Creating a new LLC in Hawaii requires fees and expenses, but the associated costs can be affordable even on a new business’s budget. From an entirely DIY approach to an all-inclusive LLC formation service, there are several ways you can manage the costs.
Almost every step required to start an LLC can be done yourself, and this certainly is the most affordable way to create a new LLC. You would only have to pay ~$71 in state fees (which are unavoidable), plus perhaps some nominal other expenses depending on your particular business.
Most affordable often isn’t most efficient, and that’s where an LLC formation service might help. An LLC formation service can save you significant time, taking care of most of the steps for you. That’s time you can instead invest in running or growing your business. And, the cost of an LLC formation service is often lower than what many entrepreneurs expect.
There’s no right answer as to whether you should DIY file your LLC or use an LLC formation service. A breakdown of each cost should help you make that decision, though.
The following steps are a general outline of the process for creating a new LLC in Hawaii. Each step has required and/or optional costs to consider.
The first step is to select a name for your LLC. You search the Hawaii Business Express’s business name database to see what names are currently in use (free). Your chosen name will have to be distinct from any other business’s name.
In addition to being distinct, there are a few other rules for naming a Hawaii business. These generally are:
The full regulations for naming a business in Hawaii are detailed in Hawaii Administrative Rules Title 16 Chapter 36.
When you’ve decided on an available name for your business, you can register the name when filing your LLC’s formation documents. There’s no additional fee for naming your LLC this way.
In some cases, you might instead choose to reserve a name and/or use a DBA:
Estimated Costs for Naming Your Hawaii LLC: $0 – $61
Filing Articles of Organization is how you officially establish your LLC. The articles are filed with the Hawaii Department of Commerce and Consumer Affairs, either by mail with Form LLC-1 or online through Hawaii Business Express.
The state filing fee is paid when you submit these articles. The total filing cost is $51, which includes the Hawaii LLC filing fee of $50 and a $1 State Archive fee. Expedited review is available for an additional $25 if it’s needed.
Estimated Cost for Filing Articles of Organization: $51
All LLCs in Hawaii must designate a registered agent. This individual or entity will be responsible for receiving legal and official documents on behalf of your LLC, and they must be physically located on one of the islands.
Many business owners choose to serve as their own registered agents. You’re able to so long as you live in the state, and there’s no cost for benign your LLC’s registered agent.
Some business owners choose to pay a registered agent service, though. A registered agent service can receive official mailings on behalf of your LLC, and they’ll pass on the communications to you.
You might choose to use a registered agent service if you live outside the state (uncommon), don’t want your address public, or don’t want to worry about missing something important. Prices for registered agent services vary, but budget $200 – $400 annually if you want to use one.
Estimated Cost for a Registered Agent: $0 – $400.
State law doesn’t require that you draft an Operating Agreement, but it’s a best practice to have one. This is a document that details LLC members’ roles, distribution payments, dissolution process, and many other important details.
Writing an Operating Agreement for a solo-member LLC is a good exercise, as it’ll force you to complete a thorough analysis of your business’s operations and plan. You could write the agreement yourself, or you might use an LLC service to ensure that you take a comprehensive approach.
If you’re starting a multi-member LLC with two or more owners, consider using an LLC formation service or even seeking counsel from a business attorney. Your Operating Agreement will be a legal contract should disputes arise between members, so this isn’t something you want to make a mistake on.
Hiring a business attorney could be $1,000 or more, depending on the level of complexity. An LLC formation service will usually cost much less, but still can be a few hundred.
Estimated Cost for an Operating Agreement: $0 – $1,000+
The Hawaii State Archive charges a $1 fee for most documents that are filed with the Hawaii Department of Commerce and Consumer Affairs. This is in addition to the listed filing fees. For example, the LLC filing fee is $50 but you’ll need to pay $51.
The additional $1 charge is minor, but it’s unique to Hawaii and something business owners should be aware of. The charge normally applies regardless of whether you file something online or by mail.
In addition to the LLC formation costs that you need to budget for, there are some other expenses to consider. These include mandatory fees, annual fees, and optional expenses.
Hawaii assesses a general excise tax (GET) on almost all businesses in the state, and this is paid on almost all revenues. It’s assessed on gross revenues, regardless of source and before business expenses.
The state’s general excise tax rate is 4% for retailers and most other customer-facing businesses. Wholesalers pay 0.5%, manufacturers and producers pay 0.5%, and insurance agencies pay 0.15% on commissions. Many counties have an additional local GET tax, usually of around 0.5% for customer-facing businesses.
GET tax rates are based solely on sector, and not on your business’s revenues. Small and large businesses in the same sector pay the same GET rate.
GET taxes can be paid online through the Hawaii Department of Taxation.
The general excise tax is different from the state’s franchise tax. Although the GET tax might function similarly to an annual LLC franchise tax in other states, Hawaii has a separate annual franchise tax.
The annual franchise tax is only assessed on businesses in the financial sector, such as banks, financial institutions, and small business investment companies. If your LLC is subject to this tax, use the Franchise Tax Form (Form F-1) or pay online.
Estimated Business Tax Costs: 0.5 – 4..5% of revenue.
Depending on the nature of your business and where it operates, the LLC could need licenses and/or permits.
Before you can pay the GET tax, you’ll need to apply for a General Excise Tax License. There’s a one-time $20 fee due at the time of registering. This is sometimes colloquially referred to as a “seller’s permit.”
You could need another state license if operating in certain industries, such as medical care, auto sales or alcohol sales. State licenses can range from a few hundred to over a thousand dollars.
Local licenses and permits are even more often needed, although they tend to cost substantially less than state licenses. These local ones can include:
The best way to check local license and permit requirements is to talk with your local town, city or county clerk.
Estimated License and Permit Fees: $20 – $1,000+
All Hawaii businesses are required to file an Annual Report every year. The report confirms your business’s address, registered agent information, and the names and addresses of each member. The state generally sends a reminder to your registered agent’s address at the start of the quarter when your LLC’s Annual Report is due.
You can use a mail-in form or file online. An LLC fee of $15 is due when you file the report.
Estimated Annual Report Cost: $15
If using a trade name (DBA) for your LLC, the name will need to be renewed every 5 years. You can do this by filing the same Application for Registration of Trade Name by mail or online, and are able to do so starting 6 months before your trade name expires.
The fee for renewing a trade name is $50, just as it is to initially register a trade name.
Estimated Annual Trade Name Cost: $0 – $10 (annual average)
Your registered agent information is confirmed when filing the annual report, and you don’t have to pay a state fee unless you change registered agents. You’ll have an annual cost if you use a registered agent service, though. Most services range between $200 and $400, or you can serve as the registered agent yourself.
Estimated Annual Registered Agent Cost: $0 – $400
Most of the expenses for forming or maintaining an LLC can be written off as a tax deduction. For example, you usually can deduct:
You can confirm specific deductions with a qualified tax professional, who can review your business’s particulars.
Articles of Organization (LLC filing fee) | $51 |
Trade Name (DBA, optional) | $50 |
Business Name Reservation (optional) | $10 |
General Excise Tax License (seller’s permit) | $20 |
Other License & Permit Applications | $0 – $1,000 |
Operating Agreement Help (optional) | $100 – $1,000 |
Commercial Registered Agent Service (optional) | $200 – $400 |
Starting your Hawaii LLC could cost as little as $71, up to a few hundred dollars if you use LLC formation services. It’s only in rare cases that licenses and extensive legal help run the formation costs into the thousands.
LLC Hawaii Costs – Annual Fees | |
Fee/Cost | Amount |
Periodic Report (Annual report) | $15 |
Trade Name (DBA, optional) | $10 (annual average) |
General Excise Tax | 0.5% – 4.5% of gross revenues |
Licenses and Permits | $0 – $1,000 |
Commercial Registered Agent Service (optional) | $199 – $400 |
Maintaining an LLC can cost as little as $15 annually, plus 0.5% – 4.5% of gross revenues. A commercial registered agent service or some license/permit requirements could push this into the hundreds. Again, spending more than $1,000 on an LLC is uncommon outside of highly regulated sectors (e.g. auto or alcohol sales).
Starting a new limited liability company in Hawaii doesn’t need to be expensive. Decide which state fees you’ll need to pay, and then decide whether you want to use an LLC formation service. Using a service can be quite affordable and save quite a lot of time, but they aren’t necessary if you’re on a tight budget.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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