How to Start a Nonprofit Organization in Hawaii 2024

Establishing a nonprofit is kind of similar to forming a corporation in Hawaii. You can easily start a nonprofit in Hawaii as a limited liability company, a corporation, or any other type of business structure. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues than profit-oriented businesses.

This article will guide you through the Dos and Don’ts of starting a nonprofit in Hawaii. LLCBuddy editors explain all the steps you must follow to form a corporation for your nonprofit organization. It must be noted that this page shared generalized steps to form a nonprofit in Hawaii. It is recommended to consult an attorney or hire a professional service.

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 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-

Nonprofit LLC
Nonprofit Corporation
Unincorporated Nonprofit

BOI Report Filing

According to the Corporate Transparency Act, every LLC, corporation, and other type of business that is registered with the Hawaii SOS or similar authority, must file the BOI report with FinCEN. From January 1, 2024, it is mandatory to file a BOI report for every business entity. In this report, LLCs have to share information about the beneficial owners (having equal or more than 25% share). LLC owners can file BOI reports online or offline.

Businesses in Hawaii that are created before January 1, 2024, should file their BOI report by January 1, 2025. Businesses that are created in 2024, must file the BOI report within 90 business days of finishing the formation process. Missing out on filing the BOI report may lead to a monetary penalty of $500/day.

How to Start a Nonprofit in Hawaii

Nonprofits are certainly different from for-profit organizations. The main focus of the organization is on social values rather than profit. The process of having a nonprofit in Hawaii is similar to forming any corporation in Hawaii. However, there are a few additional steps to follow.

Step 1: Develop Your Mission and Vision

Before you get into legal details, you need to define the purpose and goal of your organization clearly; this will go a long way in guiding your decisions as well as making it easy for you to explain your mission statement.

Pick out what specific cause or issue you want to address;
Define who you will target or help reach particular goals;
List down both what people should do within a short period and what they should achieve in the long term perspective;
Write a captivating mission statement.

Step 2: Name Your Nonprofit in Hawaii

Naming a business in Hawaii has a handful of regulations. If you start a corporation or an LLC in Hawaii, you must follow those regulations to name your nonprofit. The most important rule is to check if the name is available in Hawaii to use.

If you’re forming an LLC in Hawaii for your nonprofit organization, check out LLC naming guidelines in Hawaii. For the corporation regulations, read on how to start a corporation in Hawaii. As soon as the name is decided, you can reserve it with the Hawaii Secretary of State. You can also file DBA in Hawaii before you establish your nonprofit organization. DBA can be filed in several methods, online, fax, email, by mail, or in-person. The DBA filing fee in Hawaii is $50.

Online DBA Filing: For online filing, check the Hawaii Secretary of State. There, look for the “Trade Names” section. You will get the registration form.
Offline DBA Filing: For offline filing, send the form by mail to the Department of Commerce and Consumer Affairs, Business Registration Division, P.O. Box 40, Honolulu, Hawaii 96810, email it to [email protected], or fax it to (808) 586-2733
DBA Renew Time in Hawaii: five years

Step 3: Appoint Initial Board Members

If you’re forming a corporation for your Hawaii nonprofit, it is required to appoint the initial board members. In Hawaii, 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 4: Get Hawaii Resident Agent

This is a very important step for any business in Hawaii. The Resident Agent in Hawaii is a person who conducts all types of documentation between the State and your nonprofit organization. The Registered Agent must be from Hawaii, above 18 years of age, and must have legal rights to conduct business in the state. Several professional and business formation services offer registered agent services in all the states in the USA. It is better to hire a professional rather than being your own Resident Agent in Hawaii.

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Step 5: File Articles of Incorporation with Hawaii SOS

This is the most important step in forming a nonprofit corporation in Hawaii. File your Articles of Incorporation with the Hawaii Secretary of State. You can file your nonprofit corporation through four ways, online, by mail, fax, and email. 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.

Online Incorporation: Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything. Email it to [email protected].
Offline Incorporation: Send the form by mail to Office of the Secretary of State, 450 N 4th Street, P.O. Box 83720, Boise, ID 83720-0080 or Fax it to (808) 586-2733.
Incorporation Fee in Hawaii: $50 for filing online, by mail, fax, or by email

Hiring a professional service might be a wise idea here. Having a corporation is much more complex than forming an LLC. We recommend ZenBusiness as they are one of the top business service providers currently. They offer LLC formation at $0 in Hawaii.

Step 5.1: Write Company Bylaws

As soon as you file the formation documents, it is time for 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 6: Get an EIN in Hawaii

The next step is to obtain the EIN in Hawaii. The employer identification number (EIN) is required to conduct business in Hawaii. You will need to acquire the Hawaii 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: Tax Exemptions for Your Nonprofit

When you start a nonprofit in Hawaii, you enjoy tax exemptions. As the nonprofits are not profit-oriented, they get a huge tax exemption from Federal and State authorities.

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.

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 the 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 an Exemption Certificate to apply for the state tax exemption. Read Hawaii classification of taxes to learn more about the Hawaii tax structure.

Can I form an LLC for my Nonprofit in Hawaii?

Yes, you can form an LLC in Hawaii to run a nonprofit. Establishing an LLC nonprofit in Hawaii requires similar documents and paperwork. Except for tax exemption applications that one must file with the state tax and revenue department. LLCs must file Form 1023 with the Hawaii Department of Taxation to get the tax exemption.

After You Form a Nonprofit Corporation in Hawaii

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

Get necessary licenses: As soon as your corporation or an LLC for your Nonprofit in Hawaii will be established, get necessary licenses and permits. Check with the local authority/government to get the local permits.
Get Insurance for the Hawaii Nonprofit: 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.
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.
Evaluating And Improving Performance: To evaluate the performance of your non-profit organization, it is necessary to; establish performance metrics also tied to the mission; and implement continuous improvement strategies.
Staying Current With Nonprofit Trends And Best Practices: To stay up-to-date on trends and best practices in the non-profit world you should join nonprofit associations plus networks.

Common Challenges And How To Address Them

Funding Sustainability

For funding sustainability issues you need to focus on diversifying funding sources and developing strong relationships with donors. Also, implementing efficient financial management, exploring earned income opportunities for sustainability, and such should be on focus.

Volunteer Management

The challenges faced in volunteer management can be resolved by creating clear roles plus expectations for volunteers, and providing adequate training also support. Recognize and appreciate volunteer contributions while implementing volunteer retention strategies such as offering regular appreciation events or awards. Provide trainers’ placement services too.

Mission Drift

This problem can be solved by several mechanisms such as regular review and reaffirmation of your organizational mission–this will ensure that all activities are aligned with the core purpose. Educate board members and staff about the importance of the mission and make them understand how this works out in practice. Implement a strategic planning process and explain to the board why it is important for their organizations to have a well-defined mission.

Regulatory Compliance

To remain compliant with the law, you need to: keep track of changing laws and regulations all the time; conduct regular compliance audits; seek professional advice when in doubt; and implement comprehensive record-keeping systems.

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 Secretary of State portal.

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 starting a nonprofit in Hawaii?

To start a nonprofit in Hawaii, you must file articles of incorporation with the state, obtain an Employer Identification Number (EIN) from the IRS, and apply for tax-exempt status.

How long does it take to start a nonprofit in Hawaii?

The timeline for starting a nonprofit in Hawaii can vary, but it typically takes several months to complete all the necessary steps.

Do I need to have a physical office in Hawaii to start a nonprofit?

No, you do not need to have a physical office in Hawaii to start a nonprofit, but you do need to designate a registered agent with a physical address in the state.

What are the residency requirements for starting a nonprofit in Hawaii?

There are no residency requirements for starting a nonprofit in Hawaii, so individuals from outside the state can establish a nonprofit in Hawaii.

Can I start a nonprofit in Hawaii if I am not a resident of the state?

Yes, you can start a nonprofit in Hawaii even if you are not a resident of the state, as long as you follow the required steps and regulations.

What are the benefits of starting a nonprofit in Hawaii?

Some benefits of starting a nonprofit in Hawaii include access to state funding and grants, tax-exempt status, and the ability to make a positive impact in the local community.

What is the cost of starting a nonprofit in Hawaii?

The cost of starting a nonprofit in Hawaii can vary, but typically includes filing fees, application fees for tax-exempt status, and any legal or consulting fees.

Can I use a fiscal sponsor to start a nonprofit in Hawaii?

Yes, you can use a fiscal sponsor to start a nonprofit in Hawaii, which can help expedite the process of getting your organization up and running.

What is the minimum number of board members required for a nonprofit in Hawaii?

In Hawaii, a nonprofit corporation must have at least three directors on its board, but the exact number may vary depending on the organization’s bylaws.

Are there any restrictions on the types of activities a nonprofit can engage in in Hawaii?

Nonprofits in Hawaii are generally allowed to engage in a wide range of charitable activities, as long as they comply with state and federal laws and regulations.

How do I file for tax-exempt status for a nonprofit in Hawaii?

To apply for tax-exempt status in Hawaii, you must file Form N-30 with the Hawaii Department of Taxation and comply with their requirements for tax-exempt organizations.

Can I use a lawyer to help me start a nonprofit in Hawaii?

Yes, it is recommended to consult with a lawyer who is familiar with nonprofit law in Hawaii to ensure that you are complying with all state laws and regulations.

Do I need to register as a charitable organization in Hawaii?

Yes, nonprofits in Hawaii are required to register as a charitable organization with the Hawaii Attorney General’s office, if they plan to solicit donations from the public.

How can I find funding for a nonprofit in Hawaii?

Nonprofits in Hawaii can find funding through grants, donations, fundraising events, and partnerships with other organizations or businesses.

What is the difference between a nonprofit and a for-profit organization in Hawaii?

The main difference between a nonprofit and a for-profit organization in Hawaii is that nonprofits are tax-exempt and are organized for charitable, educational, or other public service purposes, while for-profit organizations are driven by profits.

Can I start a nonprofit in Hawaii if I already have a for-profit business?

Yes, you can start a nonprofit in Hawaii even if you already have a for-profit business, but the two entities must be kept separate and comply with their respective regulations.

How do I choose a name for my nonprofit in Hawaii?

When choosing a name for your nonprofit in Hawaii, be sure to check the availability of the name with the Department of Commerce and Consumer Affairs and make sure it complies with state naming regulations.

How can I promote my nonprofit in Hawaii?

You can promote your nonprofit in Hawaii through social media, networking with other organizations, hosting events, creating a website, and reaching out to local media outlets.

Are there specific reporting requirements for nonprofits in Hawaii?

Nonprofits in Hawaii are required to file an annual report with the Department of Commerce and Consumer Affairs and submit financial statements to the Attorney General’s office, if they solicit donations.

Can I get help with starting a nonprofit in Hawaii?

Yes, there are resources available to help individuals in Hawaii start a nonprofit, including nonprofit support organizations, legal aid services, and government agencies.

What is the process for dissolving a nonprofit in Hawaii?

To dissolve a nonprofit in Hawaii, you must notify the Department of Commerce and Consumer Affairs, distribute the organization’s assets to other nonprofits or charitable purposes, and file the necessary paperwork with the IRS.

Can a nonprofit in Hawaii own property?

Yes, a nonprofit in Hawaii can own property, including buildings, land, and other assets, as long as it is used for the organization’s charitable purposes.

Can I start a religious organization as a nonprofit in Hawaii?

Yes, you can start a religious organization as a nonprofit in Hawaii, as long as it operates for the purpose of promoting religious worship, teaching, or other charitable activities.

Are there any grants available for nonprofits in Hawaii?

Yes, there are grants available for nonprofits in Hawaii from government agencies, private foundations, and other sources, which can help fund programs and services.

Do nonprofits in Hawaii have to pay sales tax?

Nonprofits in Hawaii may be exempt from paying sales tax on certain purchases, depending on their tax-exempt status and the type of goods or services being purchased.

Can volunteers be held liable for actions of a nonprofit in Hawaii?

Generally, volunteers for a nonprofit in Hawaii are protected from personal liability for the organization’s actions, as long as they are acting within the scope of their roles and not engaged in willful misconduct.

Are there specific regulations for online fundraising by nonprofits in Hawaii?

Nonprofits in Hawaii that engage in online fundraising are subject to state and federal laws regarding charitable solicitations, including disclosure requirements and reporting obligations.

How can I find board members for my nonprofit in Hawaii?

You can find board members for your nonprofit in Hawaii through networking, reaching out to professionals in the community, and attending board recruitment events or workshops.

Can a nonprofit in Hawaii make a profit?

Nonprofits in Hawaii can generate revenue through fundraising, grants, and other activities, but any profits must be used to further the organization’s charitable mission and cannot be distributed to individuals or shareholders.

Can anyone start a nonprofit organization in Hawaii?

Yes, anyone can start a nonprofit organization in Hawaii by following the necessary steps and requirements.

In Conclusion

Starting a Nonprofit corporation in the Hawaii takes careful thought, dedication, and detailing. Follow the steps detailed in this guide while addressing common challenges so that your organization can be built on solid ground and make a long-lasting impact on your cause. Remember also that running a nonprofit organization in Hawaii is a perpetual learning, adapting, and growing process.

As you continue your journey, you may need professional help. Having a professional or experienced person, or attorneys while you run your nonprofit in Hawaii can make the journey much simpler in the long run. Since forming a nonprofit involves tax exemptions, the government takes additional care to verify your background.

Donations, charity, and several community services are the most desirable ways to evade tax. Hence, many people get involved in nonprofit organizations. It is recommended to consult a legal professional, accountants, and service providers like ZenBusiness for the paperwork and formation process. With persistence, passion, and proper management structure everything is possible hence changing positively your community as far as Non-Profit corporations are concerned.