How to Set Up an S Corporation in Hawaii

If you own a corporation in Hawaii, you can achieve S Corporation status for your company by making an election with the IRS. Since the business status must be elected and recognized on a federal level, you will not organize an S Corporation with the state of Hawaii, but rather form a regular domestic corporation; then make your federal election to be treated as an S Corporation.

Instructions

Form a Hawaii Corporation

1. Conduct a name availability search. Your business name can not be the same as another Hawaii corporation. From the Hawaii Department of Commerce and Consumer Affairs website, navigate to the "Search for Business Entity and Documents" page (See Resources). Enter your business name into the search box and submit. If the query result returns an existing company with the same name, you must select a new name for your business.

2. Complete Articles of Incorporation. You can complete Articles on paper and submit in person or by mail, or you can complete and submit state Articles online. If you use the electronic method, navigate to the Registration Forms and Information page of the Hawaii Department of Commerce and Consumer Affairs website, and select "Apply Online" under the Domestic Profit Corporation heading (See Resources).

3. Submit Articles of Incorporation and $50 filing fee. Mail your documents to:

   State of Hawaii Department of Commerce and Consumer Affairs

   Business Registration Division

   P.O. Box 40

   Honolulu, HI 96810

   Or, file in person by taking your documents to:

   State of Hawaii Department of Commerce and Consumer Affairs

   Business Registration Division

   335 Merchant St.

   Honolulu, HI 96810

   Fees for filing must be included with your registration documents. If you complete your Articles of Incorporation online, you'll pay the filing fee by debit or credit card online.

4. Register with the Department of Taxation. As a corporate officer, you're required to be a W-2 employee of the corporation, even if you're the only employee. Register with the Department of Taxation to obtain state unemployment and withholding accounts by completing the Basic Business Application. Additionally, you can use this consolidated application to request other accounts such as seller's tax and liquor licenses.

5. Apply for an IRS EIN number. This is the identification number for your business, and you'll need the number to open bank accounts, file tax returns and hire employees. You can apply for the number on the IRS website for free and receive your new EIN number immediately (See Resources).

S Corporation Election

1. Complete IRS Form 2553. Include your EIN number and the date your corporation was registered with Hawaii.

2. Select your tax year. Generally, S Corporations use a calendar tax year and reports business activities from January 1 through December 31 of each year. You do not need to complete and part of page 3 when electing a calendar year.

3. Complete page 2 of Form 2553. In this section, each corporate officer or shareholder must provide his name, address, Social Security number and signature. Indicate the number of shares (percentage of business) owned by each shareholder. Most shareholders also use a calendar tax year ending December 31. Indicate the tax year for each shareholder.

4. Mail or fax Form 2553 to the IRS. Consult the instructions for Form 2553 for the submission address associated with your state. This election does not require a fee.

Tips & Warnings

• New corporations must make an election to be treated as an S Corporation within 75 days of formation.

• Existing corporations can only make the election within the first 75 days of a new tax year, generally by March 15.

References

• Hawaii Department of Commerce and Consumer Affairs: Domestic For Profit Corporations
• Hawaii Department of Commerce and Consumer Affairs: General Info on Registering
• IRS: S Corporations
• Hawaii Department of Commerce and Consumer Affairs: Business Naming Rules

Resources

• IRS: Apply for an Employer Identification Number (EIN) Online
• Hawaii Department of Commerce and Consumer Affairs: Registration Forms and Information
• Hawaii Department of Commerce and Consumer Affairs: Search for Business Entity and Documents
• Hawaii Department of Taxation: Basic Business Application
• IRS: Form 2553: Election by Small Business Corporation
• IRS: Instructions for Form 2553