Do I need an EIN to start a business in Hawaii?

Most businesses should obtain a federal employer identification number (EIN) to open bank accounts, hire employees, and file tax forms. Even sole proprietors can benefit from an EIN to separate business and personal finances.

When should I register for the Hawaii general excise tax?

Register for the Hawaii general excise tax before you begin operations or make taxable sales. Early registration ensures you collect, report, and remit the correct tax and avoid penalties.

How to Start a Business in Hawaii: Accounting & Tax Checklist

Starting a business in Hawaii feels like a big adventure, but the islands have their own set of accounting and tax rules you can’t ignore. Here’s a straightforward checklist to help you handle everything—from picking your business structure and registering for taxes, to setting up your books and staying compliant. Keep this guide handy so you can start off organized and avoid stress later.

1. Pick your legal structure and know the tax impact

First things first: What kind of business are you starting? Your choice—sole proprietorship, partnership, LLC, or corporation—changes how you pay taxes, report income, and keep your records. Here’s the basics:

If you’re a sole proprietor or a single-member LLC, you usually report business income on your personal tax return. You’ll probably need to make estimated tax payments.
Partnerships and multi-member LLCs file partnership returns and give partners their own tax info.
Corporations face different tax rules and payroll requirements.

Talk all this through with a good advisor. You want the right balance between protecting yourself and keeping taxes reasonable. This decision shapes everything else, including what you’ll need to register for and how you’ll manage your books.

2. Get a federal employer identification number (EIN)

Most businesses need an EIN. You’ll use it to hire employees, open business bank accounts, and file tax forms. Even if you’re solo, having an EIN helps keep your business and personal finances separate. Once you get your EIN, keep it safe—you’ll use it a lot for both state and federal paperwork.

3. Register for Hawaii state taxes and local licenses

Hawaii has some unique tax requirements and registrations you should handle before you start selling or hiring. Here’s what you’ll probably need:

General excise tax (GET): Hawaii taxes almost all business activity. Register for GET before you start, and make sure you know your rate and how often to file.
Employer withholding and unemployment insurance: If you’re hiring, you need to register to withhold state income tax and report unemployment insurance payments.
Business licenses and permits: Depending on what you do and where you’re located, you might need extra licenses or permits.

It’s best to get all this out of the way early. That way, you avoid penalties and make sure you’re collecting and paying taxes correctly from day one.

4. Open a business bank account and keep finances separate

This is simple but huge—keep your personal and business money apart. Open a dedicated business bank account, and maybe even a business credit card. It makes bookkeeping way easier, protects you if there’s a legal issue, and saves you headaches at tax time.

5. Pick an accounting method and set up your books

Decide if you’ll use cash-basis accounting (tracking money when it actually moves) or accrual-basis (tracking money when you earn or owe it, even if it hasn’t changed hands yet). Small businesses usually start with cash-basis, but accrual can be better if you carry inventory or have long payment terms.

Set up a chart of accounts that fits your business: sales, cost of goods sold, expenses, payroll, taxes, owner draws. Good bookkeeping means:

Recording income and expenses regularly
Reconciling your bank and credit cards every month
Tracking who owes you money and who you owe
Keeping receipts and digital copies of everything
When you stay organized, tax time goes smoother and you actually know how your business is doing.

6. Set up payroll and payroll taxes

If you have employees or pay contractors, get your payroll process in place right away. Withhold the correct taxes, pay your share, and file payroll tax returns on time. Keep all employee records straight—W-2s, contractor forms, everything. And send in your payroll taxes when they’re due so you don’t get hit with penalties.

7. Know your estimated tax and filing deadlines

If you don’t get taxes taken out of paychecks, you’ll need to pay estimated taxes each quarter. If your business is making solid profits, you’ll likely owe estimated taxes for both federal and state. Mark your calendar for GET filings, payroll tax returns, and annual income tax deadlines. Missing these dates can cost you extra in penalties and interest, so stay on top of it.

8. Set up internal controls and keep good records

You want to protect your business’s money and keep your books straight. So, split up duties — don’t let the same person handle cash and record transactions. Reconcile your accounts regularly. Only let authorized people sign off on payments. Keep your tax records, bank statements, and backup documents for as long as recommended. If you ever get audited, you’ll be glad you did.

9. Create a tax calendar and stick to it

Don’t wait for tax deadlines to sneak up on you. Mark every filing and payment date on a calendar — monthly or quarterly GET returns, payroll deposits and forms, estimated payments, and yearly tax returns. With a clear routine, you’re much less likely to miss something or pay late.

10. Budget for accounting, right from the start

When you’re planning your startup costs, don’t forget filing fees, licenses, and professional setup help. Ongoing, you’ll need to cover things like accounting software, bookkeeping (especially if you hire it out), payroll services, and tax prep. Spending wisely here actually saves you money down the line — it keeps you compliant and helps you make the most of your tax situation.

11. Stay on top of sales tax and exemptions

If you sell goods or services, double-check which sales are subject to GET and which ones aren’t. Make sure you apply exemptions the right way and keep records for every exempt sale. Handling sales tax correctly helps your cash flow and lowers your audit risk.

12. Plan for growth — and more complex taxes

As your business expands, taxes get trickier. Maybe you’ll need inventory accounting, start selling in other states, work with contractors, or deal with changing payroll rules. Review your accounting setup and tax plans regularly so you’re ready for what’s next.

Final checklist (what to do next)

Pick your legal structure and finish state formation steps.
Get your federal EIN and keep it safe.
Register for state tax accounts (GET, withholding, unemployment) and local licenses.
Open a business bank account and keep your finances separate.
Set up bookkeeping, a chart of accounts, and do monthly reconciliations.
Put payroll processes and withholdings in place.
Build a tax calendar for estimated payments and filings.
Put internal controls and record retention in place.
Budget for accounting and tax services

Starting a business in Hawaii means paying close attention to tax registrations and keeping your books in order. Use this checklist to set up a solid financial base, stay compliant, and make room for steady growth. Register early, keep your bookkeeping clean, and stick to your tax calendar — you’ll stress less and have more time to actually run your business.