Hawaii Business License Basics

Starting a business in Hawaii? Many entrepreneurs can easily find themselves lost in a sea of paperwork, unsure which forms to file or agencies to contact.

But you don’t have to let this deter you from pursuing your Hawaiian business dreams. In this guide, we’ll break down the entire process of making your business official into manageable steps. From weighing the pros and cons of different business structures like LLCs and corporations to obtaining your tax ID number and more, you will be up and running in no time.

Related: Starting A Business In Hawaii Checklist

Step 1: Choose a Business Structure

One of the first decisions when registering a business in Hawaii is selecting the right business structure. This choice affects your taxes, personal liability, and operational flexibility.

There are four main business structures in Hawaii:

• Sole Proprietorship
  • One owner
  • No separation between personal and business assets
  • Simplest to set up but offers no personal liability protection
• General Partnership
  • Two or more owners
  • Shared management and profits/losses
  • No personal liability protection
• Corporation
  • A separate legal entity from its owners (shareholders)
  • Provides limited liability protection
  • More complex structure with formal requirements
  • Can be taxed as a C-corporation or S-corporation
• Limited Liability Company (LLC)
  • Combines features of corporations, sole proprietorships and partnerships
  • Offers liability protection for owners (members)
  • Flexible tax options (can be taxed as a sole proprietorship, partnership, or corporation)
  • A popular choice for small to medium-sized businesses

Each structure has its advantages and disadvantages. Sole proprietorships and partnerships are straightforward to set up but offer no liability protection. Corporations provide strong liability shields but come with more regulatory requirements. LLCs offer a middle ground, balancing liability protection with operational flexibility.

Related: Comparison of Business Structures

Step 2: Select a Business Name

After deciding on the business structure, the next step is choosing a business name. Here’s how it works for different business structures:

• Sole Proprietorships and Partnerships:
  • No registration is required if operating under the owner’s full legal name(s).
  • To use any other name, you must register a Hawaii Trade Name (also known as DBA or “Doing Business As”) with the Hawaii Department of Commerce and Consumer Affairs (DCCA), Business Registration Division. For example, John Smith, operating as “Aloha Surf Rentals,” would register this Trade Name.
• Corporations:
  • Must include a corporate designator like “Corporation,” “Incorporated,” “Company,” “Limited,” or their abbreviations (e.g., “Corp.,” “Inc.,” “Co.,” “Ltd.”).
  • The corporate name is registered when you file your Articles of Incorporation.
  • If you want to operate under a name different from your registered corporate name, you’ll file for a Trade Name. For example, “Hawaii Pineapple Corporation” could file a Trade Name to operate as “Sweet Island Fruits.”
• Limited Liability Companies (LLCs):
  • Must include “Limited Liability Company,” “LLC,” or “L.L.C.” in the name.
  • The LLC name is registered when you file your Articles of Organization.
  • Like corporations, LLCs can file for a Trade Name to operate under a different name. For example: “Maui Adventures LLC” might file a Trade Name to do business as “Island Excursions.”

For all business types, your business name must be distinguishable from other registered business names in Hawaii. The DCCA provides a Hawaii business name search tool on its website to check availability.

Step 3: Federal Employer Identification Number (FEIN)

The Federal Employer Identification Number (FEIN), also known as a Federal Tax Identification Number, is a registration for many businesses operating in the Aloha State. This unique nine-digit number, assigned by the Internal Revenue Service (IRS), is needed for:

• Sole proprietors and single-member LLCs without employees
• Corporations and partnerships, regardless of employee status
• Multi-member LLCs

Sole proprietors and single-member LLCs without employees can use the owner’s Social Security number instead (though they can get an EIN if they wish.

Learn How to Register for an EIN

Step 4: Occupational Licensing

Hawaii, like many states, regulates various professions to protect public health, safety, and welfare. The Hawaii Department of Commerce and Consumer Affairs (DCCA) Professional and Vocational Licensing Division oversees this process. Hawaii regulates a wide range of occupations, including but not limited to:

• Accountants
• Architects
• Attorneys (via the Hawaii State Bar Association)
• Barbers and Cosmetologists
• Contractors (General and Specialty)
• Doctors and Nurses
• Engineers
• Insurance Agents
• Massage Therapists
• Pest Control Operators
• Private Detectives and Guards
• Real Estate Agents and Brokers
• Teachers (via the Hawaii Teacher Standards Board)
• Vehicle Repair Technicians

For the most up-to-date and specific information on licensing requirements for your profession, always consult the DCCA’s Professional and Vocational Licensing Division directly. They can provide the most accurate and current details on application processes, fees, and ongoing requirements for your field.

Step 5: Hawaii Basic Business Application

All businesses in Hawaii must register with the state by filing Form BB-1, the State of Hawaii Basic Business Application.

This $20 one-time filing registers your business for various tax licenses and permits, most notably the General Excise Tax (GET) license. Unlike traditional sales tax, Hawaii’s GET applies to all gross receipts or income of a business, with a state rate of 4.0% for most activities and 0.5% for wholesale transactions. Businesses in Oahu County face an additional 0.5% surcharge. While businesses can pass GET costs to customers, they’re responsible for paying the tax to the state.

Step 6: Resale Certificate

After obtaining a valid GET license, most businesses (typically retailers, wholesalers, and manufacturers) will want to obtain a Hawaii Certificate of Resale. This allows businesses to purchase goods for resale without paying the General Excise Tax (GET).

Step 7: Local Business Licenses

In addition to state-level requirements, many Hawaii counties have their own licensing regulations. These vary based on location and business type. Here’s a brief look at county-specific requirements:

1. Hawaii County (Big Island):
   • Specific business types requiring licenses include:
     • Auctioneers
     • Firearm dealers
     • Dance hall operators
     • Pawnbrokers
     • Second-hand dealers
   • Food establishments need permits from the Department of Health
2. Maui County:
   • Liquor licenses are required for businesses selling or serving alcohol
   • Special Management Area permits may be required for businesses in coastal areas
   • Food truck permits are required for mobile food vendors
3. Honolulu County (Oahu):
   • Some types of business activities in the Waikiki Special District require special permits
   • Sidewalk vending requires specific licensing
   • Massage establishments need county-level permits in addition to state licensing
   • Short-term vacation rentals have strict licensing requirements
   • Commercial vehicle permits may be needed for certain business vehicles
4. Kauai County:
   • Licenses required for commercial water activities (e.g., surf schools, kayak rentals)
   • Transient Vacation Rental licenses are needed for short-term accommodations
   • Special event permits for temporary business activities

Step 8: Local Building & Zoning Permits

In Hawaii, local regulations can play a big role in business operations. While state laws provide a framework, counties often have specific business requirements. Here’s an overview of key local considerations:

Individual counties establish zoning regulations in Hawaii to ensure orderly development and appropriate land use. Before starting your business, verify that your chosen location aligns with local zoning laws. For instance, in Kauai County, the Planning Department offers a Zoning Permit Clearance Form, which helps business owners confirm their property’s zoning designation and permitted uses. Home-based businesses often require special consideration as many counties issue home occupation permits to ensure commercial activities don’t unduly impact residential areas.

Building permits are necessary for constructing, altering, or repairing business structures in Hawaii. Each county manages its own building department, which is responsible for permit issuance and enforcing the state’s building code. For example, the Department of Public Works handles building permits in Maui County. It offers an online portal where business owners can submit applications, track progress, and schedule inspections, streamlining the process for local entrepreneurs.

Signage is an important aspect of many businesses but is subject to local regulation in Hawaii. Before installing any business signage, you must obtain a permit from your county’s relevant department. Hawaii County takes a unique approach to sign regulation, incorporating it into its zoning code. The county’s Planning Department reviews sign permit applications to ensure compliance with size restrictions, placement rules, and design standards to preserve the island’s scenic beauty while allowing effective business advertising.