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Note: Our tax lesson is not as step-by-step as our other Hawaii LLC formation lessons, due to the uniqueness and variation among businesses. Taxes are usually not as straightforward as forming an LLC, and therefore, the information below is an overview, and not a comprehensive guide.
You will likely need to hire a local tax professional to make sure you meet all your Hawaii tax obligations. We recommend using Thumbtack.
Do it yourself in Hawaii
Hawaii Tax ID Number
You need to obtain a Hawaii Tax ID Number (from the HI Department of Taxation) after your LLC is formed. You also need to obtain any additional (and required) tax licenses.
You can obtain your HI Tax ID online (takes 3-5 business days) or by mail (takes 10-15 business days). The application fee in both cases is $20.
Here is Form BB-1 to file by mail (which includes instructions). Send your $20 fee, along with two copies of BB-1 to: Hawaii Department of Taxation, PO Box 259, Honolulu, HI 96809-0259.
Here is the link to file online. Click the “Use QuickFile”. Login with the email address and password you created (if you followed our Articles of Organization lesson). Click the “BB-1 Basic Business Application” link at the top to begin.
General Excise Tax
In addition to your federal and state income tax, you also need to file and pay Hawaii’s General Excise Tax (GET). It is a tax on the gross income of your business. The GET is either 0.5%, 4%, or 4.5% – it depends on your business activity and on which island your business is located.
0.5% tax: wholesaling goods, manufacturing, producing, providing wholesale services, and business activities of disabled people.
4 – 4.5%: selling retail goods and services, renting/leasing real property, construction, contracting, and earning commissions.
The GET tax is a bit similar to sales tax, but technically it is different. Sales tax is a tax on customers, whereas GET is a tax on your business.
You’ll apply for your GET license via Form BB-1 as mentioned above.
If you’ll pay less than $2,000 per year in GET, you need to file and pay every 6 months. If you’ll pay between $2,001-$4,000, you need to file and pay every quarter (3 months). If you’ll pay $4,001 or more, you need to file and pay every month. The more money you make, the faster the state wants it ;)
For more information, please read Hawaii’s Tax Facts on GET and/or check out Tod Marcus’s top 10 FAQs on GET.
Additional Tax Licenses
You will need to apply for more tax licenses depending on the nature of your business.
Have employees?
If you have employees, you need to:
- withhold federal, state, and payroll taxes from your employees’ wages
- get a Federal Tax ID/EIN (see this lesson)
- get a Hawaii tax ID (mentioned above)
- get a Department of Labor Number, aka Employer Account ID Number (visit HI Dept. of Labor’s website and/or call them at 808-586-8844)
- get unemployment insurance
- obey Hawaii labor laws for worker’s compensation, temporary disability insurance, prepaid health care, and wage and hour programs.
Other Taxes
Depending on your industry, where your business is located, how you are taxed by the IRS, and whether or not you have employees, will determine which additional taxes and forms are due.
Some examples of other taxes and forms due are:
- Use tax
- Individual income tax
- Income withholding tax
- Partnership and LLC tax
- Transient tax
- Accommodations tax
- Rental motor vehicle tax
- Tour tax
- Vehicle tax
- Car sharing tax
- Vehicle surcharge tax
- Cigarette and tobacco tax
- Liquor tax
- Fuel tax
- Local taxes
- And more
The Hawaii Department of Taxation has more information if needed, and also offers online filings for taxes:
Hawaii Department of Taxation: E-Services Information
If you have more questions, please see the Hawaii Department of Taxation’s contact page.
Our Recommendation
Calculating your tax obligations in Hawaii can be complicated and if done improperly can negatively impact your LLC.
We recommend that you get help from a tax professional once your LLC is formed. You can use Thumbtack or Yelp.
Hiring a tax professional will not only help you keep your Hawaii LLC in compliance, but it will also give you an advisor to go to for other business questions.
You’ll want someone who’s a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions. It should be someone you like personally as well as professionally. We recommend talking with at least 2-3 people before making your final decision.
References
Hawaii Department of Taxation: General Excise Tax (GET) Information
Hawaii Department of Taxation: General Excise and Use Tax
Hawaii Department of Taxation: Tax Facts 31-1
Hawaii Department of Taxation: Tax Facts 37-1
Hawaii Department of Taxation
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.
HAWAII LLC GUIDE
Follow the lessons below to form your Hawaii LLC.
Thank you for the helpful easy to understand information
You’re very welcome David :)
Thank you so much for this super helpful, very accurate and easy to understand information and step-by-step instructions! You made this process so much easier for me, and helped me feel so accomplished in finishing this all up on my own!
Hi Lindsey, you’re very welcome! Thanks so much for your lovely comment :) It’s greatly appreciated. We spend a tremendous amount of time making things very accurate, yet step-by-step, with the end goal of empowering people to do it themselves, learn, and grow. So that fact that your comment mentions all that really means a lot to us. Thanks again and best wishes!
So if I form my LLC in a different state, like Delaware for instance, would I have to pay Hawaii G.E. tax?
Hi Jay, please run this by an accountant as we’re not 100% sure. However, we believe you’ll still have to pay the GE tax since taxes are paid where the money is made, so even if you form an LLC in another state, you’re still operating and doing business in Hawaii. Hope that helps.