How do I collect sales tax legally?

How to Collect Sales Tax Legally in Hawaii

In Hawaii, sales tax is referred to as the General Excise Tax (GET). It applies to most business activities, including retail sales, services, and rentals. To collect GET legally, follow these operational steps:

Register for a GET License

• Apply for a GET License: Before collecting GET, register your business with the Hawaii Department of Taxation to obtain a GET license number.
• Provide Accurate Business Information: Ensure your business name, address, and type of activities are correctly reported during registration.

Collecting and Reporting GET

• Include GET in Your Pricing: GET is generally calculated on the gross income from sales or services. Decide whether to include GET in the listed price or add it separately.
• Charge the Correct Rate: As of 2026, the statewide GET rate is 4%, with an additional 0.5% surcharge in Honolulu County. Confirm current rates regularly to ensure compliance.
• Issue Proper Receipts: Provide customers with receipts showing the GET amount collected when applicable.
• Maintain Detailed Records: Keep thorough sales and GET collection records for bookkeeping and compliance.

Filing and Paying GET

• File Periodic Returns: Submit GET returns monthly, quarterly, or semiannually based on your business size and tax liability.
• Pay Collected Taxes on Time: Remit the collected GET to the Department of Taxation by the due dates to avoid penalties.
• Automate Reporting When Possible: Use accounting or tax software to streamline GET calculations, recordkeeping, and filing.

Additional Operational Considerations

• Understand Exemptions and Deductions: Certain transactions may be exempt from GET or qualify for deductions. Keep updated on these to optimize tax compliance.
• Coordinate with Payroll and Bookkeeping: Ensure your tax collection process aligns with overall financial recordkeeping and payroll systems.
• Consult the Hawaii Department of Taxation Website: Regularly review official resources for updates on rates, filing procedures, and compliance requirements.