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Doing business in

Hawaii

Navigate Hawaii’s business landscape with ease—whether you’re incorporating, expanding, or managing tax compliance. Commenda helps you stay ahead with automated solutions for incorporation, compliance, and tax filings.
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hawaii

Business Overview

Hawaii’s economy centers around tourism, defense, and agriculture. The state offers unique opportunities in renewable energy, aquaculture, and specialized agriculture. Its strategic Pacific location makes it valuable for international business connections, especially with Asian markets.

Key Facts & Figures

Category Details
Capital Honolulu
Major Cities Honolulu, Hilo, Kailua, Kaneohe, Waipahu
State Sales Tax Rate 4% General Excise Tax (GET)
Local Sales Tax Rate 0.5% county surcharge in some counties
Corporate Income Tax 5.75% flat rate
Physical Nexus Threshold Any physical presence including employees, inventory, or representatives
Economic Nexus Threshold $100,000 in annual sales or 200 transactions

Did you know?

Hawaii’s tourism industry generates over $17 billion annually and accounts for approximately 21% of the state’s total economic output.

Setup & Compliance

Hawaii business formation involves unique tax considerations and multi-level registration requirements.

Setting Up a Business in Hawaii:

  1. Choose Your Business Structure: Consider Hawaii’s tax environment when selecting your entity type.
  2. Register Your Business: File formation documents with the Hawaii Department of Commerce and Consumer Affairs.
  3. Obtain Tax Licenses: Register for General Excise Tax (GET) license with the Department of Taxation.
  4. Secure Business Licenses: Research and obtain necessary state and county business licenses.
  5. Register as an Employer: Register with the Department of Labor if hiring employees.

Distinctive Hawaii Compliance Requirements:

  • General Excise Tax (GET): Hawaii’s version of sales tax applies to gross business income at 4.0-4.5%.
  • Annual Business Reports: Most entities must file annual reports with the DCCA.
  • County Business Licenses: Each county has specific business licensing requirements.
  • Industry-Specific Regulations: Many industries face specialized licensing through Professional and Vocational Licensing Division.
  • Prepaid Healthcare Act: Employers must provide health insurance to employees working 20+ hours per week.

Hiring & Payroll

Hawaii has strong worker protections including unique health insurance requirements.

Hawaii Payroll Taxes:

  • Unemployment Insurance: Rates from 0% to 5.6% on first $51,600 of wages.
  • Temporary Disability Insurance: Employers may withhold up to 0.5% of wages.
  • State Income Tax Withholding: Required based on HW-4 form.

Hawaii Employment Laws:

  • Minimum Wage: $12.00 per hour (increasing to $14.00 on January 1, 2024, and $16.00 by 2026).
  • Prepaid Health Care Act: Employers must provide health insurance to employees working 20+ hours weekly.
  • Temporary Disability Insurance: Required for all employers, covering 58% of wages.
  • Final Paycheck: Due immediately upon termination or next working day if records not immediately accessible.
  • Hawaii is not a right-to-work state.

State Incentives

Hawaii offers unique economic incentives to support business development.

Key Business Incentives:

  • High Technology Business Tax Credit: Support for technology and innovation sectors.
  • Motion Picture, Digital Media, and Film Production Income Tax Credit.
  • Renewable Energy Technologies Income Tax Credit.

Small Business & Startup Support:

  • Hawaii Small Business Development Center: Comprehensive business advisory services.
  • Agricultural Loans and Grants: Support for agricultural businesses.
  • Creative Industries Division: Support for creative and cultural businesses.

Regulatory Considerations

Hawaii maintains unique regulatory requirements reflecting its distinctive business environment.

Key Business Regulations:

  • Data Privacy: Laws protecting sensitive personal and business information.
  • Environmental Compliance: Extensive regulations protecting unique ecological systems.
  • Professional Licensing: Comprehensive licensing for tourism, healthcare, and professional services.

Additional Regulatory Areas:

  • Tourism Industry Regulations.
  • Agriculture and Marine Resource Protection Compliance.

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