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How to Start a Business in Hawaii

Do you want to start a new business in the state of Hawaii, but you’re not sure how to get started? You’re in the right space.

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Does starting a business on a warm, tropical island feel like a dream to you? Yep. To us, too. Hawaii is a unique crossroads of East and West — a confluence of Pacific peoples, cultures, and ideas have been mixing for centuries. The unusual cultural environment of the state makes it an enticing location for the new business owner. Despite the high cost of living, Hawaii’s unique business advantages lie in its proximity to China and Japan, and recent efforts to diversify its economy, which is heavily dependent on tourism. A generous Enterprise Zone program offers incentives for a wide variety of businesses, and provides relief from the General Excise Tax.

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How to Start a Business

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General resources for starting a business in Hawaii

  • Physical Address
    Business Action Center (BAC)
    1130 North Nimitz Highway
    Second Level, Suite A-220
    Honolulu, Hawaii 96817

  • Hawaii Tax Forms
    http://tax.hawaii.gov/forms/

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Fun facts about starting a business in Hawaii

Famous business founded in Hawaii: Hawaiian Airlines

Hawaiian Airlines is the largest airline in Hawaii. It is the 8th largest commercial airline in the U.S., and is based in Honolulu, Hawaii. It is the oldest U.S. carrier that has never had a fatal accident or a hull loss throughout its history, and frequently tops the on-time carrier list in the country, as well as the fewest cancellations, oversales, and baggage handling issues.

Famous entrepreneur born in Hawaii: Darius A. Monsef IV

Darius A. Monsef IV (born 1981 in Honokaa, Hawaii), is an internet entrepreneur and philanthropist known as the founder of the design community COLOURlovers and co-founder and board member of the All Hands Volunteers international charitable organization. As an alumnus of Y Combinator and mentor with 500 Startups and PIE PDX, Monsef is an active participant in the internet startup community.

“If you angel invest with your heart, you don’t always pick the best companies, but you’ll always pick the best people.” — Darius A. Monsef IV

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Which type of legal structure is best for my business in Hawaii?

At bizHUMM, we strongly recommend you incorporate, but you must consider the tax, legal, and liability implications carefully before deciding on the right legal structure for your business.

Here are 5 helpful steps to determine the best structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of Hawaii.
LLC (Limited Liability Company)
An LLC is a hybrid business organization that combines the pass-through taxation of a sole proprietorship or partnership with the limited liability of a corporation. Each owner of an LLC has limited liability, like a stockholder of a corporation.

Steps to starting an LLC in Hawaii:

  • Step 1 — Choose a name for your LLC.
  • Step 2 — File Articles of Organization.
  • Step 3 — Appoint a Registered Agent.
  • Step 4 — Prepare an Operating Agreement.
  • Step 5 — Comply with other tax and regulatory requirements.
  • Step 6 — File Annual Registrations.
  • Step 7 — Register foreign LLCs doing business in Hawaii.

For help forming your LLC in Hawaii we recommend CorpNet (they have fees for their service).
Alternatively visit the Hawaii Department of Commerce and Consumer Affairs website.

Other Hawaii resources for LLCs:

Hawaii.gov Search for Business Entity: Search for the availability of your LLC name here.
File an “Application for Reservation of Name” here.
File your “Articles of Organization” here.
File your “Annual Report” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC here. If your LLC has more than one member, you must get an EIN, even if you have no employees.

Hawaii Department of Taxation: If you will be selling goods or if you have employees, you’ll need to register here.

Sole Proprietorship
A sole proprietorship is a one-person business that is very popular among individual self contractors or business owners. Even though there aren’t complicated start-up requirements for establishing a sole proprietorship, there may be local registration, business license, or permit laws you need to comply with to make your sole proprietorship legitimate. The owner of the sole proprietorship is entitled to all profits, and is responsible for all the business’s debts, losses, and liabilities.

Steps to starting Sole Proprietorship in Hawaii:

  • Step 1 — Name your business.
  • Step 2 — File a trade name with the Department of Commerce and Consumer Affairs.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Get an Employer Identification Number (EIN).

For help forming your sole proprietorship in Hawaii we recommend CorpNet (there are fees for their service).
Alternatively, you can visit the Hawaii Department of Commerce and Consumer Affairs website.

Other Hawaii resources for Sole Proprietorship:

Hawaii.gov Search for Business Entity: Search for the availability of your fictional business name here. A sole proprietorship may also use his or her given name.
File your trade name here.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

Hawaii Business Registration Division: Register your business here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your business here. If you hire employees, you must obtain an EIN.

Hawaii Department of Taxation: If you will be selling goods or if you have employees, you’ll need to register here.

Partnership
A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor, or skill. In return, each partner shares in the profits and losses of the business.

Steps to starting Partnership in Hawaii:

  • Step 1 — Name your partnership.
  • Step 2 — File a Registration Statement for Partnership.
  • Step 3 — Create and sign a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Obtain an Employer Identification Number (EIN).

For help forming your partnership in Hawaii we recommend CorpNet (they have fees for their service).
Alternatively visit the Hawaii Department of Commerce and Consumer Affairs website.

Other Hawaii resources for Partnership:

Hawaii.gov Search for Business Entity: Search for the availability of your fictional business name here.
A partnership may also use the surnames of the individual partners.
File your “Application for Reservation of Name” here.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

Hawaii Business Registration Division: Register your business here.

Hawaii Professional and Vocational Licensing: A comprehensive database of every occupation that requires a license by a partnership.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your business here. It is required, whether or not you have employees.

Hawaii Department of Taxation: If you will be selling goods or have employees, you’ll need to register here.

S Corporation
With an S corporation (or S corp), income and losses are passed through to shareholders and included on their individual tax returns. As a result, there's just one level of federal tax to pay. The shareholders must report the income or loss on their own individual income tax returns. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.

Steps to starting S Corporation in Hawaii:

  • Step 1 — Choose a corporate name.
  • Step 2 — Prepare and file Articles of Incorporation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Hawaii annual report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Hawaii.

For help forming your S corporation in Hawaii we recommend CorpNet (they have fees for their service).
Or, visit the Hawaii Department of Commerce and Consumer Affairs website.

Other Hawaii resources for S Corporation:

Hawaii.gov Search for Business Entity: Search for the availability of your corporation name here.
File your “Application for Reservation of Name” here.
File your “Articles of Incorporation” here.

Hawaii Business Registration Division: Register your business here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

Hawaii Department of Taxation: Online service for business tax.

C Corporation
A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed.

Steps to starting C Corporation in Hawaii:

  • Step 1 — Name your corporation.
  • Step 2 — Prepare and file Articles of Incorporation.
  • Step 3 — Find a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Hawaii annual report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Hawaii.

For help forming your C corporation in Hawaii we recommend CorpNet (there are fees for their service).
Alternatively visit the Hawaii Department of Commerce and Consumer Affairs website.

Other Hawaii resources for C Corporation:

Hawaii.gov Search for Business Entity: Search for the availability of your corporation name here.
File your “Application for Reservation of Name” here.
File your “Articles of Incorporation” here.

Hawaii Business Registration Division: Register your business here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

Hawaii Department of Taxation: Online service for business tax.

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Why choose Hawaii for my business?

  • 1

    Enterprise Zone Program
    “The Enterprise Zone program is a state-county partnership that has been growing job opportunities on Hawai‘i Island for over 20 years by incentivizing business investment in areas with low income or high unemployment. The Enterprise Zone is an area within which businesses engaged in eligible activities can receive state and county tax incentives, provided they meet job growth goals (or revenue goals for agriculture businesses).”

  • 2

    Hawaii Small Business Development Center
    “The Hawai‘i Small Business Development Center established in 1990, provides professional business advice, research and training to business owners and new entrepreneurs in order to promote growth, innovation, productivity and management improvement. To accomplish these objectives, we link federal, state and local resources, the educational community and the private sector to meet the needs of Hawai‘i’s businesses.”

  • 3

    Hawaii Venture Capital Association
    “Since its founding in 1988, the Hawaii Venture Capital Association (HVCA) has stood as a nexus for entrepreneurs, capital foundation, and networking opportunities in Hawaii. Fostering entrepreneurship through education and exposure to prime members of our business community continues to be our goal as we strive to grow a vibrant and successful venture community.”

  • 4

    Hawaii Business Development and Support Division
    “The Business Development & Support Division (BDSD) of DBEDT promotes industry development and economic diversification by supporting existing and emerging industries in Hawaii and by attracting new investment and businesses to the state.”

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