Start Your Own Business in Hawaii: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Hawaii.



Here’s an overview of the key steps you’ll need to take to start your own business in Hawaii.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Business Registration Division (BREG) of the Hawaii Department of Commerce and Consumer Affairs (DCCA). You can check for available names by doing a  business entity search  on the BREG website. You can reserve an available name for 120 days by filing an  Application for Reservation of Namewith BREG. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Corporation” for corporations). See  How to Form an LLC in Hawaii  and  How to Form a Corporation in Hawaiifor more information.

If you are forming a Hawaii general partnership you must file  Form GP-1,  Registration Statement of Partnership, with BREG. If your business is a sole proprietorship that uses a business name that is different from the legal name of the business owner, you have the option to  register a trade name  with BREG.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Hawaii, you don’t need to file any organizational documents with the state. For more information, see  How to Establish a Sole Proprietorship in Hawaii.
  • Partnership:  To create a general partnership in Hawaii, you need file  Form GP-1,  Registration Statement of Partnership, with BREG. In addition, although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Hawaii.  To form a  limited liability partnership  (often used by professionals), you must file a Statement of Qualification with BREG. For more information, see  How to Form a Limited Liability Partnership in Hawaii.
  • LLCs:  To create an LLC in Hawaii, you must file  Articles of Organization  with BREG. You will also need to appoint a  registered agent  in Hawaii for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Hawaii  andHow to Form a Professional LLC in Hawaii  (for professionals).
  • Corporations:  To create a corporation in Hawaii, you must file  Articles of Incorporation  with BREG. You will also need to appoint a  registered agent  in Hawaii for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Hawaii.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Hawaii, you must register with the Department of Taxation (DOT) to collect the general excise tax (GET; known elsewhere as sales tax). There is a one-time fee to register for the GET. If your business will have employees, you must register with the DOT for employer withholding taxes. You can register for both the GET and withholding taxes, as well as other business taxes, either online via  Hawaii Business Express  (HBE) or on paper using  Form BB-1,  Basic Business Application.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Regulatory licenses and permits.  Unlike some other states, Hawaii doesn’t have a required general business license for all businesses. However, some businesses may be required to obtain permits from state agencies. For example, a business may need a permit related to the environment or health and safety issued by the Department of Health.  In addition, some required licenses are issued locally — for more information, check the websites for any cities or counties where you will have a business location.

Professional and occupational licenses.  These cover people who work in various fields. The DCCA’s  Professional and Vocational Licensing Division  (PVL) is responsible for licensing for 49 different professions and vocations. The PVL website lists information for each of these professions and vocations.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Hawaii taxes every kind of business. See  Hawaii State Business Income Tax  for more information on state business taxes in Hawaii.

Sole proprietorships.  Pay state taxes on business income as part of their personal state income tax returns (Form N-11).

Partnerships.  Partners pay state taxes on partnership income on personal tax returns. In addition, Hawaii partnerships also must file  Form N-20,  Partnership Return of Income.

LLCs.  Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Hawaii LLCs also are required to file anannual report  with BREG. See  Hawaii LLC Annual Filing Requirements  for more information.

Corporations.  Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Hawaii  corporation taxes. And, finally, corporations must file an  annual report  with BREG.

If you have employees, you must also deal with state  employer taxes.

And, apart from Hawaii taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

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