
For one thing, Hawaiian law states that all members of an LLC can enter an operating agreement to regulate their affairs. The agreement can be used to regulate the operating activities of the business.
The agreement, however, cannot restrict rights to information or eliminate the duty of loyalty. It also cannot unreasonably restrict access to information, eliminate the obligation of fair dealing, or vary the rights to expel a member.
These laws are in place to help protect members of the LLC from unfair treatment. They make sure that the operating agreements are written up in a legally abiding way.
You should also be aware that when naming your LLC it must contain the phrase ‘Limited Liability Company’ or the abbreviation ‘L.L.C.’, or ‘LLC’. ‘Limited’ may be ‘Ltd.’, and ‘Company’ may be ‘Co’.
How Much Does It Cost to Form an LLC in Hawaii?
If you want to create an LLC in Hawaii, you’ll need to be prepared to pay $50 to file your articles of organization. This will make your LLC active so that you can start conducting business.
You can also reserve your LLC name by filing with the Hawaii Department of Commerce and the Consumer Affairs Business Registration Division. Doing so will cost you an additional $10.
You should also be aware that you’ll need to pay an annual filing fee of $15. This is to renew your paperwork and keep your business running.
How to Form an LLC in Hawaii?
Let’s take a look at a few of the steps necessary for anyone wanting to know how to start an LLC in Hawaii:
Step 1 – Locate a Registered Agent
The first step to starting an LLC in Hawaii is to find a registered agent. This individual will receive legal documents for the business and will handle legal affairs.
The registered agent can either be an entity or an individual residing in Hawaii. LLC members can also serve as the RA.
The registered agent must have a physical street address in Hawaii.
Step 2 – Select Which Type of LLC
Next, you’ll need to choose which type of LLC your business will be, single or multi-member. This is important for determining how you will file your paperwork as well as whether the company will operate as a domestic or foreign entity.
Remember that domestic entities are entities formed in Hawaii. Foreign entities are considered any entity formed outside of Hawaii.
The paperwork you’ll need to fill out will change depending on whether you’re a foreign or domestic entity. Foreign entities will typically have more paperwork to fill out.
Step 3 – Pay Your Filing Fee
Once you’ve selected which type of business entity you’ll form and you’ve filled out the appropriate paperwork, it’s time for you to pay your filing fee. You can pay the fee online via credit card.
If you want to send a paper check, you can send it to the Department of Commerce and Consumer Affairs. Make sure to attach a PDF copy of your application to your check.
Step 4 – Create an Operating Agreement
Even though it’s not required for you to have an LLC operating agreement in Hawaii, it’s still a good idea. An operating agreement can help create standard procedures for your company that keep things running smoothly.
What’s more, the LLC helps separate members’ assets from the LLC. This is important for legal protection in the event that something goes awry.
Step 5 – Register for an Employer Identification Number (EIN)
The IRS issues Employer Identification Numbers, also called EINs, to help them identify business entities. This makes it easier for them to monitor business tax payments.
If you don’t have an EIN, you’ll have difficulty applying for bank accounts, legally paying your employees, or trying to take out a bank loan. Luckily, you can easily register for one on the IRS website.
Hawaii LLC Operating Agreement Template
This Hawaii LLC operating agreement template has everything you need to know to successfully write a Hawaii LLC operating agreement: