If you want to start and run a Hawaii limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Hawaii LLCs.
The State of Hawaii requires you to file an annual report for your LLC. You can file your annual report online at the BREG website or by mail. The state will send an annual report reminder to your LLC. The annual report is due during the calendar quarter of the anniversary month of your LLC's formation. For example, if your LLC was formed on July 15 then your report would be due each subsequent year between July 1 and—at the latest—September 30. The current filing fee is $15.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states impose a separate tax or fee on LLCs for the privilege of doing business in the state. Hawaii, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Hawaii, like almost every other state, taxes corporation income. The corporation income tax is based on a small series of marginal rates currently ranging from 4.4% to 6.4%. The tax is payable to the state's Department of Taxation (DOT). Use the state's corporation income tax return (Form N-30) to pay the tax. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOT website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Hawaii employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the Department of Taxation. Begin by registering your business with the DOT either online through Hawaii Business Express or on paper (Form BB-1; submit with a one-time $20 license fee). Once you've registered, you'll need to file withholding taxes on a periodic basis (for example monthly) using Forms HW-14 and VP-1. You'll also need to use Form HW-3 each year to reconcile your LLC's tax withholding. For more information, including regarding electronic filings, check the DOT website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through Hawaii's Department of Labor and Industrial Relations (DOL). You can register for these taxesonline or by using Form BB-1. Then, each quarter, use Forms UC-B6 and UC-B6A and go online to Hawaii Unemployment Insurance (HUI) Express to report on wages and pay the UI taxes. For more information, check theDOL website.
If your LLC will sell goods to customers in Hawaii, you will need to collect and pay the general excise tax (GET; essentially a sales tax). This means you'll have to register for this purpose with Department of Taxation and then make periodic GET payments for goods sold. You can register online through Hawaii Business Express or mail in Form BB-1. After you've registered, you'll be sent a GET license. Then, on a periodic basis—monthly, quarterly, semiannually—you must submit excise tax returns to the DOT. You can do this on paper (Form G-45) or online. For more information, check the DOT website.
If you will be doing business in states other than Hawaii, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Hawaii, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.