If you own a business that was created in a state other than Hawaii, you will need to qualify or register that business in Hawaii if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Hawaii) limited liability company (LLC) to do business in Hawaii.

What is a Foreign LLC?

For Hawaii purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Hawaii. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Minnesota is a foreign LLC in Wisconsin.

Transacting Business in Hawaii

According to Hawaii’s LLC Act, you are required to register your foreign company with the state of Hawaii if you are “transacting business” in Hawaii. What does this mean? Well, like most states, Hawaii’s LLC Act does not specifically define the phrase “transacting business” in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

• a warehouse in the state
• a store in the state
• an office in the state, or
• a sales representative in the state.

Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.

Certain Activities Are Exempt

Like most states, Hawaii’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:

• defending or settling a lawsuit
• dealing with LLC business affairs such as holding member or manager meetings
• having a bank account in the state
• having an office, agency, or persons in the state for handling your company’s own securities
• selling through independent contractors
• soliciting or obtaining orders where the orders require acceptance outside the state before they become contracts
• creating or acquiring indebtedness, mortgages, or security interests in real or personal property
• securing or collecting debts
• conducting an isolated transaction that is completed within thirty days and is not one in the course of similar, repeated transactions; and
• transacting business in interstate commerce.

For the full, legal description of each of the listed items, check Section 428-1003 of the Hawaii Revised Statutes. If your LLC’s only activity in Hawaii is one or more of the listed items, you should not need to register with the state.

Certificate of Authority

To register your business in Hawaii, you must file an Application for Certificate of Authority with the Hawaii Department of Commerce and Consumer Affairs (DCCA). You can download a copy of the application form from the DCCA website. (The full name printed on the form is Application for Certificate of Authority for Foreign Limited Liability Company.)

To complete the application, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for a Hawaii application for registration, you need to provide:

• the name of your LLC exactly as stated in its certificate of existence (the records of the state where it was formed)
• the state where your LLC was organized
• the mailing address of your LLC’s principal office
• a statement that “A list of the names and addresses of all members and their respective capital contributions are kept and will be kept at this principal office until this registration is cancelled”
• the name and street address of your LLC’s registered agent in Hawaii
• the duration of your LLC (which may be “at-will”)
• an indication of whether your LLC is member-managed or manager-managed
• if your LLC is manager-managed, the name and address of each manager
• if your LLC is member-managed, the name and address of each member
• an indication of whether LLC members are liable for all, none, or some of the company’s debts, obligations, and liabilities
• if members are liable for some debts, obligations, and liabilities, a statement of what those are, and a statement that the members have consented to be bound by this statement of liability
• an original certificate of existence or equivalent document; and
• an authorized signature.

The certificate of existence usually will be issued by the secretary of state (or equivalent official) in the state where your LLC is organized. The certificate must dated no more than sixty days prior the date you file your application. You can file on paper or online. The basic filing fee is $50 plus a $1 state archives fee.

What Happens if You Don’t Register?

If your LLC transacts business in Hawaii without authority, it cannot bring a lawsuit in the state. In addition, your LLC will be liable for all fees and penalties that it should have paid if it was properly registered. However, not being registered does not invalidate your LLC’s contracts or prevent it from defending a lawsuit in Hawaii. Also, the limitations on the personal liability of LLC members is not waived solely because the company transacted business in Hawaii without authority.

Registering a Foreign Corporation in Hawaii

If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Hawaii are similar. You will, however, have to use a different application form (Form DC-1). See the Hawaii Secretary of State website for forms, information, and filing instructions for registering a foreign corporation in Hawaii.

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