In Hawaii, you can establish a sole proprietorship without filing any legal documents with the Hawaii state government. There are four simple steps you should take:
In Hawaii, a sole proprietor may use his or her own given name or may use an assumed name or trade name. You cannot use a name that is similar to or the same as another registered business name including trade names. It is also a good idea to choose a name that is not too similar to another registered business because of common and federal law trademark protections. To make sure your business name is available, run a search in the following government databases:
If you use a business name that is different from your legal name, Hawaii allows you to register the trade name. This is not a mandatory requirement in Hawaii. To file your trade name you have the option to file online at the Department of Commerce and Consumer Affairs Hawaii Business Express or you can download the trade name application and file via mail. The filing fee is $50.
Your business may need to obtain business licenses or professional licenses depending on its business activities. Hawaii State Department of Taxation issues a general excise tax license to those planning to start a business in Hawaii. By signing up with the Hawaii Business Registration Division, your new business will be registered to do business in Hawaii. In addition, local regulations, including licenses, building permits, and zoning clearances, may apply to your business. You will need to check with your city and county governments for more information.
Sole proprietors who wish to have employees need to obtain an Employer Identification Number, or EIN. This is a nine digit number issued by the IRS to keep track of businesses. All businesses with employees are required to report wages to the IRS using their EIN. Registering for an EIN can be done online at the IRS website.
Even though sole proprietors without employees are not required to have an EIN, you may want to obtain one anyway. Some banks require one to open a bank account and it can reduce the risk of identity theft.
In Hawaii, businesses are required to obtain several identification numbers for taxes and employee reports. You will need to use your EIN when registering your business through the Hawaii Business Express - Registration. If you have employees, you must report and pay employment taxes on a periodic basis. You will need to register and obtain a taxpayer withholding number. To register as a new business and employer in Hawaii, see the Hawaii Department of Labor New Employer Brochure.
It is important to consider doing the following once you have established your sole proprietorship: