Hawaii LLC - How to Start Your New Business
Forming an LLC in Hawaii is an exciting new venture. When you first start out, there are several important steps to take. You want to make sure that you don’t miss one so that everything with your new business flows smoothly when it comes to taxes and other important filing procedures.
Since a limited liability corporation is a type of business, you want to obviously have your business plan and affairs in order before you set out to apply for LLC status. An LLC is a good thing to have, but technically not every business is an LLC. So before you have an LLC, you will need several things.
A Business Plan
Most businesses start with an idea. From great restaurants to real estate brokerages, businesses are the owner’s way of making their mark on the world. But plans don’t become reality without a lot of action…and more planning. So create a business plan with a trusted adviser and lay out the steps you will need to take to make money each quarter or year.
Once you’ve got a thoroughly detailed business plan laid out, prepare yourself to do some paperwork. Having your business plan together helps you fill out the important day-to-day functions of your business on your Hawaii LLC application.
Get Some Management Coaching
Manage Hawaii LLC is not super easy, but it doesn’t have to be impossible. The best thing you can do for yourself is to get some coaching on how to manage an LLC. LLC’s have different legal than a simple sole proprietor business, but they have a little more freedom too.
Getting management coaching will free your time up because you will have solid skills that will help you execute your plans faster. Every business deals with the pressure of getting things done in less time than people would ideally like to have to complete the job. Having a mentor and some plans for how you will manage your company eliminates time you would spend making mistakes or over-analyzing every small decision.
Once you’re freed yourself from guessing about what is a good way to manage your LLC in Hawaii, you’re ready to start the application process to get your LLC status. Having your business plan handy with a detailed outline of projected expenses and a management plan will help you fill out your LLC paperwork faster. Here are the steps to get your Hawaii LLC fees together with the correct paperwork.
Get a Name
Choosing a name may seem like an overly simplistic step, but getting a Hawaii LLC name is actually a bit of a process. Besides the legal issues involved, which we will outline below, you need to make sure that your business name actually represents your business well.
While you don’t want the name to be overly simplistic, it shouldn’t be too off-the-wall or people won’t understand what your business is about! Be creative, but informative. Choose a name that has character and style similar to your actual business.
Now, for the legal part. The name must be clearly different from other business names in Hawaii, and you may need to reserve a name (the reservation fee is only $10) for a while if you think the application process will take a while.
Under Hawaii law, the name of an LLC must have LLC in it. You can also list it as “limited liability corporation” if you don’t like the abbreviation.
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File Articles of Organization
Contact the Hawaii Department of Commerce and Consumer Affairs Business Registration Division to file your articles. These include the name and address of the corporation, who will be managing it, the dates of its operation (if not indefinitely continued), and who shall be responsible for the debts and obligations of the corporation.
You can get professional help by using a LLC registration service to make the paperwork easier, since there are quite a few pieces and parts to do.
Register an Agent
An agent is someone who will represent the LLC Hawaii legally for paperwork purposes. They will accept mail for the entity and do the paperwork if the LLC is sued. They must have a physical street address in the state. The agent can be a resident of Hawaii or a foreign or domestic business. The business would be authorized to transact business in Hawaii. Like the individual option, the business must have a street address in Hawaii.
An agent must be a responsible person who knows about paperwork deadlines. If you need help designating a person or business to accept and file paperwork on behalf of the Hawaii LLC, consider talking to a lawyer about what issues could come up with your particular business.
A smart lawyer will help you realize the potential dangers of your particular area of business (every business has them) and how best to choose a responsible designee to be the agent of the LLC. Preferably, the person will have some business experience in an administrative role and will be organized. But in certain circumstances, especially with larger LLCs, there may be other issues at stake.
Dealing with other entities like wildlife management groups or the FDA may present special paperwork challenges, and you want to make sure that your LLC is in a safe position. Designate someone who isn’t afraid to tackle tough issues, but who will represent the company diplomatically and professionally.
Every LLC does not need an operational agreement, but they are a wise idea. An operating agreement LLC Hawaii outlines several things, but the gist of the matter is that management and investment responsibilities are outlined in the operating agreement.
The operating agreement helps people understand several things. But it also specifically defines legal responsibilities so that a court can tell that the LLC has limited liability.
This may seem like a situation in which an LLC with one owner won’t need an operating agreement. But the court may do two things with respect to your company if you don’t outline an operating agreement, even if you are the sole owner. One, they can tend to view your LLC as a sole proprietorship. Two, they can apply default rules to your LLC if the state you are dealing with has them or gets them during your time in business.
Carefully specify management principles and share allotment in your LLC so that a court isn’t confused in the case of any legal proceedings, including a buyout or IPO. You also want to protect against equal division of profits or losses if there is more than one investor in the company and the investments weren’t equal. Since they rarely are equal, you want to obtain some legal and accounting help with this section of the operating agreement.
An operating agreement also defines voting and meeting rules for the company. People sometimes take for granted that everyone is on the same page when it comes to voting rights and meeting rules for a company, especially with multiple investors. Keep in mind that everyone is not always clear on details, and plan for when new investors come in so that they aren’t left in the dark.
In addition, an operating agreement clearly outlines buy-out and sell-out guidelines. This goes hand-in-hand with writing down each person’s percentage in the company investment and profits, which is also in the operating agreement. Keep in mind that a person may choose to leave an LLC if their division isn’t profitable. Sometimes, people experience health issues and may be forced to leave a company. This is especially true if they suddenly become disabled.
Buy-out and sell-out guidelines should include instructions and procedures for buying and selling pieces and parts of the company or its equipment. But these instructions also apply to the whole company buy-out or sell-out. These things aren’t always easy to talk about when you are excited about starting a new LLC. But a Hawaii LLC search on the internet with the words “buy-out” may pop up some examples of companies that got offers that were too good to turn down. Be prepared and protect everyone’s investments buy attending to this important part of the operating agreement.
In addition to third-party buy-outs and sell-outs, there are always instances where initial investors end up buying more investment in the company from other initial investors. Make sure to specify how to sell shares or equipment in this instance, since it can be complicated.
There are several operating agreement forms available online that will help you with the legal language, or you can seek help from a lawyer and an accountant if you want the procedure done by hand.
Tax and Regulatory Agreements
Employee Identification Numbers, business licenses, and registration with the Hawaii Department of Taxation are important steps to attend to. Whether you will need each one varies according to your business situation. Paperwork can vary depending on whether you are importing or exporting anything.
Always get help from a lawyer when you have questions about which paperwork to file, especially when it comes to employees and import or export. Be sure to note that in Hawaii, you will need Employee Identification Numbers for everyone involved if there is more than one person in your company. This is true even if everyone is an investor and there are no employees yet.
For every LLC in Hawaii, there is an company annual report with the Business Registration Division. There is a $15 filing fee. You will be sent a reminder by the state to file your report. You must file the report in the calendar quarter of the date your LLC was initially formed.
Detailed reports are always a good idea, so consider getting some admin and accounting help to keep up on your report notes throughout the year. Ideally, you will have copies of all the paperwork referenced in one fie so that you can easily pull up your file in the event that the state contacts you with questions.
A thorough business report will cover operating expenses, profits, and losses at the bare minimum, but the state will have other requirements as well. The form may be filled out online or mailed in by snail mail. The form is form C5 for the State of Hawaii.
Extra Paperwork for Foreign LLCs
If you are a foreign LLC doing business in Hawaii, you will need a certificate of authority from the state to conduct business there. You can fill out form FLCC-1 to apply for the certificate of authority and appoint your registered agent in Hawaii with the Hawaii Department of Commerce and Consumer Affairs Business Registration Division.
With this certificate, the LLC must include a Certificate of Existence from the LLC’s home state that is dated no more than 60 days from the date of application for form FLCC-1. This is to ensure that all entities are paying the appropriate taxes and are doing business legally within the State of Hawaii. The Idaho LLC formation guide is another one to check out.