What taxes apply to a new small business?

Taxes for New Small Businesses in Hawaii

When starting a small business in Hawaii, understanding the tax obligations is essential for smooth operations and compliance. Here are the key taxes to consider:

• General Excise Tax (GET): Hawaii imposes a General Excise Tax on all business income. This tax applies to nearly all business activities, including sales, services, and rentals. The current rate varies by county but generally ranges around 4% to 4.5%. You must register for a GET license and file returns regularly.
• Use Tax: If your business purchases goods or services from outside Hawaii without paying GET, you may owe a use tax. This helps level the playing field between local and out-of-state suppliers.
• Income Tax: Businesses operating as corporations, partnerships, or sole proprietors must file state income tax returns. Hawaii has a progressive income tax system with rates depending on net income and business structure. Keep accurate bookkeeping to support income reporting.
• Employment Taxes: If you hire employees, you must handle payroll taxes including withholding state income tax, unemployment insurance contributions, and workers’ compensation insurance. Register with the Hawaii Department of Labor and Industrial Relations for unemployment insurance.
• Transient Accommodations Tax (TAT): If your business involves short-term lodging rentals, you must collect and remit the TAT. This applies to hotels, vacation rentals, and similar accommodations.

Operational Recommendations

• Register Early: Obtain your GET license and register for payroll taxes before starting operations to avoid penalties.
• Use Accounting Software: Automate tax calculations, recordkeeping, and filing deadlines to maintain compliance.
• Consult State Resources: Use the Hawaii Department of Taxation website for the latest rates, forms, and filing schedules. As of 2026, tax rates and rules may change.
• Maintain Accurate Records: Keep detailed sales, income, and payroll records to support tax filings and audits.