How to Transfer LLC Ownership in Hawaii

Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Transfer LLC ownership in Hawaii

Transferring ownership of a Limited Liability Company (LLC) in Hawaii is a relatively simple and straightforward process involving minimal paperwork. Establishing an LLC in Hawaii is less complicated than other business structures like corporations or partnerships, making it easier to transfer ownership. You can partially or fully transfer your LLC ownership by following a few simple steps. However, it is recommended to consult a legal expert to address any potential complexities that may arise in the future.

When setting up an LLC in Hawaii, also referred to as The Aloha State, it is crucial to follow several essential steps. One of these steps includes creating an Operating Agreement, a document that allows owners to transfer their shares to third parties or other LLC members. In this article, we will provide a comprehensive guide on how to transfer LLC ownership in Hawaii. Be sure to read the entire article to learn more about buying and selling your LLC ownership.

What is an LLC and its Ownership Structure in Hawaii

A Limited Liability Company (LLC) is a popular business structure in the United States, combining the advantages of both corporations and partnerships. In Hawaii, an LLC is characterized by a flexible ownership structure that allows for easier management and limited liability protection for its owners, also known as members.

An LLC in Hawaii is a separate legal entity from its owners, which means the owners are not personally liable for the company’s debts or legal obligations. The ownership structure of an LLC in Hawaii is determined by the percentage of ownership interests held by each member. These ownership interests can be distributed in any way the members see fit and are typically outlined in the Operating Agreement.

There is no maximum limit on the number of members an LLC in Hawaii can have, and the members can be individuals, other LLCs, corporations, or even foreign entities. This flexibility allows for a wide range of business structures, from single-member LLCs to large, multi-member LLCs with complex ownership arrangements.

Understanding the LLC Ownership Transfer in Hawaii

When an LLC member decides to step down from the owner’s position, they must transfer the ownership to someone else. It can be other existing members of the LLC or a third party. Transferring LLC ownership in Hawaii is a common yet complex deed. LLC owners, who want to transfer their ownership, must follow some steps to do the task. Before we dig deeper into the steps and details of transferring LLC ownership, let’s look at the reasons why LLC ownership takes place.

Why Transfer LLC Ownership in Hawaii

There can be several reasons why the transfer of LLC ownership in Hawaii takes place in any organization. Some of the most common reasons include the following-

  1. Death of the LLC owner
  2. Separation or Divorce of the LLC Owners
  3. LLC owners do not wish to continue their association with the organization
  4. LLC owners want to appoint a new member (owner)
  5. LLC owners want to sell the business off to someone else

These are some of the common reasons why an LLC ownership gets transferred in Hawaii. Transferring LLC ownership requires a comprehensive operating agreement. This is an internal document every LLC should have at the time of formation.

The Role of Hawaii Operating Agreement in LLC Ownership Transfer

Creating an Operating Agreement in Hawaii is one of the major steps in forming a limited liability company (LLC). However, many states do not require to have an Operating Agreement. California, New York, Delaware, Maine, Nebraska, and Missouri are the states where an LLC operating agreement is mandatory.

Even when your state does not necessarily need you to file the operating agreement, it is recommended that you should have it to avoid any internal disagreements or issues in the future.

LLCBuddy Editorial Team

An operating agreement is an internal document explaining all the procedures, including ownership transfer, dissolution, LLC operation, members, and other LLC-related processes. Operations, such as dissolution and ownership transfer, occur based on those written regulations.

If there is no Hawaii Operating Agreement or it does not have clear ownership transfer or buy-sell agreement provisions, the transfer takes place based on Hawaii state law.

What to Include in Hawaii Operating Agreement

This official document outlines the company’s structure, the members’ details, the dissolution process, and a lot more. Hence, it is always wise to have one to avoid any confusion in the future, whether your state needs it or not. The LLC operating agreement should have the following points-

  • Whether members are related to each other and what type of relationships they share
  • Managers’ rights and responsibilities
  • Operating Agreement Amendment conditions
  • Members’ profit and loss shares
  • Hawaii LLC Tax structures
  • Transfer of ownership rules and procedure
  • Dissolution of Hawaii LLC

If your operating agreement explains all the above points, you must follow it for the ownership transfer.

How Does Hawaii LLC Buy-Sell Agreement Work?

In Hawaii, the buy-sell agreement is a part of your operating agreement. It explains the instructions for buying and selling the LLC ownership. For example, who can be the member of Hawaii LLC, how will buy out and sell of the LLC be determined, whether the members of the LLC in Hawaii will buy the shares of the leaving owner, and how – these are the points you have in the buy-sell agreement.

Buy Out Hawaii LLC or Partial Transfer: In this case, the members of the LLC generally buy the shares of the owner who is leaving. As the LLC buys the owner’s interests, the shares get divided equally among the remaining Hawaii LLC members. LLC members must approve the transfer, and then the Operating Agreement (OA) will be updated to exclude the departed owner.

If your Hawaii operating agreement does not specify these terms beforehand, you must follow Hawaii state LLC law. In some states, ownership transfer does not simply take place. Instead, they have to dissolve the LLC to continue with the process. So, while you’re forming an Hawaii LLC, make sure to create a buy-sell agreement beforehand.

Sell a Hawaii LLC Or Fully Transfer: Selling an LLC or Fully Transferring the ownership is a bit more complicated than the buy-out process. In this condition, owners have the independent legal right to sell the interest to any third party. They do not need other members’ approval for this. The negotiation between the buyer and the seller involves complexities if there is no operating agreement in the first place. As an owner, you must find a buyer, write the change of ownership letter, set out other formalities, and voila! Your ownership transfer is done. The parties will settle the sale contract, including the LLC price, following Hawaii state laws.

How to Transfer Hawaii LLC Ownership

You need to follow a few simple steps to transfer ownership of your LLC in Hawaii. As mentioned, you must review the operating agreement first to get everything in the same space. Here are the following steps-

Step 1: Review Your Hawaii LLC Operating Agreement

Many states do not need to file the operating agreement. Hence, it is not mandatory for any LLC to have it while forming an LLC. If your LLC has no operating agreement, you must draft one while transferring the LLC ownership. On the other hand, if you already have an operating agreement, you must review it for the ownership transfer conditions and other legal requirements regarding the buy-out and sale of the LLC.

Step 2: Amend the Hawaii Articles of Organization

Changing/transferring ownership might lead to structural change at the managerial level. In that case, the LLCs must comply with the Hawaii Secretary of State. To do so, one must file the Hawaii Articles of Organization amendment. Specifically in Texas, LLCs must submit a Public Information Report annually to the Texas Comptroller of Public Accounts. The managerial changes will be explained there.

As soon as the ownership transfer negotiation is done and the agreement is made with the updated change of ownership, file it with the Secretary of State. For that, you must amend the Articles of Organization and get the Articles of Amendment. Make the changes to the existing Articles of Organization, get the amendment form, and submit it to the Hawaii SOS along with other documents and the filing fee. Read how to amend Hawaii Articles of Organization in a simple way.

Step 3: Spread the News

Once the legal formalities are done, and the ownership of your LLC is transferred officially in Hawaii, you must spread the word to the clients, partners, and other concerned people. Also, banks and other financial institutions should be notified about the ownership change. Business entities, vendors, and other officials you work with should also be notified.

Step 4: Obtain a New EIN (optional)

You might need to apply for a new EIN based on the LLC ownership transfer. After officially transferring ownership, you must check with the IRS whether you need a new EIN. There is a formal form to notify IRS about the LLC ownership transfer. Get the form from their website, enter the details, and submit it. You will get notified whether you need to apply for a new EIN.

Reasons to Transfer Hawaii LLC Ownership

There can be many issues that lead to ownership transfer. One of the most common issues is the death of the owner. There can be other issues where transfer of ownership occurs. Here are some issues to consider,

Divorce Or End of Marriage: In some cases, according to the divorce decree, the ownership transfers to the spouse. If the LLC in Hawaii has an operating agreement and the ownership transfer condition is specified, then the LLC must follow the Hawaii operating agreement to proceed.

Death of a Member: This is the most common issue in LLCs. In Hawaii, if a member dies, the ownership, by default, transfers to the legal heirs of the deceased person. However, in this case, the legal heirs (wife/husband/kids) do not get any managerial power or authority. They continue enjoying the benefits, such as a share of the profit and others. But they won’t get any other power in the company. In such situations, other members of the Hawaii LLC often buy out the deceased’s interests.

Dissolution of Hawaii LLC: If any member/owner plans to leave the company, the LLC gets dissolved and reformed with the new policy and operating agreement. The members and managers make this sort of decision at the time of the creation of the operating agreement.


Is it necessary to transfer Hawaii LLC ownership?
Yes, it is necessary to transfer ownership of a Hawaii LLC in accordance with Hawaii state law. Question
What is an LLC in Hawaii?
An LLC in Hawaii is a limited liability company, which is a type of legal business structure that offers limited liability protection to its owners.
What is the process for transferring Hawaii LLC ownership?
The process for transferring Hawaii LLC ownership involves executing a new operating agreement, filing a Certificate of Amendment with the state of Hawaii, and notifying the LLC’s current members of the transfer.
How long does it take to transfer Hawaii LLC ownership?
The process for transferring Hawaii LLC ownership usually takes between 7-14 business days.
How much does it cost to transfer Hawaii LLC ownership?
The cost for transferring Hawaii LLC ownership varies depending on the state filing fees, as well as any legal or professional fees that may be incurred.
What documents are needed to transfer Hawaii LLC ownership?
The documents needed to transfer Hawaii LLC ownership include a new operating agreement and the Certificate of Amendment, which must be filed with the state of Hawaii.
Do I need to notify the current members of the LLC when transferring Hawaii LLC ownership?
Yes, you must notify the current members of the LLC when transferring Hawaii LLC ownership.
Can I transfer Hawaii LLC ownership without the consent of the other members?
No, the transfer of Hawaii LLC ownership requires the consent of all members.
Who is responsible for filing the Certificate of Amendment when transferring Hawaii LLC ownership?
The LLC’s registered agent is responsible for filing the Certificate of Amendment when transferring Hawaii LLC ownership.
Can I transfer Hawaii LLC ownership to an outside party?
Yes, you can transfer Hawaii LLC ownership to an outside party, as long as all members of the LLC consent to the transfer.
Does the state of Hawaii require a transfer of ownership to be in writing?
Yes, the state of Hawaii requires the transfer of ownership to be in writing and filed with the state.
Do I need to notify the IRS when transferring Hawaii LLC ownership?
No, you do not need to notify the IRS when transferring Hawaii LLC ownership.
Is it necessary to execute a new operating agreement when transferring Hawaii LLC ownership?
Yes, it is necessary to execute a new operating agreement when transferring Hawaii LLC ownership.
Are there any other documents that must be filed when transferring Hawaii LLC ownership?
Yes, in addition to the Certificate of Amendment, you may also need to file other documents with the state of Hawaii, such as a Form DB-A.
How often can I transfer Hawaii LLC ownership?
The frequency of transferring Hawaii LLC ownership depends on the provisions of the LLC’s operating agreement.
What is a Certificate of Amendment?
A Certificate of Amendment is a document that is filed with the state of Hawaii in order to change or update the information on an LLC’s Certificate of Formation.
What happens if I don’t transfer Hawaii LLC ownership properly?
If you don’t transfer Hawaii LLC ownership properly, you may be subject to penalties, including fines and/or suspension of the LLC’s operating privileges.
Can I transfer Hawaii LLC ownership to an individual?
Yes, you can transfer Hawaii LLC ownership to an individual, as long as the individual meets the state’s requirements for an LLC owner.
Can I transfer Hawaii LLC ownership to a corporation?
Yes, you can transfer Hawaii LLC ownership to a corporation, as long as the corporation meets the state’s requirements for an LLC owner.
Do I need to update my LLC’s registered agent when transferring Hawaii LLC ownership?
No, you do not need to update your LLC’s registered agent when transferring Hawaii LLC ownership.
Is there a limit to the number of members I can transfer Hawaii LLC ownership to?
No, there is no limit to the number of members you can transfer Hawaii LLC ownership to.

Also Read

Why Hawaii LLC Ownership Transfer is So Important

One of the key reasons why Hawaii LLC ownership transfer is so important is the potential impact it can have on the future of the business. Ownership changes can bring about new perspectives, fresh ideas, and different management styles that may help to drive growth and innovation within the company. By facilitating a smooth ownership transfer, LLCs can ensure continuity and stability for the business, allowing it to thrive and adapt to changing market conditions.

Additionally, ownership transfer is crucial for maintaining strong relationships within the business. Whether it involves transferring ownership to family members, existing partners, or outside investors, the process must be handled with transparency, fairness, and integrity. Clear communication and documentation are essential to prevent misunderstandings and conflicts that could harm the harmony and productivity of the business.

Furthermore, ownership transfer in an LLC can provide opportunities for succession planning and ensuring the long-term viability of the business. By establishing a clear protocol for ownership transfer, LLCs can avoid potential disputes and legal complications in the event of changes in ownership due to retirement, disability, or death of a member. Planning for these scenarios in advance can help to safeguard the interests of all parties involved and preserve the continuity of the business.

Another reason why Hawaii LLC ownership transfer is important is its impact on financial stability and compliance with legal requirements. Transferring ownership shares in an LLC involves careful consideration of tax implications, valuation of the business, and compliance with state regulations. By following the proper procedures and seeking professional guidance, LLCs can ensure that the transfer is done in a legally sound and financially responsible manner.

In conclusion, Hawaii LLC ownership transfer is a critical aspect of managing a successful business and securing its future. By recognizing the importance of ownership transfer, LLCs can position themselves for growth, innovation, and long-term sustainability. With careful planning, communication, and adherence to legal requirements, businesses can navigate the complexities of ownership transfer with confidence and ensure a smooth transition for all parties involved.


Transferring LLC ownership in Hawaii does not need a lot of paperwork or steps. You must update the formation papers with the new ownership information, file the amendment to the formation document, tell people about it, and comply with the state. LLCs can hire professional services to do the tasks. This will ease the work.

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