Do you own a limited liability company (LLC) created in a state other than Hawaii, but you want to expand your business to the The Aloha State? If so, you’ll need to qualify your foreign LLC in order to transact business in Hawaii.
What is a foreign qualification and how do foreign LLCs function within the state of Hawaii? In this guide, we’ll answer these questions and more.
Guru Tip: If you’d rather hire an online service to handle this process for you, many of the best LLC services can handle it for you.
What Is a Foreign Qualification?
A foreign qualification enables your limited liability company to do business in the state of Hawaii. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in Hawaii is the same regardless of where your domestic LLC is based.
The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. However, Hawaii is one of the few states that does clearly define what it means to “do business.”
What Qualifies as ‘Doing Business’ in Hawaii
According to Hawaii’s General Excise Tax Law, “business” and “engaging in business” are defined as follows:
What Does NOT Qualify as ‘Doing Business’ in Hawaii
Like many states, Hawaii has adopted the Revised Model Act provisions, which outline certain activities that are exempt from the above definition. The following activities do not qualify as “doing business” in this state:
How to Get Foreign Qualification in Hawaii
To obtain Foreign Qualification for your Hawaii business, you must file the “Application for Certificate of Authority for Foreign Corporation” form. You can find out more about the registration steps on the Hawaii Department of Commerce and Consumer Affairs website.
Filing Fee: $50, plus an additional $25 for expedited service and $10 for a certified copy. Checks must be made payable to “Department of Commerce and Consumer Affairs.” The forms can either be submitted online here, or printed out and delivered to the following address: Department of Commerce and Consumer Affairs P.O. Box 40
Honolulu, HI 96810
Department of Commerce and Consumer Affairs P.O. Box 40 Honolulu, HI 96810
What Is the Penalty for Not Getting Foreign Qualification in Hawaii?
The primary penalty for doing business as an unregistered foreign entity in Hawaii is the inability to bring forward lawsuits in a state court. However, your business can still defend itself against lawsuits, and all of your business contracts remain valid.
Should I Hire a Business Service Provider to File My Hawaii Foreign Qualification?
If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.
The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of Hawaii.
These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.
Getting foreign qualification in Hawaii is easy and much cheaper than many other states. Hawaii Business Express makes the process extremely simple and efficient. However, just because it is easy does not mean that you should take the foreign qualification process lightly. The penalties for non-compliance can be severe -- especially if you need to bring a lawsuit against a third party in Hawaii.
We hope this article managed to answer your questions about obtaining a Hawaii foreign qualification, and we wish you a prosperous business future!