A limited liability partnership (LLP) is one way to organize your business aside from the more commonly known options of limited liability companies (LLCs) and corporations. An LLP consists of two or more owners, or general partners, who have limited liability with regard to the LLP and other partners. Despite not being liable for the actions of other partners involving the LLP, each general partner is obligated to share equally in the management and representation of the LLP with the other general partners. Also, your company needs to be registered as an LLP with Hawaii’s Department of Commerce and Consumer Affairs (DCCA) in order to be an LLP.
There are a number of requirements under Hawaii state law that a company must meet if it wishes to become an LLP. For instance, a company must have a name that both is unique, barring a few narrow exceptions, and contains one of the following:
- Registered Limited Liability Partnership
- Limited Liability Partnership
Another task that an LLP must accomplish is appointing a registered agent who can be served legal documents on behalf of the LLP. The registered agent must be either a company that is registered with the DCCA or a person who is physically present in Hawaii. All LLPs must also conduct a vote among all of their members agreeing for the partnership to be an LLP instead of a general partnership. Finally, and perhaps most importantly, an LLP must file the appropriate paperwork with the DCCA.
The paperwork requirements are set forth on the DCCA’s website, where you can also file the paperwork online or find the forms to print out and mail in. There are separate paperwork requirements for domestic, or Hawaii-based, LLPs and foreign LLPs, which are LLPs that were initially created outside of Hawaii. However, both domestic and foreign LLPs must file a Registration Statement for Partnership. For this form, you will need to indicate whether the LLP is a foreign or domestic company and provide the LLP’s name, date of formation, and mailing address for the principal office of the partnership. A foreign LLP will also need to provide where it was originally formed and when it began transacting business in Hawaii. In addition to this information about the LLP specifically, you will also need to include the names and addresses of all of the partners and the registered agent. Also, this form will need to be signed by two of the LLP’s partners.
A domestic LLP will also need to fill out and submit a Statement of Qualification. In order to complete this form, you will need to list the name of the partnership before it became an LLP, the new name of the LLP that meets the aforementioned requirements, and the address of the LLP’s principal office. You will also need to put down the name and the address of the LLP’s registered agent. One of the LLP’s partners needs to sign the form.
Foreign LLPs must file both a certificate of good standing from the location where they were originally registered and a Statement of Foreign Qualification along with the Registration Statement for Partnership. To complete the Statement of Foreign Qualification, you will be required to put down:
- The original name of the partnership before it became an LLP
- The current name of the LLP as it appears on the LLP’s certificate of good standing
- The registered agent’s name and address
- The location where the LLP was originally created
- The LLP’s principal office’s address
A general partner of the LLP needs to sign the form, as well.
There are numerous tax breaks provided by the state for businesses through the Hawaii Enterprise Zone Partnership program. For example, a business in an enterprise zone is not required for pay the general excise tax for its first seven years. Businesses in an enterprise zone also benefit from lowered property taxes on improvements that they make to their property.
All LLPs have to file an annual statement, and they will be charged $25 for every 30 days that the statement is late. If an LLP fails to file a statement for two consecutive years, then the Director of the DCCA may dissolve the LLP. Another thing that each LLP must do every year is pay a general excise tax on its gross income, even though the income for an LLP is traditionally taxed as part of the personal income of the partners. The rates are 0.15% on commissions from insurance sales, 0.5% on profits gained through wholesale or manufacturing, and 4% on income earned through other business activities. This tax can be passed onto your customers, but the passing of the tax onto the customer has to be directly stated to them.
Registering a business as an LLP in Hawaii can be difficult, especially since one is required to fill out and file multiple documents during the process. A corporate lawyer in Hawaii can help you in filing all of the required documents and help you avoid any mistakes while establishing your company as an LLP in Hawaii.