A limited liability company ("LLC") is described as a business organization that shares the limited liability benefits of a corporation but the management and tax freedom of a partnership. LLCs are legal entities created only under state law. "Limited liability" simply means that everybody associated with the company is not liable for damages beyond their initial investment and cannot be held vicariously liable.
An LLC in Hawaii is a legal entity in the state of Hawaii that has the same similarities to both corporations and partnerships. A Hawaii LLC is formed under specific state laws and regulations that many businesses use. When you form an LLC in Hawaii, it can be used to combine the limited liability benefits of a corporation with the flexibility and tax benefits of a partnership in the state of Hawaii.
To form an LLC in Hawaii, you must complete the following requirements:
- Choose a name for your LLC: Under Hawaii law, an LLC name must have one of the following: "Limited Liability Company," "LLC," "L.L.C.," "Limited Company," "LC," or "L.C." The term "Limited" can be short like "Ltd." and "Company" or "Co." You also have to do a name check to see if the name is available in the state.
- File Articles of Organization and Transmittal form: In Hawaii, to register your LLC, you will need to file the Articles of Organization with the state of Hawaii. The filing fee is $50.
- Appoint a Registered Agent: Every Hawaii LLC is required to have an appointed agent for service of process. The agent is an individual or business entity that agrees to accept legal documents on behalf of the LLC’s if it is sued or any legal documents that need to be handed over to the LLC. A registered agent can be an individual or business that is authorized to do business in Hawaii. The registered agent must have a Hawaiian physical address.
- Obtain an EIN: If the Hawaii LLC has more than one individual, they must obtain its own IRS Employer Identification Number (EIN). An EIN is required for Hawaiian LLCs that will have employees. Also, most banks require an EIN if you want to open a business bank account.
- Pay annual registration fee. All LLCs formed and doing business in Hawaii must file an annual report with the Business Registration Division and pay a filing fee. This has to be filed every year on the same time the previous one was filed.
- Obtain all Business Permits and Insurance: In Hawaii, business permits and licenses are required for most business. It is important to apply and obtain one before doing any business.
The documents that are required to form a LLC in Hawaii are the Articles of Organization for limited liability company. This form is called Form LLC-1. These documents would need to be filed with the Secretary of State in the State of Hawaii before the formation of the LLC.
When you form an LLC in Hawaii, it can be used to combine the limited liability benefits of a corporation with the flexibility and tax benefits of a partnership in the state of Hawaii. LLC’s are also very easy to operate unlike corporations. Some benefits of having a LLC are that you can limit your liability to business debt. You can also save tax with an LLC through pass through taxation.
There are disadvantages to LLC’s in Hawaii. LLCs can be dissolved easily when a member of the LLC dies or goes bankrupt. In addition, having a sole-proprietorship or partnership will have less paperwork and complexity while LLCs have a bit more paperwork to deal with.
Choosing an entity for your business can be a challenging task given the various options. If you are looking to form a LLC or change the form of your business entity, consider consulting an attorney. A corporate lawyer can help you evaluate your options, it is a good idea to discuss your ideas with an experience local Hawaii business lawyer. A lawyer experienced with limited liability companies can help you incorporate your LLC and explain the tax and organizational benefits of the limited liability structure