As a requirement when forming a Non-Profit in Hawaii, you are to select a business name that is not the same or not closely similar to any existing business entity registered with the Department of Commerce and Consumer Affairs.
You can check for the availability of the Hawaii Non-Profit name you have chosen on the DCCA website.
As part of the requirements of starting a Hawaii Non-Profit, you must have a number of officers and an initial set of directors. At least three or more directors are required for you to be able to incorporate legally.
Note that your Hawaii Non-Profit officers and directors will serve in the organization until the first shareholder’s meeting.
A Hawaii Registered Agent is another requirement to legally incorporate your Hawaii Non-Profit. A Registered Agent in Hawaii can either be a qualified individual who is a resident of the state or a business entity, which can be local or foreign, provided that it is legally registered to operate in the state.
Upon the Registered Agent’s consent, a physical address should be provided. Aside from the state qualifications that the Registered Agent should meet, she/he should also be reliable and trustworthy.
That said, you can hire a Registered Agent service and pay up to $160/year, or get a Hawaii Registered Agent free of charge when you incorporate your Non-Profit with IncFile.
The Non-Profit Articles of Incorporation is to be filed at the Department of Commerce and Consumer Affairs to be legally recognized as a Non-Profit in Hawaii. When you file your Articles of Incorporation, certain information about your Non-Profit is required.
In addition, you must also include some specific languages that meet the IRS criteria to enjoy the 501(c)(3) status with the IRS. These languages should include provisions on where your assets should be distributed should your Non-Profit be dissolved.
The first meeting with your board of directors is vital as some business concerns will be discussed and be taken action upon. The following will be the meeting’s main points of discussion:
The minutes of meeting should be created at the end of the meeting and signed by all participants.
A Corporate Records Binder is not a mandatory requirement, but it should still be bought and used when forming a Non-Profit. This binder will be the record keeper of all pertinent business documents such as your Hawaii Non-Profit registration, licenses and permits, tax reports, etc.
A Corporate Records Binder should be kept in a safe place in your office for easy access when the need arises. This binder will also serve as a proof of legitimacy for your Hawaii Non-Profit. You can get a binder at the local office supply chain or order directly via Amazon.
In order to operate as a Non-Profit, you are required to get an EIN. An online application of your EIN through the IRS website can be done quickly, with you getting your EIN as soon as the session ends.
Make sure you have your EIN before you start operations as this will be an important requirement in all your transactions.
By opening a separate business bank account for your Hawaii Non-Profit you will be able to keep all finances separate. This way, you can ensure that all your personal assets will not be mixed up with your business assets, which is extremely important.
You can use the bank you keep your personal account with, just be sure to keep transactions 100% separate. For a look at our top options, here is a review of the top 3.
Now this step of the formation of your Non-Profit is the meat of this guide as this is where you need to comply all requirements to obtain your federal and state tax exemption status. Note that even if you get a tax-exempt status, you will still be registering for Non-Profit taxes.
The Hawaii Non-Profit tax registration is still mandatory as there are some taxes you still need to pay for despite a tax-exempt status. Here are the following steps you should take to obtain the tax-exempt status:
IRS Form 1023 or the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code should be filed to obtain federal exemption for taxes. As this form is lengthy and requires much information, you should be careful in filling it out.
For smaller organizations, an alternative Form 1023-EZ or the Streamlined Application for Recognition of Exemption Under 501(c)(3) of the Internal Revenue Code, given that the criteria for small organization are met. This means that your yearly gross receipts should not exceed $50,000 and total assets should not exceed $250,000.
As soon as you have filed the necessary forms for federal tax exemption, you can head on to Hawaii’s tax agency to process your state tax exemption. As there are a variety of taxes imposed by the state, you might want to look into the requirements for taxes carefully.
As there may be additional requirements you need to complete with regard to fundraising activities, you can check with the Attorney General’s office to make sure that you are aware what you need to do.
The next step to starting a business in Hawaii is to take care of all business license and regulations. This is a requirement to be a legally operating business as well as being compliant with state rules and regulations.
SBA.gov has a great resource roundup and provides you with the important details to compliance for the licenses, permits, and certifications you need to handle. However if you are short on time and would like professionals to do the specific research for you, here is a great service.
Now that you have followed the steps above, you are an official Non-Profit organization in the state of Hawaii. Other than those 10 steps that are based on state guidelines, here are 2 additional steps based on best practices for starting a successful organization. Not required, but highly recommended.
Every organization should follow a solid business plan to achieve what it wants to accomplish in the future. More than being a roadmap to success, a business plan summarizes the entire existence of your organization.
A business plan does not need to be written in a very technical style as long as it clearly conveys the organization’s goals and how to achieve them. Get started on a solid business plan now with these resources below.
If you want your business to be taken seriously, build a professional website. Thankfully, there are free tools like WordPress for the non-tech savvy entrepreneurs like myself.
Learn how to build your website with this simple step-by-step guide. It covers the basics and walks you through the entire process.
Note to our readers that this article is only an informational guide and is not legal advice. Seek the advice of a local professionals if you have any specific legal questions.