Many view Hawaii as paradise. The perspective is understandable. The state has amazing tropical weather, beautiful scenic views at every turn, world-class beaches and surfing, and is a popular destination for honeymooners, vacationers, and even retirees.
It should not be overlooked, however, that Hawaii can also be an attractive location to start a business.
Small businesses in the state comprise 99.2% of all businesses in Hawaii. They account for about 50 percent of jobs in Hawaii. Hawaii also traditionally has one of the lowest unemployment rates in the country.
When one generally thinks about Hawaii and its business climate, it is understandable to think of hospitality and tourism, and even agricultural products, like coffee and pineapples. But major players in the Hawaiian economy now also include medical, technology, construction, and insurance.
Because Hawaii is separated from the mainland United States, it does have some unique regulations when it comes to business licenses and taxing permits within the state.
In this article we will address some of the major permits and licenses required in Hawaii to start and conduct a business enterprise. We will take a look at some unique circumstances you may be faced with when starting a business in Hawaii. We will explore who needs a business license and why and delineate the cost of the various licenses and permits across Hawaii. If you ever considered starting a business enterprise in Hawaii, you will want to know what to expect and how to be in compliance with Hawaiian business regulations.
Do you need a business license in Hawaii?
While there is no general Hawaii business license required across the Aloha State, there is a general excise tax (GET) license that is required for virtually all businesses in the state.
A business is considered any entity that buys or sells items or services in the state.
You will need to secure a GET license once determining your business structure (e.g., sole proprietorship, partnership, LLC, etc.).
Once you have determined your business structure and type of business, you can apply for your GET license.
Hawaii has a number of valuable natural resources that state regulators seek to protect. There are a number of environmental regulations and permits that may be required for certain business sectors. Hawaii has a unique agricultural industry that includes products like tropical fruits, premium coffee, and even honeybees that are provided protection through some unique permitting and licensing.
How much does a business license cost in Hawaii?
The fee for this GET license is a modest $20 annually, although some counties and localities may add to that cost depending on location and business type and structure.
Your business license cost varies not only state to state, but county to county and industry to industry. The general range for state licenses and local fees in Hawaii can be from $15 to 400 dollars depending on the type, size, structure, and location of the business.
Some business fees may be subject to renewal or have a nominal annual reporting fee. While the GET license is a one-time fee, there may be other assessments associated with keeping your business in compliance annually.
Types of business licenses in Hawaii and their cost
Business permit and licensing fees in Hawaii are levied based upon a variety of criteria. These include the structure of the business, size of the enterprise, type of business being offered, and impact the business may have on the local and regional area in which it conducts its business.
Common business start-up fees include a one-time general excise tax license fee ($20), a $51 fee for formulation of an LLC, a $50 fee to register a trade name or DBA, a name reservation fee of $10, and annual reporting fees of $12.50 to report digitally or $15 to report by traditional mail.
Businesses may also be required to submit a one-time state archive preservation fee of $1, environmental impact fees, professional licensing fees, and, if desired, expedited processing fees to ensure quicker processing of permits and licenses.
City/local
Some local municipalities may levy a variety of Hawaiian business permit fees and licensing fees based on their location and the specific type of business being permitted. These are generally treated as surcharges and are in addition to other applicable fees.
County
Business fees in Hawaiian counties include the General Excise Tax, which can vary based on surcharges levied on a county-by-county basis. For example, the county surcharge for Honolulu and Kauai is .5%. This is above or in addition to what the state of Hawaii charges.
State
Statewide General Excise Tax rates on businesses vary. For example, an additional .15% on insurance commissions, .5% on manufacturing and wholesaling, and generally 4% on other business activities.
Professional services may also be subject to statewide licensing fees. These fees can be minimal or run into the hundreds of dollars depending on the type of professional service offered.
Hawaii business tax permits (courtesy of the State of Hawaii Department of Taxation)
Licensing Information
Businesses operating in Hawaii are required to register with the Department to obtain a license, permit, certificate of registration, or exemption, (all generally referred to by the Department as a “license”). The table below summarizes by type of license, who must register, the registration frequency, and associated fees.
| Tax License Type | Who Must Register | Registration Frequency | Fee |
|---|---|---|---|
| General Excise Tax License | Anyone who receives income from conducting business activities in the State of Hawaii including, but not limited to: wholesaling, retailing, farming, services, construction contracting, rental of personal or real property, business interest income, and royalties. | One-time | $20 at registration |
| Transient Accommodations Tax Certificate of Registration | Anyone who rents a transient accommodation (for example, a house, condominium, hotel room) to a transient for less than 180 consecutive days | One-time | 1-5 units: $5 6+ units: $15 at registration |
| Transient Accommodations Tax Certificate of Registration | Time share plan managers | One-time | $15 per time share plan, at registration |
| Transient Accommodations Tax Certificate of Registration | Transient accommodations brokers, travel agencies, or tour packagers who enters into arrangements to furnish transient accommodations at noncommissioned negotiated contract rates. | One-time | $15 at registration |
| Rental Motor Vehicle, Tour Vehicle, and Car-Sharing Vehicle Certificate of Registration | Anyone that rents out motor and/or tour vehicles or operates a car-sharing organization. | One-time | $20 at registration |
| Liquid Fuel Distributor License | Persons/businesses that refine, manufacture, produce, or compound liquid fuel in the state or import liquid fuel into the state. with the intention of selling or using the liquid fuel in the state | One-time | No fee |
| Liquid Fuel Retail Dealer Permit | Anyone who purchases liquid fuel from licensed distributors with the intention of selling the liquid fuel to consumers. | Renew annually (December 31) | $5 per year |
| Liquor Tax Permit | Holders of a county liquor license for Manufacturer, Wholesaler, or Brewpub | Renew annually (June 30) | $2.50 per year |
| Cigarette and Tobacco Tax License | Anyone who distributes cigarette or tobacco products or comes into the possession of cigarette or tobacco products that have not been acquired from another licensee or retail tobacco permit holder | Renew annually (June 30) | $250.00 per year |
| Cigarette and Tobacco – Retail Tobacco Permit | Anyone who sells cigarettes and tobacco products to consumers. A separate retail tobacco permit for each retail location (including vehicles) is required. | Renew annually (November 30) | $50 per retail location per year |
Renewing your business license in Hawaii
Business licenses in Hawaii are generally renewed via an annual report. The fee for annual reports is $12.50 when filed online and $15 when filed by mail. A fee of $10 will be assessed for reports that are filed late.
General Excise Tax payments/reports which are filed late are subject to a 5% penalty per month up to 25%.
Conclusion
While starting a business in Hawaii can be exciting and rewarding, the state has a variety of tax and licensing permit fees that can be a bit complicated. Business fees for individual enterprises often vary based on their business structure, type of business, environmental impact, and location within the state; something that becomes clearer when you understand how to start an LLC in Hawaii.
Typically, virtually all businesses will need to secure a General Excise Tax license. While this fee is nominal at $20, it can grow exponentially depending on the specific industry.
Should you like assistance in starting your business enterprise in Hawaii, reach out to us at Tailor Brands.
FAQ
Yes, most businesses are required to secure a Hawaiian General Excise Tax License. Including online and home-based businesses.
To secure a GET license, you must submit a basic business application through the Hawaii Department of Taxation. This is done through form BB-1.
It should take approximately 5 to 7 days after you submit form BB-1 to the state of Hawaii to receive your GET license.
The answer is yes. All entities wishing to conduct business in Hawaii are required to secure a General Excise Tax license. This includes LLC’s.
The answer is no, the two are not the same. An LLC is a business structure while a business license permits you to conduct business in the state.
Since Hawaii doesn’t have a state-wide general business license, its General Excise Tax license serves in its place. Failure to secure a GET for your business can result in fines, levies, and penalties. You ultimately will be unable to operate your business without a GET.
While Hawaii does not have a state-wide general business license, a general excise tax license serves in its place. Hawaii also may have unique licensing and permitting requirements based on factors like the environment, transportation, tourism, and agriculture.