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You can make turn your business idea into a new career by starting a business in Hawaii. Use our step-by-step guide to starting a business below. We can also help you start, run and grow your business with our formation services.
Ready to get serious about starting your business in Hawaii? Here’s a checklist to help you on the adventure:
Ready to take the first step on your entrepreneurial journey? Before jaunting down the startup road, you must first plan the path by creating your business plan. Investors, lenders, and grantors will request this plan when you seek financial help. It will be your resource when the going gets tough, so don’t skip the step.
The business must be registered with the IRS and Hawaii, so you’ll need to decide on a business structure. The most commonly used entity types are sole proprietorships, general partnerships, limited liability companies (LLCs), and corporations (S corp or C corp).
The main things to think about when choosing a structure include:
Many small businesses decide to go the LLC route because it provides liability protection for personal assets (unlike sole proprietorships). Your personal and business expenses will be separate.
Plus, this type of business entity avoids the double taxation of some corporate structures.You can file for your Hawaii LLC online. The Hawaii DCC Professional and Vocational Licensing Division can advise you on what other permits or business licenses might be required for your business.
Counting up your startup costs is an important step to take before spending money on the business. It can be helpful to think of costs in three categories: one-time, fixed, and ongoing.
One-time costs only happen once. Getting a logo designed, a website built, a prototype made, and buying office furniture are good examples of one-time costs.
Fixed costs happen regularly, but they won’t change from month to month regardless of your sales. These costs are things like your attorney and accountant, rent, and business insurance.
Ongoing expenses are the ones that need some longer, more in-depth thought and forecasting. They change depending on how much business your company is doing, and they’re nearly always present. Think seasonal labor, product creation costs, shipping, etc.
You can’t have a business without a business name, right? Some entrepreneurs come to the journey with a name already in their minds. Others still need to suss out the perfect choice. If you’re in the latter category, break out the whiteboard and markers. Write words from your industry, Hawaii itself, your name, and the products you’ll provide.
Now take a look at what you’ve written and see if any combinations can be made that are understandable, memorable, and unique. Did a few jump out? Great! Now check to see if any are already registered at Hawaii Business Express. You don’t want to get sued by someone already using the name or lose customers to someone else operating under the same name.
If the name isn’t registered in Hawaii, move on to check its status online. Is a website address with your desired business name available? If so, register the domain so no one else can snatch it up. Are the corresponding social media handles already in use? Don’t panic if they are. Perhaps you can come up with another iteration of the name and use that consistently across social media.
If you’ll do business under a different name for marketing or other purposes, look into creating a “doing business as” or DBA name with the state. Unlike other states, registering a DBA is optional in Hawaii, though doing so can help dissuade others from using the name. In Hawaii, ownership of a DBA, which is referred to as a “trade name” Hawaii, is acquired mainly by adopting and using it.
Once you’ve chosen a business structure, register your small business with the state of Hawaii and, if required, your city/regional government entity.
Then, apply for a federal employer identification number (EIN), which is your federal tax ID that you also use to hire employees. You may also need an EIN to open a business bank account.
Note: If you’re a sole proprietor, you can use your social security number as your tax ID, though most experts recommend obtaining an EIN to help avoid identity theft.
Next, open up a business bank account to avoid mixing business finances with personal. It creates a mess come tax time and makes it hard for you to see the true income and expenses of the business. It can also sometimes make your personal assets vulnerable by voiding your liability protections.
At this time, you can also consider opening a business credit card to cover small purchases at the start and build your credit.
Talk with business insurance agents in Hawaii to learn what coverage you may need, including workers’ compensation, general liability, and others.
Finally, consult the Department of Commerce and Consumer Affairs (DCCA) to find out what business licenses and permits may be required.
There are plenty of marketing agencies in Hawaii that can help you reach the local audience, and even complimentary marketing support from the state. You’ll want to think about where your customers are and go to them.
That might necessitate conducting special events, passing out business cards, posting flyers, or even hiring a plane to trail a sign promoting your business to beachgoers. Think creatively!
Think about how you’ll promote your business online, too. Set up a search-engine-optimized (SEO) website and create a social media strategy that works with the site so that your branding/look stays true no matter where customers find you online. Build up a database of customer emails, then send regular helpful communication so your product(s) stay front of mind.
Also, register with Google My Business so that customers can find you once they hear about you.
Hawaii offers local help for entrepreneurs via the Hawaii Small Business Development Centers (SBDC) and SCORE chapters in both Oahu and Maui. The Hawaii Angels have poured over $50 million into 100+ companies in the state since their founding in February 2002.
And the Hawaii Venture Capital Association, along with providing capital for startups, identifies standout entrepreneurs in several categories and highlights them at an annual awards banquet. There is also specific assistance for women-owned and veteran-owned businesses, the latter being from the Small Business Administration (SBA).
While the cost of living in Hawaii is higher than in other places, the fees to incorporate a new business are lower than many on the mainland.
Our formation services can help make it easier to start a business in Hawaii. Choose a legal business entity below:
Export businesses are good ones to start in Hawaii, with the Hawaii State Trade Expansion Program offering assistance. Companies that cater to the roughly 10 million annual tourists, like Blue Hawaiian Helicopters, Hawaii Forest & Trail, Kipu Ranch Adventures, Alii Nui, and Kailani Tours Hawaii, should be able to find success in the state as it comes back from the pandemic fallout.
With our help, you can turn your business idea into your dream company in Hawaii.
The Hawaii Free Press reports that Hilo, Kahului, Waipahu, and Pearl City are good cities in which to start a business.
It costs $50 to register an LLC in Hawaii, though the fee was reduced to $25 for the year 2020.
The combined local and state tax burden per person in Hawaii was $4,396 in 2010, which is 10th highest in the U.S.