To dissolve an LLC in Hawaii, the members vote to shut the company down, wind up its debts and obligations, obtain a tax clearance certificate from the Hawaii Department of Taxation, and then file Articles of Termination (Form LLC-11) with the Department of Commerce and Consumer Affairs for a $25 fee. The order matters. Hawaii’s Uniform Limited Liability Company Act, Chapter 428, won’t let you file the termination paperwork until the company’s debts have been paid or adequately provided for, so skipping ahead to the state form is the single most common way owners get stuck.
Step 1: Vote to Dissolve
Pull out the operating agreement first. If it sets rules for dissolution, follow them, whether that means a supermajority, unanimous consent, or a specific triggering event. If the agreement is silent, or the LLC never adopted one, Hawaii’s default rule under HRS §428-801 calls for a majority vote of the members.1Justia Law. Hawaii Revised Statutes 428-801 – Events Causing Dissolution
Record the decision in written minutes or a signed resolution. That document is your proof the dissolution was properly authorized, and it’s what you’ll rely on if a former member later challenges how the company was closed. Once the vote is on paper, the members or managers can begin winding up.
Step 2: Wind Up the Business
A dissolved Hawaii LLC doesn’t disappear on the day of the vote. It keeps existing for the limited purpose of closing out its affairs: collecting what’s owed to it, finishing or settling contracts, selling assets, and paying creditors.2Justia Law. Hawaii Revised Statutes 428-803 – Right to Wind Up Limited Liability Company’s Business What the company can’t do during this phase is take on new business unrelated to the wind-down.
Notice to Known Creditors
For every creditor you know about, send written notice directly. Under HRS §428-807, the notice has to explain that the LLC is dissolving, give the creditor enough information to evaluate the claim, state a deadline for submitting it, and warn that the claim is barred if the deadline is missed.3Justia Law. Hawaii Revised Statutes 428-807 – Known Claims Against Dissolved Limited Liability Company The deadline you set can’t be shorter than 120 days from delivery of the notice. Any claim not submitted in time, or within two years of the dissolution date (whichever is earlier), is cut off. Skip this step and those creditors can pursue the former members for years.
Published Notice for Unknown Creditors
For creditors you may not know about, HRS §428-808 lets you publish notice of the LLC’s intent to terminate.4Justia Law. Hawaii Revised Statutes 428-808 – Notice; Other Claims Against Dissolved Limited Liability Company The ad must run at least once a week for four consecutive weeks in a daily or weekly publication with statewide circulation, describe what claimants need to include, and set a deadline. Publication isn’t strictly required, but it starts a clock that eventually bars unknown claims. For the cost of a few newspaper ads, it closes off surprises later.
Distribute What’s Left
Hawaii law is explicit on the order: creditors are paid in full before any capital or profits go back to members.5Justia Law. Hawaii Revised Statutes 428-806 – Distribution of Assets in Winding Up Limited Liability Company’s Business After the debts are settled, the remainder is distributed according to the operating agreement, or by ownership interest if the agreement doesn’t specify. Shortchanging creditors to pay members can trigger personal liability for the difference.
Step 3: Get a Hawaii Tax Clearance Certificate
The DCCA won’t process your Articles of Termination without proof the LLC has settled up with the Hawaii Department of Taxation. That means filing a final state tax return covering the period from the start of the tax year through the dissolution date, with the “final” box checked, and paying any outstanding General Excise Tax, transient accommodations tax, and employer withholding tax in full.
Once the final returns are filed and the balances are zero, request a tax clearance certificate by submitting Form A-6. Paper applications take 10 to 15 business days; requests through Hawaii Tax Online are typically processed within one day.6Department of Taxation. Tax Clearance Certificates The certificate itself has no set expiration date, though the DCCA may have its own rules about how recent it needs to be. Members or managers can be held personally liable for unpaid state taxes, so this isn’t a step to defer.
Step 4: Handle Federal Taxes and Close the EIN
State filings only cover the Hawaii side. The IRS wants its own final returns, and which forms apply depends on how the LLC is classified for federal tax purposes.7Internal Revenue Service. Closing a Business
- Multi-member LLC taxed as a partnership: file a final Form 1065 with the “final return” box checked, and check the “final K-1” box on each Schedule K-1.
- LLC taxed as an S corporation: file a final Form 1120-S, and file Form 966 (Corporate Dissolution or Liquidation) if the S election applies.
- Single-member LLC treated as a disregarded entity: report the final business activity on Schedule C of your personal Form 1040 for the year of dissolution.
If the LLC sold business property or assets during the wind-down, Form 4797 (Sales of Business Property) and Form 8594 (Asset Acquisition Statement) may also apply.
After the final returns are filed, close the LLC’s Employer Identification Number by sending a letter to the IRS at Cincinnati, OH 45999. Include the LLC’s legal name, EIN, business address, and the reason for closing the account. The IRS won’t close the EIN until all required returns are filed and all taxes are paid.7Internal Revenue Service. Closing a Business
Step 5: Close Out Payroll and Employees
If the LLC had employees, Hawaii law requires that all earned wages be paid at the time of discharge, or no later than the next working day.8State of Hawaii Wage Standards Division. Unpaid Wages On the federal side, file final Form 941 (quarterly payroll tax) and final Form 940 (federal unemployment tax), with the “final” box checked on each. Issue W-2s to employees for the final year by the standard January 31 deadline, and issue 1099s to any contractors on the usual schedule.
Step 6: File Articles of Termination (Form LLC-11)
Only after winding up is complete and all debts are paid or adequately provided for can you file the Articles of Termination using Form LLC-11.9DCCA Hawaii. Forms – Domestic Limited Liability Company The form itself requires you to certify those obligations have been handled, which is why filing out of sequence doesn’t work.10Justia Law. Hawaii Revised Statutes 428-805 – Articles of Termination
Form LLC-11 asks for:
- The LLC’s exact legal name as it appears in state records.
- The effective date of dissolution.
- A statement that all debts, liabilities, and obligations have been paid or adequately provided for and that winding up is complete.
- The name and title of the person signing on behalf of the LLC.
The filing fee is $25, with another $25 available for expedited processing.11Department of Commerce and Consumer Affairs. Fees – Uniform Limited Liability Company Act, Chapter 428 You can submit the form by mail, in person at the DCCA’s Business Registration Division in the King Kalakaua Building in Honolulu, or by fax with credit card payment information. Form LLC-11 is not available through the Hawaii Business Express online portal based on available information.
Once the Business Registration Division accepts the filing, the LLC’s status in the state’s public database changes to “terminated.” A stamped copy is returned to the address on file for mailed submissions.
Step 7: Final Cleanup
Termination at the state level doesn’t finish the job on the ground. Close the LLC’s bank accounts, cancel any state or county business licenses, and surrender any permits the company held. If the LLC carried a contractor license or another professional license through the DCCA’s Professional and Vocational Licensing Division, file the inactivation paperwork for that board as well.12DCCA Hawaii. Inactivate or Reactivate Your Contractor License
Keep the LLC’s books, tax returns, and the signed dissolution resolution for at least seven years. Both state and federal tax authorities can audit returns filed during the LLC’s existence, and the dissolution records are what you’ll rely on if a former member later questions how assets were distributed or debts were handled.
Why You Can’t Just Walk Away
Letting an LLC go dormant without formally dissolving is more expensive than closing it properly. Hawaii requires every active LLC to file an annual report with a $15 fee, and that obligation runs until the entity is terminated or administratively dissolved by the state.11Department of Commerce and Consumer Affairs. Fees – Uniform Limited Liability Company Act, Chapter 428 If you ignore the annual report, the DCCA will eventually administratively dissolve the LLC on its own, but delinquent fees and penalties accumulate along the way, and reinstating later requires paying all of that off, filing all overdue reports, and obtaining a tax clearance certificate. Voluntary dissolution closes the books on your terms, with a clean record and no lingering filings.