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