How Much Does an LLC Cost in Hawaii (All the Fees Revealed)
A Hawaiian LLC provides limited liability protection against creditors and bad business debt. But speaking of business funds, it is essential to have a good overview of the cost to set up and run this type of business structure.
As a Merger and Acquisitions specialist and degree holder in tax law, I spent years helping entrepreneurs form LLCs and joint organizations.
Working with our business experts in the state and browsing the Hawaiian Secretary of State’s website, we've summarized all the costs you may bear 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.
- 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 licenses and permits, registered agent service, annual report, taxes, and other documents.
- According to the Hawaii Department of Taxation, employers must withhold a 7.65% payroll tax from employee wages.
- Most of my clients and colleagues whose LLCs thrive in Hawaii are involved in the travel business and tourism industry.
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 the Articles of Organization, and the $1 for the state archives fee – and is filed with the Department of Commerce and Consumer Affairs (DCCA), Business Registration Division (BREG) .
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 an LLC in Hawaii, you need a registered agent to create and file all legal documents. Apart from the option of acting as your own registered agent, you can hire a professional service to handle your correspondence.
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."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions
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 a company name for 120 days.
To ensure the name complies with 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)
The state requires all businesses to obtain a 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.
2. Annual Reports ($50 - Mandatory)
In Hawaii, you must submit an annual report for $50 for your LLC to remain in good standing; if you miss the deadline, you'll be subject to a $10 penalty.
For clients who want to receive email reminders, I advise them to do their filing online so that notifications are sent to their email address.
Also, the payment system will depend on your filing method: if you file online, you'll have to pay using a credit card and cash, money order, or check for paper filing.
3. Taxes (Depending on Income Bracket - Mandatory)
There are several state tax filing requirements for LLCs in Hawaii :
- State income tax: The state income 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. For example, you're subject to a 0.5% tax rate if you run manufacturing and wholesaling. If you engage in loans or insurance commissions, you pay 0.15% GET tax.
- 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: Hawaii requires employers to withhold payroll tax from employees' wages. The typical withholding rate is 7.65% of the employee's taxable salary, according to the Hawaii Department of Taxation.
4. Operating Agreement ($100 - $200 - Optional, but Recommended)
The operating agreement is a document that outlines your 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 clients to draft an operating agreement since in the absence of one, state laws automatically apply.
You can hire an attorney to draft the document or employ an online 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 ($7.50 - Optional, but Recommended)
Some financial institutions will want you to prove that your 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 $7.50 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 . 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.
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?