Hawaii Startup
If you're forming a Hawaii startup but you're not sure what type of business is
best for you, we can help. Our Hawaii startup page has information on Trade Names,
LLCs, and corporations of all type (for-profit or nonprofit; foreign corporations
and domestic).
Hawaii is a great place for a startup business—the state assesses no franchise
or charter tax, other than for financial institutions, which results in a welcoming
environment for small businesses.
Hawaii Trade Name
A Hawaii DBA is a type
of filing that enables an individual or legal business to conduct business under
a new name. For example, Magic Flowers, Inc. might register a trade name as Magic
Houseplants in order to market to a different group of consumers.
Incorporate in Hawaii
When a business incorporates
in Hawaii, it will select a tax classification: C corporation or S corporation.
Corporations are filed through the DCCA, or Department of Commerce & Consumer Affairs.
C Corporation
A
C corporation is formed by filing Articles of Incorporation with the DCCA;
no additional filing is required. A C corporation has a more stringent tax structure,
but it also enjoys the most ownership flexibility of the two types of for-profit
corporation.
S Corporation
An
S corporation, on the other hand, is more restrictive as far as ownership
is concerned, but it allows for a lighter tax burden. To form an S corporation,
you will submit a form to the IRS after your Articles have been filed with the DCCA,
requesting the IRS to tax you as an S corporation.
Hawaii Foreign Corporation
In order to do business in Hawaii, a corporation registered in another state must
file in Hawaii as a
Hawaii foreign corporation. Just as with a domestic corporation, a registered
agent must be kept on file at all time. Whether this registered agent is a corporation
or individual, it must hold a physical address in Hawaii (and not just a PO box).
A foreign corporation has other corporate responsibilities, and it is responsible
for complying with them. Failure to do so may result in disqualification from being
allowed to conduct business in the state.
Hawaii LLC
An LLC in Hawaii is a type
of business that, like a corporation, provides limited liability to its owners and
is considered a legal entity, separate from its owners.
An LLC will elect to be taxed by the IRS as a corporation, a partnership, or an
individual, depending on the amount of owners it has. Like a C corporation, its
ownership structure is quite flexible; like an S corporation, it is a pass-through
entity.
Hawaii Nonprofit Corporation
Like a for-profit corporation, a
Hawaii nonprofit corporation is filed by submitting Articles of Incorporation
to the state. However, note that in order to act as a tax-exempt organization, such
as a 501c3 nonprofit organization, you must receive express permission from the
IRS to be treated as such. Until your 501c3 application has been accepted by the
IRS, you are just a Hawaii nonprofit corporation and still responsible for paying
taxes.