Hawaii Business License

Obtaining the right Hawaii business license is crucial to ensure your business operates legally within this state. However, the total number and different types of licenses you’ll need will vary based on your business’s location and specific activities.

To help guide you through your unique licensing path, this article offers key insights, essential resources, and an estimate of the potential cost of getting licensed in Hawaii.

Do I Need a Business License in Hawaii

In Hawaii, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• General Excise and Retail Licenses: All Hawaii businesses must obtain a license from the Hawaii Department of Commerce and Consumer Affairs’ Business Registration Division to comply with the state’s General Excise Tax (GET). Instead of a traditional sales tax, businesses in Hawaii must pay GET, which varies from a rate of 0.15% to 4% depending on the business activity — some counties even add surcharges to this, such as Honolulu
• Professional Services Licenses: Like many states, businesses in Hawaii that offer specialized services (e.g., auctioneering or pawnbroking) must obtain specific licenses. Typically managed by the Business Registration Division within Hawaii’s Department of Commerce and Consumer Affairs, these licenses ensure businesses meet the state’s standards for these professions
• Environmental and Safety Licenses: Specific boards or agencies in Hawaii oversee the required permits and licenses for businesses that may impact the environment or public safety. The exact agency might vary based on the nature of the potential impact

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Hawaii plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

• Local: City and county-specific regulations in Hawaii also will dictate your business’s licensing needs. For example, a restaurant on the island of Maui might need a different set of health permits than one on the island of Oahu due to varying local health department guidelines
• State: State-wide licenses regulate a number of business activities, such as selling firearms or operating as an auctioneer. These are typically issued by the Business Registration Division within Hawaii’s Department of Commerce and Consumer Affairs issues these licenses, though the Hawaii Department of Taxation is responsible for regulating GET licenses
• Federal: Certain businesses in Hawaii also need to consider federal regulations. For instance, a commercial fishing operation will need federal permits related to marine conservation and sustainable fishing practices

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Hawaii

In order to get your business license(s) in Hawaii, you will need to complete the following steps:

• Form Your Business
• Obtain an Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Hawaii, it’s pivotal that you first choose an appropriate business entity and business name. Sole proprietorships, limited liability partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Hawaii to register as Limited Liability Companies (LLCs). Here are a few reasons for why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: A limited liability company typically enjoys pass-through tax treatment, which means it avoids the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Hawaii Secretary of State providing registration forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: The Hawaii business licenses you’ll need will depend on the specific Hawaiian city or county in which your business is located. If you set up shop in Honolulu, for example, you’ll need to adhere to the city’s particular licensing requirements in addition to state and federal obligations
• Statewide Licenses: You can get your GET license through the Hawaii Department of Taxation. If your niche is related to a certain profession or state-regulated activity — such as selling firearms or operating as an auctioneer — you’ll need to apply for your licenses through Hawaii’s Department of Commerce, Business Registration Division
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For a comprehensive overview of local, state, and federal licenses in Hawaii, the Hawaii Small Business Development Center is a valuable resource to explore.

Step 4: Renewal of Licenses and Permits

In Hawaii, staying current with required license renewals is key to keeping your business running. While various licenses have their own renewal timelines, some have fixed renewal dates (e.g., firearms or electric guns). It’s essential to be aware of these specific deadlines to ensure continuous legal operation of your business.

Because it can seem complicated to keep track of these deadlines, it’s a good idea to use a third-party service to handle this on your behalf in order to avoid potential fines and save time.

How Much is a Business License in Hawaii

Business licensing costs can vary widely in Hawaii, depending on your business type and location. Moreover, some licenses have fixed fees while others have fees that fluctuate according to local, state, and federal regulations.

At the state level, your business activity will largely dictate your licensing fees. Auctioneers must pay a $100 annual license fee, for example, while firearms businesses only need to pay for a license that costs between $10 and $50 based on the type of guns they sell. On top of this, your GET rate will also vary between 0.15% and 4% depending on your profession.

These are just a few examples, though, and the full scope of licensing fees in Hawaii is extensive. To ensure they identify all applicable licensing costs, many business owners in the state opt to engage a third-party service. These experts meticulously navigate the intricate licensing terrain, providing clarity and helping entrepreneurs avoid potential pitfalls down the road.