A limited liability company, or LLC, is a business entity created under state laws which can be taxed in a lot of different ways. An LLC is becoming the most popular way to start a business due to the following advantages:
- LLCs are easy to set up and maintain
- Members are typically not liable for the debts of the LLC
- Income and losses can be passed through to members as in a sole proprietorship, partnership or S-Corporation
- LLCs do not have the same corporate formalities as a corporation
- An LLC has a flexible management and ownership structure
- LLC owners can elect for the IRS to tax the LLC as a sole proprietorship, partnership, C Corporation, or S Corporation.
Owners make this election through the IRS after the company forms with the state.
- Decide on a business name for your Limited Liability Company (LLC). In most states, “LLC,” “Limited Liability Co.,” or a similar variation must be included in the LLC’s business name.
- Search availability of your LLC’s chosen business name, and for similarity to existing names.
- You can choose to Register your LLC name (including as a “doing business as”). Your state’s LLC office can tell you how to find out whether your proposed name is available for your use. For a small fee, you can reserve your LLC name for a short period of time until you file your articles of organization.
- Create and sign an LLC Operating Agreementwhich sets out the rights and responsibilities of the LLC members. In the state of Hawaii the Operating Agreement is needed to open up a bank account
- Write and file your LLC’s Articles of Organization with the Department of Commerce and Consumer Affairs (DCCA)
- Choose a Registered Agent.
- Obtain business licenses and permits for your LLC from:
- The federal government; A Federal Employer Identification Number (FEIN)
- Your state government (DCCA)
- Your local government (State Tax Department)
Forming a limited liability company (LLC) can be a long-term benefit to your new business in the long run, but the process can be complicated. It’s important to ensure that your new business complies with your state’s legal requirements at all steps in the LLC formation process.
The standard filing to form an LLC formation in Hawaii takes about 2 to 4 weeks