4.6.2021

How to Start a Business in Hawaii

Written by Austin Chegini

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If you’ve ever thought about starting a business in Hawaii but aren’t sure where to begin, then you’ve 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 you’ll need a physical location or will be online-only
  • Who your target market is
  • How much financing you’ll 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 you’ll market your business to consumers
  • How to sustainably grow your business

By committing the answers to these questions in writing, you’ll 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 it’s 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 business—some have bigger tax breaks, while others don’t have to go through as many legal hoops to begin operating. There are a few generalized guidelines on Hawaii’s business action center, but if you’re 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 you’ve figured out which type of business you have, it’s 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 company’s behalf.

Registering also enables you to file an annual report—which 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 you’ve registered with the state, you’re 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, you’ll 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 you’re one of the lucky few who don’t need an EIN after all.

Before you can welcome customers to your website or physical location, however, you’ll need to complete the next step in the process of starting a business in Hawaii—obtaining all the necessary tax licenses/accounts and the required business licenses/permits.

Obtain Hawaii Tax Account(s) and Permits/Licenses

Which Hawaii tax account you’ll 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 you’ll 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 Hawaii’s four counties have their own requirements for licenses and permits for new and existing businesses.

Once you’ve obtained all of the necessary federal and state tax accounts, licenses, and permits, you’re ready to insure your business and protect those assets, both physical and financial.

Insuring Your Hawaii Business

It’s the one thing no business owner wants to think about—what if someone gets hurt on your property, or from one of your products? It’s crucial to have liability protection in place for both you and your customers.

The type of liability insurance you’ll need depends on the type of business you have. If you sell a service (such as consulting), you’ll need a different type of insurance than if you sell a product (such as children’s 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 provide—or fail to provide—harms someone)

Depending on the type of business you own, you may want to get more than one type of liability protection. You’ll 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 key—if no one hears about your business, you won’t have any customers no matter how innovative your product is.

You’ll also need a great location if you’ve 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 won’t be pounding down your door.

But what often gets overlooked is a robust and secure point of sale system. After all, it doesn’t do much good to get customers in the door (or to your online checkout screen) if you can’t 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. 

Call today to learn more about our POS solutions.