How to Start a Business in Hawaii: Clear Guide

Hawaii has a diverse and thriving economy, where tourism and agriculture play key roles. The islands' location in the Pacific makes them a prime spot for businesses looking to bridge the gap between the US mainland and Asia.

The state offers a unique and exciting opportunity for business owners. Over 99% of ‌businesses in Hawaii are small businesses.¹

Whether you want to open a charming surf shop catering to tourists or a cutting-edge technology startup, let’s look at everything you need to start a business in Hawaii:

How to Start a Business in Hawaii: First Steps

Before jumping straight into picking your business name, you’ll want to do some groundwork on the things you’ll need to start up a business in Hawaii.

The first step is to gather information and make a plan. Read the official guidance on starting a business in Hawaii from the state’s Department of Commerce and Consumer Affairs (DCCA). They offer a comprehensive guide for the process, plus important considerations.²

Now you’re ready to tackle some legal requirements.

Legal Requirements for Starting a Business in Hawaii

Once you’re ready to start the official process of creating your Hawaii business you’ll need to make sure you meet some key legalities:

Choosing the Right Business Structure

The first major legal requirement is picking the type of business structure you’ll use. This is the legal framework for your business, which will determine how you run your business and pay taxes.

The best structure depends on your business and liability protection needs or taxation preferences. Here are the most common business structures you’ll need to choose from:

• Sole proprietorship: The simplest structure with one owner who reports business profits and losses on their personal tax return. It has no liability protections.

• Partnership: A business co-owned by two or more people who share profits, losses, and management responsibilities. Each partner has unlimited personal liability.

• Limited Liability Company (LLC): Provide liability protection for owners and profits and losses pass through to the owners' tax returns, like a sole proprietorship.

• Corporation: Offer the most significant liability protection but are more complex to set up and run.

You should consult a lawyer or accountant to help you determine the best structure for your unique business goals.

Registering Your Business

Once you pick your business structure, you can officially register your business with Hawaii. Choose a business name that complies with state regulations. You can check name availability and register a business name through the Hawaii Business Express (HBE).³

Depending on your business structure, file proper formation documents with the Department of Commerce and Consumer Affairs (DCCA), such as Articles of Organization for an LLC.

You can register your business online or in person. The Hawaii Business Express allows you to register your business conveniently. Simply create an account and follow the prompts.⁴

To register in person, visit the nearest Business Action Center. These centers offer assistance with registration, licensing, and other business needs.⁵

Obtaining Necessary Licenses and Permits

With your business relegation complete, it’s time to get the necessary licenses and permits. The ones you need will depend on your business and your industry. Here are some of the most common business licenses and permits in Hawaii:

• Professional and occupational licenses: If your business involves a regulated profession you'll need a professional license. Use the DCCA’s Professional and Vocational Licensing (PVL) Divisio to identify the specific license.⁶

• Local zoning and building permits: You might need permits from your county or city for zoning compliance, construction, or signage.

Always consult with the relevant agencies or seek professional guidance to ensure you have obtained all necessary licenses.

How Much Does It Cost to Start a Business in Hawaii?

Starting a business in Hawaii is relatively affordable. The main expenses you’ll need to consider when starting your Hawaiian business include:

• State filing fee: This is the core cost for most businesses. For example, Hawaii charges a $50 fee to start an LLC or corporation.⁷
• Local permits and licenses: The fees for state, county, or municipality permits can vary.

Beyond the basic costs, you may need to budget for startup costs like inventory, website development, or business insurance.

Understanding Hawaii's Business Landscape

Hawaii’s business landscape is different given its unique location and culture. It’s a tourism-driven economy, which is great for businesses catering to visitors, such as restaurants and shops.

Hawaii also places a high value on environmental protection and sustainability. Being an island chain, Hawaii does have limited resources with limitations on things like land and manpower. This can affect factors like operating costs and supply chains.

Key Industries in Hawaii

Hawaii's unique location and culture fuel a diverse economy. Some of ‌the state's most prominent industries include:

• Tourism: Consider services that cater to visitors, like guided tours, transportation, or specialty rentals. You could also explore food and retail options with a local twist.
• Agriculture: If you enjoy farming or producing value-added agricultural products, there's a potential place for you.
• Manufacturing: Hawaii’s manufacturing sector focuses on products like processed foods, building materials, and light manufacturing.

Hawaii's business landscape thrives on innovation and catering to specific needs.

Economic Considerations

Hawaii's unique location and scenery come with a distinct economic landscape. Understanding tax rates, business incentives, and the cost of living is important.

There are two key tax rates you need to know about:

• Income tax: Hawaii has a progressive income tax system, with the top marginal rate reaching 11%.⁸
• General excise tax (GET): There's no traditional sales tax in Hawaii. Instead, businesses pay a 4% general excise tax (GET) on most business activities.⁹

The Hawaiian government offers incentives to attract and support businesses, like tax credits and loan programs. Also, note that Hawaii has a significantly higher cost of living than the national average.

Practical Steps in Launching Your Business

With all the legalities and research out of the way, it’s time to launch your business:

Crafting a Business Plan

A well-crafted business plan can serve as a roadmap for a successful business venture, and Hawaii is no exception. Certain businesses can also use a business plan to secure funding from investors or banks. It shows the viability of your business idea and that you understand the market.

Crafting a business plan may seem daunting, but using a business plan template is an easy way to get started.

Financing Your Business

Turning your dream business into reality often requires funding. Here are some of the financing options available to get your Hawaiian business off the ground:

• Community-Based Economic Development (CBED) loan program: Offered by the Hawaii Department of Business, Economic Development and Tourism (DBEDT). It prioritizes businesses in the agriculture, food production, manufacturing, and wholesaling sectors.¹⁰

• Local banks: Many Hawaii-based banks offer traditional business bank accounts as well as loans and lines of credit.

• State and Federal Grants: Various government grants may be available for businesses in specific industries or locations.

Research and compare different financing options to find the best fit for your business goals and financial situation.

Marketing Your Business in Hawaii

Now comes the exciting part: spreading the word and attracting customers. In Hawaii, you have a unique opportunity to reach residents and tourists.

A strategic mix of digital and traditional marketing strategies that works well for Hawaiian businesses might look like this:

Digital marketing strategies:

• Target local residents and tourists: Use search engine optimization (SEO) to ensure your business shows up in local searches. Paid advertising on social media platforms allows you to target specific demographics, reaching residents and tourists based on interests and location.

Traditional marketing strategies:

• Tap into the community: Get involved in local events, farmers' markets, and business associations. Sponsor local sports teams or charities to build brand awareness and goodwill.
• Consider local partnerships: Collaborate with other local businesses for cross-promotion. This is a great way to expand your reach and tap into a

Remember to highlight your local connection. Showcase what makes your business unique to Hawaii.

Tips for Success in the Hawaiian Market

Breaking into the Hawaiian market requires understanding the local culture and business landscape. Here are some key strategies to navigate the market:

• Embrace Aloha: "Aloha" goes beyond just a greeting; it's a philosophy emphasizing respect and kindness. Integrate Aloha into your interactions with customers and business partners.
• Network like a local: Hawaii's business community is tight-knit. Attend industry events, join local chambers of commerce, and connect with other entrepreneurs.
• Learn the language: While English is the primary language of business, understanding basic Hawaiian phrases demonstrates respect for the culture and can go a long way in building rapport.

Try to focus on local needs by identifying gaps in the market where your business can serve the local community, such as product localization.

What Is the Best Business to Start in Hawaii?

As with any state, there’s no perfect business. Given the character and uniqueness of Hawaii, there are promising opportunities to consider, however, such as:

• Capitalizing on tourism: Hawaii's tourism industry is a major driver of the economy. Consider businesses that cater to visitors.
• Embracing local agriculture: The Hawaiian climate allows for a diverse range of agriculture. Explore opportunities in farming, brewing, or specialty food production.
• Choosing sustainability: Sustainability is a major focus in Hawaii. Incorporate eco-friendly practices or cater to the growing demand for sustainable products.

Note that the success of your business depends on your passion, dedication, and ability to adapt to the unique Hawaiian market.

How to Start a Business in Hawaii: Summary

Launching your business in Hawaii can be an exciting adventure. To turn your dream into reality, careful planning is essential. Remember, Hawaii offers a supportive environment for entrepreneurs.

With thorough preparation and the resources available from local organizations, you'll be well-equipped to navigate the startup process and establish a thriving Hawaiian business.

Discover Wise Business: The Account for Global Businesses

Even if you're starting a business in paradise, you might have global ambitions. Wise Business can be your financial partner for a borderless operation. Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks.

Here's how Wise Business empowers your Hawaiian business to thrive internationally:

• Get paid globally: Wise provides local bank details in multiple currencies, allowing international clients to pay you easily and conveniently. This eliminates the hassle of currency conversion for your clients and potentially speeds up your collections.
• Send money internationally: Wise offers competitive exchange rates and low transparent fees, saving you money compared to traditional banks when you need to send funds overseas for inventory, payroll, or other expenses.
• Batch payments made easy: For businesses that frequently pay international contractors or vendors, Wise streamlines the process. Upload a spreadsheet with recipient details and send bulk payments efficiently.

With Wise Business, you can focus on running your business in Hawaii while managing your international finances seamlessly and cost-effectively.

Open a Wise Business account online

The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to 160+ countries.

Read the guide on how to open a Wise Business account

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Sources:

1. SBA - Hawaii 2023 Small Business Profile
2. Hawaii.gov - Starting a Business
3. Hawaii.gov - Search for Businesses & Buy Documents
4. Hawaii.gov - Log In
5. Hawaii.gov - Business Action Center
6. Hawaii.gov - Professional and Vocational Licensing
7. Hawaii.gov - Registration Forms, Fees and Information
8. Hawaii Department of Taxation - General Excise Tax (GET) Information
9. Tax Foundation - Taxes in Hawaii
10. Hawaii.gov - Loans to Help Businesses

All sources checked June 2024.