How to Start a Nonprofit in Hawaii


Steve Goldstein
Steve Goldstein
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Start a Nonprofit in Hawaii

Are you looking to start a nonprofit in Hawaii? You’ve come to the right place. Known for its vibrant community and rich culture, Hawaii (often referred to as The Aloha State) is an ideal location for establishing a nonprofit organization. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues and require a strong foundation, thorough research, and a clear mission targeting a specific community problem.

Embarking on the journey of creating a nonprofit entails various crucial steps, such as obtaining 501(c)(3) status. A 501(c)(3) organization is designed for charitable, religious, educational purposes, and more, qualifying it for federal and state tax exemptions.

In the spirit of Hawaii’s motto, “The life of the land is perpetuated in righteousness (Ua mau ke ea o ka ʻāina i ka pono),” thousands of nonprofits are founded within the state each year. This article will provide a comprehensive guide to starting your own nonprofit corporation in Hawaii. Keep in mind that the steps discussed here are general guidelines, and modifications may be necessary depending on your specific circumstances. To gain a deep understanding of how to start a nonprofit in Hawaii, we encourage you to read this article in its entirety.

What is a Nonprofit in Hawaii?

Nonprofit organizations are legal entities that operate to serve public benefits and address community issues. Unlike for-profit organizations, nonprofits do not aim to generate any profit. The Internal Revenue Service (IRS) generally exempts nonprofit organizations from tax. However, based on the business entity structure, you will receive tax exemptions as a nonprofit.

In Hawaii, ensure you have a community issue to address before you start forming your nonprofit. It can generally be education, religion, charity, social service, or other social issues. Nonprofits do not pay taxes on the money they receive through fundraising programs, donations, or any charitable funding.

Types of Nonprofits in Hawaii

The first thing one has to decide is what type of nonprofit structure one wants. There are several types of nonprofits one can start. Here is a list of nonprofit types one can choose from-

  1. Nonprofit LLC
  2. Nonprofit Corporation
  3. Unincorporated Nonprofit

Forming an LLC in Hawaii for your nonprofit can be a smooth option. However, having a corporation is less complex than having a nonprofit LLC. Hence, it is wise to start a nonprofit corporation instead of an unincorporated nonprofit or nonprofit LLC.

LLCBuddy Editorial Team.

Technically, starting a corporation for your nonprofit protects your personal assets but also is eligible for Federal and State tax exemptions. When you form an LLC for your nonprofit, it only protects your personal assets but does not give you any tax exemptions. On the other hand, a nonprofit Corporation has both corporation and limited liability company benefits. You can also have an unincorporated structure where you don’t have to register it. Unincorporated nonprofits in Hawaii might be eligible for tax exemptions (check with Hawaii Department of Taxation), but this type of organization does not get to enjoy limited liability and personal asset protection.

How to Start a Nonprofit Corporation in Hawaii

Setting up a nonprofit corporation requires a few things to consider. Name of the nonprofit, initial directors, drafting bylaws, get a Resident Agent, obtain tax IDs, insurance, and a bank account – these are important steps you must follow. The steps mentioned here are general business formation steps. State-wise, some steps can be different. Getting an expert consultation before you start your nonprofit corporation formation is recommended. Here are the steps explained below-

Step 1: Get a Suitable Name for Your Hawaii Nonprofit Corp

The first step is to name your nonprofit corporation. You must be sure that the name is available and that no other organization is using this name. You can check the Hawaii LLC name search to find the best suitable name for your organization. You must follow those rules to avoid any legal issues later. You can reserve the name for 120 days for any domestic entity (such as a nonprofit LLC) if you’re not forming the nonprofit immediately.

Step 2: Appoint the Initial Board of Directors

The next step is to get your nonprofit’s initial board of directors. It is very important when you are setting up a nonprofit corporation. You need at least Three unrelated directors to start the organization. If you don’t choose a minimum of Three directors, it will automatically become a member-managed corporation.

Step 3: Appoint Your Hawaii Resident Agent

The third step is to get a Hawaii Resident Agent for your nonprofit corporation. The Resident Agent is a person who receives all the legal documents on your behalf. It is necessary to get a registered agent. He/she must be above 18 years old and have a physical address in Hawaii.

Step 4: Write Hawaii Nonprofit Bylaws

The next important step is to write the company bylaws. The directors and board members must decide how the meetings, elections, voting, and other corporate activities will be held. These bylaws must comply with the Hawaii state law. It is similar to an LLC operating agreement in Hawaii for the LLC owners.

Step 5: File the Hawaii Articles of Incorporation

This is the most important step. File your Articles of Incorporation with the Hawaii Secretary of State. You can do it through four ways, online, by mail, fax, and email. All the formation forms, such as the Hawaii LLC Articles of Organization form, the Hawaii Articles of Incorporation form for corporations, forms for LLPs, and all others can be found on the Hawaii SOS official website. Submit the details of your nonprofit corporation, like the name of the nonprofit, address, name and address of the registered agent, operation dates, directors’ details, and more information related to your company. You can send the form (for offline filing) and the filing fee of $50 for filing online, by mail, fax, or by email to the Department of Commerce and Consumer Affairs, Business Registration Division, 335 Merchant St., P.O. Box 40, Honolulu, HI 96810 or upload it online (if available).

Step 6: Obtain Tax ID for Your Hawaii Nonprofit Corporation

The subsequent step involves obtaining a Tax ID for your nonprofit corporation. You will need to acquire an Employer Identification Number (EIN) from the official IRS website. To obtain the EIN, submit your application to the IRS office either by mail or through their online platform. There is no associated cost for this process.

Step 7: Get Business Licenses in Hawaii

The next step is to get the business licenses you need to run your nonprofit organization in Hawaii. Check with the local government office if any special licenses you need to run your nonprofit. You can file your nonprofit as a charity if you want.

Step 8: Federal Tax Exemption

You must submit Form 1023 to the IRS to file for federal tax exemption. This form, titled “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is required for all nonprofit corporations. Smaller nonprofits have the option to file Form 1023-EZ instead. You will be prompted to provide details about your organization upon obtaining the relevant form. Complete the form with the necessary information and submit it. The filing fees are $600 for Form 1023 and $275 for Form 1023-EZ.

Step 9: State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In Hawaii, you must apply for the tax exemption to Hawaii Department of Taxation. Get the form, fill it up with the correct details, and send it to the office. You may need to pay a fee along with the form and supportive documents to apply for the State Tax Exemption. You need General Tax Exemption Form to apply for the state tax exemption. Read Hawaii classification of taxes to learn more about the Hawaii tax structure.

Step 10: Get Insurance for Your Hawaii Nonprofit

Once you start your nonprofit, you must get insurance to protect your organization. You must get workers’ compensation and unemployment insurance if you have employees. Based on your nonprofit structure, you might need general liability insurance, property, vehicle, auto insurance, etc. You can contact the insurance providers to learn more about which are required for your organization. Also, you can contact Hawaii Insurance Division for more information.

After Forming Your Hawaii Nonprofit Corporation

Once your nonprofit is formed, there are additional steps to complete:

  • Get a Business Bank Account: You must get a business account for all types of business-related transactions in Hawaii. You may need different documents based on the bank and place of business. Check with the bank for it.
  • File Nonprofit as Charity: This is optional. Your nonprofit is either for charity purposes or any purpose that meets your community’s needs. If your organization is for charity purposes, then you can file your nonprofit as a charity to enjoy tax exemptions.
  • Other Business Compliances: You may need additional compliances based on your nonprofit type. Check with your attorney or local authority for more information.

Names of Nonprofit Corporations in Hawaii

Following are some of the Nonprofit Organizations in Hawaii. The contact information of these organizations can be found on Hawaii SOS official websites.

  • Project Hawaii Inc.
  • Pacific Primate Sanctuary Inc.
  • Kauai Humane Society.
  • Dyslexia Center Of The Pacific Inc Dcp.
  • Gentle World Inc.
  • Keaukaha School Foundation
  • Fur-Angel Foundation
  • American Cancer Federation.

FAQs

What are the steps to start a nonprofit in Hawaii?
The steps to start a nonprofit in Hawaii include developing a mission statement, forming your organization, recruiting a Board of Directors, obtaining applicable licenses, registering with the state, obtaining a federal tax identification number, writing bylaws, and applying for tax-exempt status.
What type of organization is required for a nonprofit in Hawaii?
Nonprofits in Hawaii must be organized as non-stock corporations, cooperatives, limited partnerships, limited liability companies, and unincorporated associations.
What documents must be filed with the state to form a nonprofit in Hawaii?
To form a nonprofit in Hawaii, you must file Articles of Incorporation with the Department of Commerce and Consumer Affairs.
Does a nonprofit in Hawaii need a Board of Directors?
Yes, a nonprofit in Hawaii is required to have a Board of Directors.
What is the filing fee for Articles of Incorporation in Hawaii?
The filing fee for Articles of Incorporation in Hawaii is $50.
Does a nonprofit in Hawaii need to obtain a federal tax identification number?
Yes, a nonprofit in Hawaii needs to obtain a federal tax identification number in order to apply for tax-exempt status.
What is the process to obtain a federal tax identification number in Hawaii?
The process to obtain a federal tax identification number in Hawaii is to file a Form SS-4 Application for Employer Identification Number with the Internal Revenue Service (IRS).
Does a nonprofit in Hawaii need to obtain a state tax identification number?
Yes, a nonprofit in Hawaii needs to obtain a state tax identification number in order to apply for tax-exempt status.
What is the process to obtain a state tax identification number in Hawaii?
The process to obtain a state tax identification number in Hawaii is to file a Form N-13A with the Hawaii Department of Taxation.
Is a nonprofit in Hawaii required to have bylaws?
Yes, a nonprofit in Hawaii is required to have bylaws that outline the purpose, procedures, and responsibilities of the organization.
What is the process to obtain tax-exempt status in Hawaii?
The process to obtain tax-exempt status in Hawaii is to file a Form N-1A with the Hawaii Department of Taxation.
Are there any restrictions on the funds of a nonprofit in Hawaii?
Yes, funds of a nonprofit in Hawaii must be used for charitable or educational purposes and cannot be used to benefit private individuals.
Is a nonprofit in Hawaii allowed to engage in political activities?
No, a nonprofit in Hawaii is not allowed to engage in political activities or to take a stance on any political issue.
Does a nonprofit in Hawaii need to file annual reports?
Yes, a nonprofit in Hawaii is required to file annual reports with the state.
Does a nonprofit in Hawaii need to hold annual meetings?
Yes, a nonprofit in Hawaii is required to hold annual meetings of its Board of Directors and members.
Does a nonprofit in Hawaii need to obtain a permit for fundraising activities?
Yes, a nonprofit in Hawaii is required to obtain a permit for fundraising activities from the Charities, Community, and Consumer Protection Branch of the Hawaii Attorney General’s Office.
Is a nonprofit in Hawaii required to file tax returns?
Yes, a nonprofit in Hawaii is required to file an annual IRS Form 990.
Are donations to a nonprofit in Hawaii tax-deductible?
Yes, donations to a nonprofit in Hawaii are tax-deductible if the organization has obtained tax-exempt status from the IRS.
What are the reporting requirements for a nonprofit in Hawaii?
The reporting requirements for a nonprofit in Hawaii include filing annual reports, financial reports, and IRS Form 990.
Are there any restrictions on the assets of a nonprofit in Hawaii?
Yes, the assets of a nonprofit in Hawaii must be used for charitable or educational purposes and cannot be used to benefit private individuals.
Does a nonprofit in Hawaii need to obtain a business license?
Yes, a nonprofit in Hawaii is required to obtain a business license from the Department of Taxation.
Does a nonprofit in Hawaii need to register with the state?
Yes, a nonprofit in Hawaii is required to register with the state by filing a Form N-1.
Does a nonprofit in Hawaii need to insure its assets?
Yes, a nonprofit in Hawaii is required to insure its assets and liabilities in order to protect the organization and its members.
Is a nonprofit in Hawaii allowed to engage in lobbying activities?
Yes, a nonprofit in Hawaii is allowed to engage in lobbying activities, but it must register as a lobbyist with the Office of Elections.
What type of financial records must a nonprofit in Hawaii maintain?
A nonprofit in Hawaii is required to maintain accurate financial records that include income, expenses, and assets.
Are there any restrictions on the salaries of a nonprofit in Hawaii?
Yes, the salaries of a nonprofit in Hawaii must be reasonable and commensurate with the services provided.
Are there any restrictions on the investments of a nonprofit in Hawaii?
Yes, the investments of a nonprofit in Hawaii must be made in accordance with the organization’s mission and with the approval of its Board of Directors.
Is a nonprofit in Hawaii allowed to have employees?
Yes, a nonprofit in Hawaii is allowed to have employees, but it must adhere to all state and federal employment laws.
Does a nonprofit in Hawaii need to register with the state for sales tax?
Yes, a nonprofit in Hawaii is required to register with the state for sales tax if it engages in any sales activities.
Are there any restrictions on the expenses of a nonprofit in Hawaii?
Yes, the expenses of a nonprofit in Hawaii must be related to the organization’s mission and not for the benefit of private individuals.
Does a nonprofit in Hawaii need to obtain workers’ compensation insurance?
Yes, a nonprofit in Hawaii is required to obtain workers’ compensation insurance to protect its employees in case of injury or illness.
Does a nonprofit in Hawaii need to obtain a professional fundraiser’s license?
Yes, a nonprofit in Hawaii is required to obtain a professional fundraiser’s license if it engages in professional fundraising activities.

Also Read

Why Hawaii Nonprofit Corporation is So Important

Nonprofit corporations in Hawaii are so important for several key reasons. First and foremost, these organizations often fill gaps in services that may not be adequately provided by the government or for-profit sector. From homelessness prevention to job training programs, nonprofits in Hawaii work tirelessly to address the needs of vulnerable populations and advocate for policies that promote social justice and equality.

Additionally, Hawaii nonprofit corporations are instrumental in preserving the rich cultural heritage of the islands. These organizations work to protect and promote traditional Hawaiian practices, language, and art forms, ensuring that future generations will be able to connect with their history and identity. Through cultural events, educational programs, and historical preservation efforts, nonprofits in Hawaii play a vital role in preserving the unique spirit of the Aloha State.

Furthermore, Hawaii’s nonprofits are on the front lines of environmental conservation and sustainability efforts. With some of the most ecologically diverse ecosystems in the world, Hawaii faces unique environmental challenges that require innovative solutions. Nonprofit organizations dedicated to protecting the islands’ natural resources work to educate the public, advocate for sound environmental policies, and engage in on-the-ground conservation efforts that help ensure a healthy future for Hawaii’s environment.

Another important aspect of Hawaii nonprofit corporations is the sense of community and connection they foster among residents. From volunteer opportunities to community events, nonprofit organizations provide a platform for individuals to come together, share their passions, and work towards common goals. Through these shared experiences, Hawaii’s nonprofits help create a sense of belonging and solidarity that strengthens the fabric of society and promotes a sense of purpose and fulfillment.

Finally, Hawaii nonprofit corporations are essential drivers of innovation and progress in the state. With their flexible structures and dedicated missions, these organizations are often able to respond quickly to emerging needs and adapt to changing circumstances. By experimenting with new approaches, collaborating with different sectors, and mobilizing resources effectively, Hawaii’s nonprofits are able to make a significant impact on key social and environmental issues facing the state.

In conclusion, Hawaii nonprofit corporations play a vital role in promoting social, cultural, and environmental well-being in the Aloha State. By addressing critical needs, preserving cultural heritage, protecting the environment, fostering community connection, and driving innovation, these organizations are indispensable partners in creating a more vibrant and resilient Hawaii. As we continue to navigate the challenges of the 21st century, the work of Hawaii’s nonprofits will be more important than ever in shaping a brighter future for the islands and their residents.

Conclusion

Starting a nonprofit corporation in Hawaii is an incredible way to give back to your community and positively impact the causes that matter most to you. By forming a nonprofit, you can provide essential services, promote awareness, and make a lasting difference in the lives of those who need it most. In Hawaii, a lot of nonprofit organizations are there to cater to people in need. Starting a nonprofit corporation is better than an LLC, as it provides limited liability and tax benefits. It helps you save taxes. If you want to start a nonprofit in Hawaii, you must follow the steps mentioned above in the article.

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