How Much Does an LLC Cost in Hawaii (All the Fees Revealed)
A Hawaiian limited liability company (LLC) provides limited liability protection against creditors and bad business debt. But speaking of business funds, it is essential for small business owners to have a good overview of the cost to set up and run this type of business structure.
As a Merger and Acquisitions specialist with a degree in tax law, I've spent 8+ years helping over 150 entrepreneurs form LLCs across multiple states.
Working with our Hawaii business formation experts and analyzing data from the Hawaiian Department of Commerce and Consumer Affairs, we've compiled every mandatory and optional cost you'll face when starting an LLC in Hawaii.
If you're looking for a Hawaii LLC service to get your company off the ground, here's a list of the best LLC services in Hawaii that check all the right boxes, from service features and price points to faster turnaround and lifelong customer service.
Quick Summary
- An LLC in Hawaii costs $50 to file the Articles of Organization and an additional $1 for the state archive fee.
- Once the business has been approved, additional expenses include business licenses and permits, registered agent service, annual report, taxes, and other documents.
- Hawaii employers must withhold state income tax (rates vary by income bracket) and federal FICA taxes (7.65%) from employee wages.
- For small business owners in Hawaii, expect to budget $300-$500 for your first year of LLC operation when accounting for formation fees, registered agent service, annual reports, and basic licenses.
Cost to Start an LLC in Hawaii
When forming an LLC in the state, there are mandatory fees and optional expenses you have to shoulder. These include the following:
1. LLC Formation Filing Fee ($51 - Mandatory)
The LLC filing fee in Hawaii is $51 – $50 for filing Articles of Organization, and the $1 for the state archives fee – and you file it with the Department of Commerce and Consumer Affairs (DCCA), Business Registration Division (BREG) [1].
When filing Articles of Organization, you must include your LLC's name, registered agent details, and management structure, which becomes public record.
The standard processing time is 3-5 business days. For clients who want to streamline the approval period, I advise them to avail of the 1 business day expedited service for $25.
2. Registered Agent Service Fee ($80-$300 Annually – Optional)
If you're forming a Hawaii LLC, you need a registered agent to receive legal documents and state correspondence. Apart from the option of acting as your own registered agent, you can hire a professional service to handle your correspondence.
Your registered agent must maintain a physical Hawaii address (not a P.O. box) and be available during normal business hours to accept legal service of process.
Depending on the company you collaborate with, the registered agent service fees may range from $80-$300 per year.
"Legally, you are required to designate a registered agent in Hawaii, who will be responsible for accepting crucial legal documents and communications from the Hawaii Secretary of State for your business."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
3. Name Reservation Fee ($10 - Optional)
Suppose you're not planning on incorporating your Hawaii LLC immediately. In that case, you can pay a $10 fee to the Hawaii DCCA through the state's Business Express site to reserve an LLC name for 120 days.
Your LLC name must include "Limited Liability Company," "LLC," or "L.L.C." and cannot imply government affiliation or use restricted words like "bank" or "insurance" without proper licensing.
To ensure the name complies with all state standards, I advise clients to conduct a Hawaii LLC business search and educate themselves on business name regulations.
Read our article if you have to change an LLC name in Hawaii.
Expenses Following the Approval of Your LLC
Let's look at additional LLC filing costs in Hawaii.
1. Business License (Depending on the Line of Business - Mandatory)
TThe state requires all businesses to obtain business licenses, starting with the general excise tax license for a one-time registration fee of $20. Depending on the nature of your business, you may be required to obtain specific licenses and permits.
A client of mine in the liquor industry was required to obtain a $2.50 license by the Hawaii Department of Taxation to legally operate in the state. They were required to renew the license annually for the same amount.
Hawaii requires all employers with one or more employees to carry workers compensation insurance, with average costs ranging from $0.75 to $4.00 per $100 of payroll depending on your industry classification.
2. Annual Reports ($12.50 - Mandatory)
Hawaii requires all LLCs to file an annual report to maintain good standing with the state. The annual report fee is $12.50 when filed online or $15 when filed by mail or in person.
Your annual report is due by the end of the calendar quarter in which your LLC was originally formed. For example, if you formed your Hawaii LLC in February, your annual report is due by March 31st each year.
If you miss the filing deadline, Hawaii assesses a $10 late penalty. More critically, failing to file annual reports for two consecutive years can result in automatic dissolution of your LLC.
I recommend filing online through Hawaii Business Express to receive email reminders before your deadline. The online system accepts credit card, eCheck, or payment through an eHawaii.gov subscriber account.
3. Taxes (Depending on Income Bracket - Mandatory)
There are several state tax filing requirements for LLCs in Hawaii [2]:
- State income tax: This tax is imposed on any income you pay yourself. The tax rate ranges from 1.4% to 8.25%, depending on the aggregate amount of taxable income.
- GET tax: There is no sales tax for LLC in Hawaii. Instead, it has a General Excise Tax (GET) set at varying rates for certain sales activities. Unlike a traditional sales tax that consumers pay, Hawaii's GET applies to the business's gross receipts. Standard rate is 4%.
- Self-employment tax: Members of a Hawaii LLC must pay self-employment tax on any profits they get from the company. The self-employment tax rate is set at 15.3%.
- Withholding payroll tax: Employers must use the withholding tax rates and tables provided in the Hawaii Department of Taxation's Booklet A Employer's Tax Guide, with rates varying based on the employee's income level and filing status. Additionally, employers must withhold federal FICA taxes at 7.65% (Social Security and Medicare).
4. Operating Agreement ($100 - $200 - Optional, but Recommended)
The LLC operating agreement is a document that outlines your Hawaii LLC's rules and regulations, including the company's management structure, voting requirements, and profit distribution.
Although Hawaii does not require you to file the document, I advise all clients—especially multi member LLC owners—to draft an operating agreement since in the absence of one, Hawaii law automatically applies.
This document is crucial for multi-member limited liability companies to prevent disputes over ownership and management decisions.
You can hire an attorney to draft the document or employ an online Hawaii LLC formation service which costs $100 to $200.
5. DBA Name ($50 - Optional)
A DBA or an assumed name is a different name for your business other than the legally registered name. It costs $50 and helps open a business bank account or diversify your brand name.
6. Certificate of Good Standing ($5 - Optional, but Recommended)
Some financial institutions will want you to prove that your Hawaii LLC complies with all applicable laws and tax regulations. This is where the Certificate of Good Standing comes in.
You may purchase one by paying $5 and requesting it from the DCCA, BREG.
I make it good practice to have a Certificate of Good Standing on file since investors and clients consider the document a positive indicator for a business.
7. Certified Document Copies ($10 - Optional)
These are true copies of the primary documents certified and endorsed by the state.
You can purchase these documents online through the Hawaii Business Express website, where regular copies cost a flat rate filing fee of $3, while certified documents cost $10 each [3]. This streamlined process supports the Department of Commerce and Consumer Affairs' commitment to efficiency, with over 90% of document requests being processed within 24 hours, according to the Department of Commerce and Consumer Affairs.
8. Federal Tax Id/EIN ($0 - Optional, but Recommended)
An Employer Identification Number is a nine-digit code that the Internal Revenue Service assigns to every company.
You can file for an EIN on the IRS website for $0 or hire a professional company and pay a filing fee of $50-$100.
I advise clients to obtain an EIN since it is necessary for filing state and federal taxes, applying for business entity loans, or proving credibility.
FAQs
Is There A Penalty For Paying My Taxes Late In Hawaii?
There is a penalty for paying your taxes late in Hawaii. You will be charged 5% to 25% of the amount due per month of unpaid tax.
What Payment Methods Can I Use To Pay Hawaii's State Fees For Filing My LLC?
The payment methods you can use to pay Hawaii's state fees for filing your LLC include cash, certified or cashier's check, money order, or credit card.
Do You Need Professional Help with Your Hawaii LLC?
References:
- https://cca.hawaii.gov/breg/registration/dllc/
- https://tax.hawaii.gov/geninfo/get/
- https://cca.hawaii.gov/breg/faqs/general/how-do-i-request-a-certified-copy-of-a-document/
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