How to Start a Business in Hawaii
If youโve ever thought about starting a business in Hawaii but arenโt sure where to begin, then youโve come to the right place. We cover what goes into a good business plan, as well as tax and legal requirements so you can hit the ground running.
Start on the Right Foot
Every good business starts with a good business plan. This includes figuring out:
- What you want to sell
- Whether youโll need a physical location or will be online-only
- Who your target market is
- How much financing youโll need to get your business off the ground
- A realistic timeframe to raise funds and gather the other resources necessary to launch your business
- How youโll market your business to consumers
- How to sustainably grow your business
By committing the answers to these questions in writing, youโll have a strong vision for your business that you can present to potential investors and partners.
In Hawaii, you can get help crafting your business plan from the Hawaii Small Business Development Center or the Service Corp of Retired Executives (SCORE).
Your next step is choosing the business structure that best fits your business plan and operation.
Selecting Your Business Structure
Although itโs not very fun, figuring out which type of business entity you have is an essential part of getting yourself ready to interface with customers in Hawaii.
You have several options here, including:
- Sole proprietorships
- Partnerships (LP or LLP)
- Limited Liability Companies (LLC)
- Corporations (B, C, S types, Nonprofits)
There are pros and cons to each type of businessโsome have bigger tax breaks, while others donโt have to go through as many legal hoops to begin operating. There are a few generalized guidelines on Hawaiiโs business action center, but if youโre not sure which type makes the most sense for your business, it may be wise to consult a business attorney licensed in the state of Hawaii.
Once youโve figured out which type of business you have, itโs time to get registered with the state of Hawaii.
Get Registered in Hawaii
All business types except sole proprietorships, non-profits, and foreign insurance companies must register with the Hawaii Department of Commerce and Consumer Affairs, Business Registration Division. Thankfully, this only takes a few minutes of your time if you choose to register online.
Registration fees vary from $15-$50, depending on the business structure.
All business owners who wish to operate in Hawaii must also have a registered agent on file. This is someone who can accept the service of process on the companyโs behalf.
Registering also enables you to file an annual reportโwhich is required for the following types of business:
- Corporations
- LLCs
- Partnerships
An annual report includes general information about the business (such as registered agents and business address), and is available to the public. These reports do not contain financial information about the business, however.
Once youโve registered with the state, youโre ready to get a federal tax ID number.
Obtain a Federal Tax ID Number
Nearly every type of Hawaii business needs to have a Federal Tax ID number, also known as a Federal Employer Identification Number (or EIN) for short.
With an EIN, youโll be able to pay federal and state taxes, and in some instances, it may be required before you can open a bank account for your business.
This is easy to do online through the IRS website, which can also help you determine if youโre one of the lucky few who donโt need an EIN after all.
Before you can welcome customers to your website or physical location, however, youโll need to complete the next step in the process of starting a business in Hawaiiโobtaining all the necessary tax licenses/accounts and the required business licenses/permits.
Obtain Hawaii Tax Account(s) and Permits/Licenses
Which Hawaii tax account youโll need to apply for depends on the types of goods and/or services you sell. Common tax accounts for Hawaii are listed below:
- General Excise tax account
- Liquid Fuel tax account
- Liquor tax account
- Cigarette and Tobacco tax account
A few types of business licenses/permits youโll need in Hawaii, in addition to the tax license, are based on whether you:
- Import/export plants or animals into the state
- Deal with real estate
- Are part of the food industry
- Perform work that affects the right-of-way on state highways in Hawaii
- Own a tattoo business
This is not a complete listing of every business activity that requires a special license or permit, and you may wish to consult with a business attorney licensed in Hawaii to determine which ones you need to obtain.
In addition, each of Hawaiiโs four counties have their own requirements for licenses and permits for new and existing businesses.
Once youโve obtained all of the necessary federal and state tax accounts, licenses, and permits, youโre ready to insure your business and protect those assets, both physical and financial.
Insuring Your Hawaii Business
Itโs the one thing no business owner wants to think aboutโwhat if someone gets hurt on your property, or from one of your products? Itโs crucial to have liability protection in place for both you and your customers.
The type of liability insurance youโll need depends on the type of business you have. If you sell a service (such as consulting), youโll need a different type of insurance than if you sell a product (such as childrenโs toys).
Three of the most common types of business insurance are:
- General liability (in case your physical location/website/advertising, etc. harms someone)
- Product liability (in case a product you make harms someone)
- Professional liability (in case a service you provideโor fail to provideโharms someone)
Depending on the type of business you own, you may want to get more than one type of liability protection. Youโll also need to find out if the state of Hawaii requires your particular business to carry a specific type of business insurance.
Business Essentials
Nowadays, nearly every successful business needs to have a standout website and e-commerce options, and of course, a strong marketing strategy is keyโif no one hears about your business, you wonโt have any customers no matter how innovative your product is.
Youโll also need a great location if youโve got a brick-and-mortar storefront. You may have the best products and the best prices in town, but if no one can find you, customers wonโt be pounding down your door.
But what often gets overlooked is a robust and secure point of sale system. After all, it doesnโt do much good to get customers in the door (or to your online checkout screen) if you canโt provide them with safe and secure payment methods.
Epos Now offers several great solutions for businesses, including mobile point-of-sale options for both Android and Apple tablets. Not only that, but Epos Now partners with payment processors so you can accept all major credit cards as well as Apple Pay and Google Pay.
Whether you need a new system, want to upgrade your current software, or add additional devices to your POS arsenal, Epos Now has you covered.