How to Start a Corporation in Hawaii: 5 Easy Steps

Read Our Free Guide to Forming a Corporation in Hawaii

5 Easy Steps to Forming your Corporation:

Step 1: Choose a Name

Step 2: Appoint a Registered Agent

Step 3: Organize A Meeting

Step 4: File the Articles of Incorporation

Step 5: Obtain an EIN

how to start a corporation in hawaii

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You can easily start a corporation in 5 easy steps by filing the Articles of Incorporation with the Hawaii Department of Commerce and Consumer Affairs. In this guide, we will show you how to form a corporation in Hawaii yourself.

Now, let’s dive into our step-by-step guide of how to get started with your corporation today. 

Step 1: Creating a Name For Your Hawaii Corporation

This is the first step in initiating the process of starting a corporation in Hawaii. You can choose the name of your corporation in compliance with these guidelines.

Comply with the Naming Requirements

You should choose a unique name for your corporation. It should have no similarity with the name of any company already registered in Hawaii.

Not only should the name be unique, but also it should not be confused with any other name. For instance, you cannot claim your name to be different from the existing business just by:

  • Adding a suffix like Corporation, Inc., Ltd, or LLC, etc.
  • Adding definite articles like ‘A’, ‘An’, and ‘The’.
  • Including ‘&’ or ‘And’ etc. in the same name.
  • Changing the name to its plural form or the singular form or using the possessive form.
  • Using the Abbreviated form or the symbols or even by altering the punctuation marks.
  • The name of the business should be such that it is easily identifiable as a corporation. For this, the name chosen for the corporation should end with either Corporation (Corp.) or Incorporated (Inc.)
  • The name cannot include any word resembling or indicating any association with any Government agency. It should also not include any word with any business restricted by the federal or state government. In addition to this, you cannot use any word that indicates that your corporation is engaged in a business that is unauthorized by Hawaii State law.
  • You should mandatorily get the due approval from the Hawaii Department of Finance to include any of the following words in your corporation: Financial Institution, Bank, Banker, Banking, Banc, Savings Bank, Savings and Loan, Savings Association, Financial Services Loan Company, Credit Union, Trust Company, Intrapacific Bank, International Banking Corporation, or Trust, Olympic, Olympiad, Citius Altius Fortius, Insurance.

You can refer to the official website of Hawaii State Legislature for its specific naming requirements.

Check for the Availability of Your Hawaii Corporation Name

We suggest you select 4-5 names that define your business or its core activity through brainstorming. You can check the availability of the selected names by visiting the Hawaii secretary of state business search. You just need to enter the proposed names of your corporation one by one as per your priority in the portal to find out their availability.

Check for the availability of the URL

Though it is not necessary to buy your business domain before registration, you can check if a good URL is available for your proposed corporation name. In case you find an impressive URL, we recommend you to buy it now. It is important because during the process of registration some other business can take the URL that you have selected for your business.

FAQs: Hawaii Corporation Facts

A: The minimum cost of starting a corporation in Hawaii is $50. This amount includes a name reservation fee and filing fees.

A: There are many benefits to forming a corporation. Some of them include:

  •  A corporation provides limited liability protection.
  • You can get substantial corporate tax benefits by forming a corporation.
  • There is no limit to capital generation.
  • Better management of business activities due to the formal structure of the management.
  • You can appeal to investors to invest in your corporation and raise funds for your business activities.

Though forming a corporation has so many advantages, before finalizing the business entity, you need to make sure that your specific business requirements best suit the structure of a corporation. 

S corporations do not pay federal taxes on their business income. The profits of the business pass through to the owners of the S corporation. You can form an S-Corporation if all the owners are US citizens. 

  • S-corporation has an added advantage over C-corporation. In an S-corporation, you can pass-through income to the stockholders to avoid double taxation.
  • The maximum limit of shareholders is restricted to 100 only.

A C corporation is the default format of an incorporated company in which it acts as a separate body from the owners. Additionally, you can form a C-Corporation if any of the owners is not a US citizen.

  • There are no legal restrictions in the United States on the number of owners to form a C-Corporation. The law also does not restrict based on the owners’ country of origin.
  • Shareholders of the corporate own the corporation and it has a board of directors.

Step 2: Appoint an Hawaii Registered Agent

A registered agent is a corporate appointed statutory agent who receives and signs all the official documents on behalf of the corporate. These documents include legal corporate compliance documents and correspondences with government agencies.

You have to choose and appoint the registered agent while registering your business entity with the Hawaii Department of Commerce and Consumer Affairs. The agent should have their physical address in the state of Hawaii and they should be available during office hours.

The registered agent can be an individual of the age above 18 years or it can be a business entity. Besides, you can also select a professional incorporation service as your registered agent. 

FAQs: Hawaii Registered Agents Facts

A: Yes, any company that is active will be required to have a company registered agent. 

A: Yes, you can act as your own registered agent as long as you have a physical street address in the state where your corporation is formed.

A: A commercial registered agent is someone who is only involved in the business as a registered agent. There are only a few states that have separate forms for commercial registered agents and noncommercial registered agents, so you usually don’t need to worry about it. Some of the states that have commercial registered agents are Wyoming, Montana, North Dakota, South Dakota, Delaware, Maine, Pennsylvania, Idaho, and Nevada.

 

Step 3: Organize a Meeting

After appointing the registered agent for your Hawaii Corporation, the next step is to hold an organizational meeting before filing the Articles of Incorporation. You need to complete many important activities during the organizational meeting. They include,

  • Elect Initial Directors
  • Fill the Articles of Incorporation
  • Draft Corporate bylaws
  • Determine the ownership of the corporation
  • Prepare Incorporator’s Statement

Elect Initial Directors

Directors are responsible to make important policy and commercial decisions for the corporate including adopting, amending, and repealing corporate bylaws. The directors are also responsible for the election and supervision of the officers. They also have the right to remove the officers as per corporate guidelines.  In the first organizational meeting, usually, the owners elect themselves as the directors. After the registration of the corporation, new directors are appointed who usually are other than the owners. 

Fill the Articles of Incorporation

This is the basic activity before filing the Articles of Incorporation with the Hawaii Department of Commerce and Consumer Affairs.

Draft Corporate Bylaws

Simply stating, bylaws are the constitution of your corporation. They include all the rules related to the governance of the day-to-day operation of your corporation. They are in line with the rules set up by the federal or state government. The Board of directors drafts the bylaws in the first organizational meeting. The bylaws of a corporation essentially include,

  • Roles and responsibilities of the directors and the officers
  • When, where, and how the meetings will be conducted
  • Procedure to vote and elect directors and officers
  • Document and record control procedures
  • Procedures for handling conflicts and disputes
  • Procedure for amendments in bylaws
  • Date and location of Annual Shareholder Meeting
  • Procedure for negotiating contracts
  • Fiduciary duties to ensure that they act in the interests of the company
  • Defining the quorum for voting

Determine the Ownership of the Corporation

This step involves choosing the share structure of the corporation. Besides, it also defines the share structure and strategy of the corporation. Each share of the company determines the ownership of the company. The organizational meeting decides on the structure of the shares including the allowable limit of issuing the number of shares, actual shares issued to shareholders, and different shares classes having special rights and privileges.

In Hawaii, you can declare if the corporation will issue more than one share class. It is advisable, to begin with, higher authorized shares to avoid paying legal fees to increase the initial share amount later.

Prepare and Sign Incorporator’s Statement

An incorporator statement is an authorized document that ensures that the names of all the initial directors have been recorded in the corporate book with their signatures. This document is very important until the election of new directors during the first shareholder meeting. 

FAQs: Hawaii Corporation Duties

A: The federal corporate tax in the US is flat at 21%. In addition, you have to pay state or local corporate taxes as per the location of the business. In Hawaii, this comes out to 4.40% in corporate income tax.

A: You basically require a Certificate of Incorporation, or Articles of Incorporation to start a corporation in Hawaii. For due diligence, you may need to submit some more certificates to ensure that you do not belong to any of the prohibited countries like Iran, North Korea, or Cuba, etc.

To start a professional corporation, you will additionally need to submit a license about the profession.

A:  Obtaining a unique logo for your business is the next important step in Hawaii. While creating a logo for your business, consider the nature of the business, how you wish to promote your brand, the customer segment that you intend to focus on, the vision and the mission of your business, and any other thing that defines your business. You should create the logo by visualizing yourself as the owner of a strong brand. The logo should be such that people can relate it with your product and the brand.

 

A: Yes, you need to file an annual report for your Hawaii corporation.

A: If you own a C-corp, you have to pay taxes on profits paid in the form of salaries, bonuses, and dividends in Hawaii. The remaining amount is taxed as per the applicable corporate tax rates. In this way, the corporates are actually double-taxed- the tax on the profits and then tax after paying out the dividends.

If you own an S-corp in Hawaii, the taxation follows a different structure because you can pass through the profits to the shareholders who can then pay taxes as per their individual tax rates.

Step 4: Filing the Hawaii Articles of Incorporation

Articles of Incorporation are also called ‘Certificate of Incorporation’ or ‘Charter’. It is the document filed to create Hawaii Corporation. Any or all the incorporators or promoters of the corporation sign the charter before submitting it to the filing office in Hawaii. You can file the document online through its eCorp website. Besides, you can also file the article by mail or by using fax at the following address:

  • 335 Merchant Street
  • Mailing Address: P.O. Box 40, Honolulu, Hawaii 96810

You need to deposit the applicable registration fee while filing. For online filing, you need to create an account to log in to the service portal and then click the icon, “Start a New Business” under the ‘Online Services” tab.

The Article of Incorporation includes the following information:

  • Name and address of the Corporation
  • Name and address of Registered agent
  • Name(s) and address(s) of Incorporator(s)
  • Name and addresses of Corporate directors and officers
  • Allowable numbers of authorized shares for issue

File the Hawaii Articles of Incorporation

File Online

OR

File by Mail

Mailing Address:

  • 335 Merchant Street
  • Mailing Address: P.O. Box 40, Honolulu, Hawaii 96810

Step 5: Obtain an Employer Identification Number (EIN) for Your Hawaii Corporation

An EIN or FTIN (Federal Tax Identification Number) is the number used by the federal government to identify a business entity. From the company’s point of view, it is an important security number.

You can get this number from the Internal Revenue Services of the related district of Hawaii after the formation of the corporation. No additional fee is charged for issuing the EIN. You can apply to get the EIN by visiting the official website of the IRS. Besides, you can also send your request to get the number through mail to the following address:

  • Internal Revenue Service
  • Attention: Employer Identification Number Operation
  • Cincinnati, OH 45999
  • Fax: (855) 641-6935

The EIN allows you to proceed with many essential business activities like opening up a business bank account and recruitment of employees. Besides, the number is also required for federal and state tax assessment purposes.

Get an EIN

Request an EIN from the IRS

 

OR

Apply for an EIN by Mail/Fax

Mailing Address:

  • Internal Revenue Service
  • Attention: Employer Identification Number Operation
  • Cincinnati, OH 45999
  • Fax: (855) 641-6935

Protect Your Business in Hawaii

You need to ensure that your personal assets remain protected in case your Hawaii corporation encounters any legal issues. For this, you need to follow some safe business practices.

Have a Dedicated Business Bank Account

For the protection of personal assets during unforeseeable business conditions, you need to have separate personal and business accounts. You further need to have banking and credit accounts exclusively for your business.

By mixing your personal and business accounts, you put your personal assets at serious risk during any legal complications in your Hawaii Corporation. In the corporate legal term, it is called piercing the corporate veil.

You can protect your personal assets like your home, vehicle, or other assets by,

  • Opening Business Account and
  • Getting a Business Credit Card
Opening Business Account

Getting a business account makes your corporation a legal entity. It decouples your personal and professional accounts and provides protection to your personal property. Having a business account also simplifies the tax assessment and evaluation process a great deal.

There are two documents required to open a bank account in Hawaii:

  • Employer Identification Number
  • Corporation Formation Documents
Get a Business Credit Card

This is another way to decouple your personal and corporate accounts. It provides a separate accounting of both the expenses.

In addition to providing you the convenience of separate accounting, you can also use your credit card to develop your corporate’s credit history. This will help you in raising funds for your business in the future. If you keep your credit scores high you become eligible for a lot of facilities like easy loans and enhanced credit limits.

Financial institutions and banks also offer various beneficial schemes for business credit cards which are generally not available on personal credit cards. These schemes can include, cash-back offers and many exclusive perks.

Build Favorable Business Credit Score

Building business credit is a focused process to avail of many different benefits for your business. Among other activities, it involves getting into the most favored list of top-class credit institutions.

To build a favorable business credit score you need to pay attention to the fundability of your business. Moreover, you also need to achieve a high credit score by establishing and maintaining credit lines.

A favorable credit score can fetch you a lot of benefits like better interest rates, higher overdraft limits, etc. The best part of these benefits is that your offers are determined solely by your business credit score and not your personal credit ratings.

The above steps, if taken in time, helps in protecting your personal assets as any financial or other complications in the business remains the liability of your business alone. It does not affect your personal property in any way.

Have a Robust Accounting System

Keeping proper accounting is essential to protect your business in Hawaii. And this is important even if you have not registered your business with the state. The properly organized and managed accounting system will help you in multiple ways:

  • It will make it easy for you to file your annual taxes.
  • You will always have clear visibility about all your finance-related activities like expenses, investments, and revenue generation, etc. 

To manage your accounting system, you can use a software application meant for the purpose and do it yourself. However, if you find it more difficult and prone to errors, particularly in the beginning, you can outsource the services to an accounting firm or a professional incorporation agency. Many of these agencies take care of many additional commercial activities apart from offering basic accounting services.

Appropriately Insure Your Business

Appropriate Insurance ensures that the risks and liabilities of your Hawaii Corporation are properly taken care of. You need to select the right type of insurance for your corporation depending on the type of business. Among others, three insurance policies apply to most corporations. They include,

Professional Liability Insurance

This insurance policy takes care of the wrongdoings of the errors caused in the business. They are mostly related to the outsourced service providers like consultants, advisers, and so on.

General Liability Insurance

This is the most common type of insurance policy that almost all the corporation opts for. This policy covers you and your company against any claims arising out of any physical injuries and damage to properties caused by your products and services. It also covers similar liabilities resulting from any of your operations.

Workers’ Compensation Insurance

This policy takes care of the claims arising out of employees’ occupational diseases, injuries, or deaths.

Carefully Administer and Execute Legal Documents

Some corporate owners make the mistake of signing corporate legal documents in their personal capacity. This practice can leave you exposed to personal liability for the errors or claims related to the corporate. So, be very careful while executing any legal document related to the corporate. Always sign them as a representative of your corporation. You can adopt a signing format to prevent any such situation where you put the name of the corporate before signing the document along with your name and your authorized position in the business as its representative.

How to Run an Hawaii Corporation

It is not very difficult to run a corporation in Hawaii provided you adhere to the rules, regulations, and guidelines to run the business in the state. Following some easy-to-follow steps will help you in running your Hawaii Corporation seamlessly while keeping your business and personal liabilities protected at all times.

Keep Your Corporate Bylaws Updated

You may need to amend the corporate bylaws from time to time to ensure compliance with the state laws as well as with the specific corporate practices followed within the organization. You should call a special meeting of your board of directors to propose the amendments by distributing them among all the directors. After the meeting, you should send the notice to all the shareholders intimating them about the proposed amendments. In the follow-up meeting, you should obtain the approvals or the disapproval of the proposed change and accordingly act to make amendments in the bylaws.

Maintain a Record Book of Your Hawaii Corporation 

It is very important to keep all the critical corporate files and documents at a safe and secured location, preferably your principal location of operation.

There are corporate record book folders available online, you can use the one most fitting to your requirements. The basic corporate documents to be kept in the document folder include, Article of Incorporation, Corporate Bylaws, Minute of Meetings (MOMs), different stock keeping and financial ledgers, and so on.

Organize Regular Board Meetings

You need to hold mandatory and voluntary meetings with your board of directors regularly. These meetings are essential to ensure compliance with the Hawaii Corporate rules and regulations and also to discuss important business matters. You also need to maintain the minutes of all these meetings properly. Some of the board meetings include,

Annual Shareholder Meeting

It is mandatory to hold annual shareholder meetings in Hawaii. The first board meeting should be organized before filing the Article of Incorporation. Its basic purpose is to elect directors and draft bylaws for the company. The date of the annual shareholder meeting is included as mandatory information in your corporate bylaws.

Special Voluntary Meetings

Apart from the Annual Shareholder Meeting, you may need to discuss some important business matters with the board of directors. In such cases, special meetings can also be called by giving prior notice to all the directors as per the Hawaii special meeting guidelines.

Formal Information of Meetings

It is essential to give prior notice of the meeting to all the shareholder(s), directors, officers, and employees of the company. The notice for the meeting should include information related to the type of meeting i.e. Annual Shareholder Meeting or Special Meeting, time and location of the meeting, etc.

In case of an emergency meeting where it was not possible to give prior notice to all the stakeholders, an exceptional waiver notice must be released after obtaining signatures of all eligible attendees accepting the meeting without a formal notice as required by the conditions of the bylaws.

Minutes of Meeting

This is a mandatory requirement for all Hawaii corporations to prepare Meeting Minutes of all the meetings held with the board of directors. The meeting of minutes is used as a part of evidence during any legal proceedings arising out of any conflicting situation or disputes.

For the corporates with more than one shareholder, there are many requirements to be fulfilled in the meeting minutes. However, for a small business having only a single shareholder, the required information is limited to the date of the meeting along with information stating that the meeting was held among the shareholder and the directors. Besides, it may also include the information about the next date of the board of director’s meetings depending on the guidelines provided in the corporate bylaws.

You can also use a corporate meeting minute template for ease of recording the minutes.

Taxes for your Hawaii Corporation

The type and nature of your business determine the types of taxes you will need to pay for your business. For some corporates, it may be a single form while for others they may need to register with multiple tax agencies.

Hawaii Sales Tax

For selling physical products you need to register with the Hawaii state seller’s permit. You can easily do that through their official website. By registering for the seller’s permit, you can collect sales tax levied by different sales agencies on transactions of all taxable goods and services.

Hawaii Employer Taxes

Taxes on hiring employees form part of Hawaii Employer Taxes. You can register for these taxes from the same website. After registering you have to pay for the EWT (Employee Withholding Tax), and insurance tax for unemployment and disability insurance.

Licenses and Permits

Apart from registering for different taxes, you also need to obtain certain licenses and permits to operate your Hawaii Corporation. Depending on the type of business activity, you need to obtain permits from different federal, state, and district authorities to run the corporation.

You can get detailed information about the relevant licenses and permits on the official website of the respective office. Be very careful while reading this information. You can also consult an expert for a better understanding of the license and permit requirements especially for your type of business in Hawaii. 

The license or permit charges depend on the type of license (s) you wish to obtain.

Annual Report Filing

This simple activity will keep you protected from many issues concerning the operation of your Hawaii Corporation. In the corporate annual report, you need to provide information about the ownership of the corporation. It includes the name(s) and address(es) of the owners and the registered agent. Your appointed registered agent tracks the filing date and informs you before the due date for filing the report.

Missing the due date of filing may lead to the inactive status of your corporate. In such a case, you will have to pay the late fee for filing the report after the due date. In certain situations of not filing the annual report, your corporation may also be dissolved by the relevant state authorities.

Corporation Dissolution in Hawaii

Stopping business activities in Hawaii also requires some important formalities to be completed to officially close the business. This is also called the official dissolution of corporations. It is important to follow the due procedure to dissolve the corporation to prevent any tax liabilities or penalties to be levied on the business. Besides, it is all-important to keep you or your corporation from any legal actions at a later stage.

You need to follow these six steps to dissolve the corporation in Hawaii:

  • Stop all business activities.
  • Before finally dissolving the business, you need to call a board meeting with the specific agenda of stopping the business. During the meeting, you have to vote on dissolution and include in the meeting minutes.
  • As you had filed the Articles of Incorporation to start the business, similarly you need to file Articles of Dissolution to officially stop the business. For this, you need to follow guidelines provided by the Hawaii Department of Commerce and Consumer Affairs.
  • Continue in the reverse order of activities carried out while starting the corporation. So, close all the corporate tax accounts. File a Tax Clearance Application (TCA) to Hawaii Department of Taxation within six months from the date of submission of Article of Dissolution, in case the corporation had issued shares or had carried out some business activities.
  • In case you have to file the TCA, you are also required to publish the Article of Dissolution. You will get more information about it from the Department of Commerce and Consumer Affairs after the approval of the articles.
  • Close all your corporate bank accounts and surrender your business credit card.

Additional Hawaii Corporation FAQs

Q: Can I reserve a name for my Hawaii Corporation?

A: Yes. If you do not plan to start your business now and find a good name for your business, you can reserve the name for your future use.

Q: Is it possible for a Non-Citizen to start a Corporation in the USA?

A: Yes, very much so. You just need to have a physical address in the US and should have a bank account in the country.

Q: Can I do business other than my Corporation name in Hawaii?

A: Yes. You can do your business under different names in Hawaii known as DBA (Doing Business As), Assumed names, or Trade names.

Q: What is the next step after getting a Business Name in Hawaii?

A:  Obtaining a unique logo for your business is the next important step in Hawaii. While creating a logo for your business, consider the nature of the business, how you wish to promote your brand, the customer segment that you intend to focus on, the vision and the mission of your business, and any other thing that defines your business. You should create the logo by visualizing yourself as the owner of a strong brand. The logo should be such that people can relate it with your product and the brand.

Q: Are there any other types of corporations that I can form in Hawaii?

A: In addition to the above broad corporation types following are some other types of corporations:

  • Professional corporations that require specific licenses to operate a business in a particular field like physicians, accountants, etc.
  • Nonprofit corporations who utilize the profits earned to promote their mission.