Starting a Business in Hawaii: A Step-by-Step Guide


Between the sand, sun, and clear blue waters, Hawaii is a natural paradise. But while it’s popular amongst vacationers looking to relax and unwind, it can also be a great place to start a business.

Hawaii’s economy mostly hinges on tourism, real estate, and the military, but the tropical state boasts an equally nurturing environment for small businesses across industries.[1] According to the SBA, small businesses made up 99.3% of all Hawaiian businesses in 2018.[2] That year saw a drop in the unemployment rate, too, which bodes well for the health of the state’s economy in general. In this guide, we’ll walk you through the eight steps required to start a business in Hawaii and contribute to this vibrant (and sunny!) entrepreneurial community.

How to Start a Business in Hawaii in 8 Steps

Follow these eight steps to start your business in Hawaii off on the right foot.

1. Write a Business Plan

Your business plan provides an actionable road map detailing how you’ll achieve both your short- and long-term goals. Business plans differ depending on your industry, and often, business plans change over time as you gain experience and insight running your business.

With that said, your preliminary business plan should aim to address at least the following key points:

  • A description of your product or service
  • Your price point
  • How your product or service differs from your competitors
  • Your ownership and management structure
  • A hiring plan, if necessary
  • A preliminary marketing plan
  • How much money you currently have, and how much startup funding you need
  • How long it will take to break even, and how long it will take to make a profit

Writing a business plan may seem daunting, but you’ll thank yourself for the effort in the long run. There are so many resources you can tap to help you with this process, too, so you don’t need to go it alone. Start by checking out our step-by-step guide on how to write a business plan. If you need more hands-on support, look into the Hawaii Small Business Development Center Network or your local SCORE chapter for free counseling and assistance—either with drafting your business plan or any other aspect of starting and running your business.

2. Choose a Business Name

If you haven’t already, now’s the time to come up with a business name. For fairly obvious reasons, your business name is crucially important. Your name is your audience’s first impression of your business, so it needs to be reflective of your offerings, your core values, and how you want your customers to feel when they take part in your products or services. And on a purely logistical level, you need an available business name in order to register your business with the state.

Once you’ve landed on a business name, conduct a business name search on the following platforms to ensure that your name is available for use:

Finally, check that your domain name is available through whichever business website platform you choose (we like Wix and Squarespace) and snatch it up. That way, you can get started on building your all-important business website (and generating leads) as soon as possible. We walk you through the entire name-choosing process in our guide on how to come up with a business name, as well as offer you some exercises to boost your creativity if you’re feeling stuck on this step.   

3. Determine Your Legal Structure

Along with a business name, you’ll need to have decided on a legal structure before you can formally register your business with the state. Your business entity type dictates your business’s ownership structure, how you’re taxed, your personal liability, and the process of registering itself.

The most common entity types are sole proprietorships, general partnerships, limited liability companies (LLCs), and corporations, though there are variations among these entity types, too. LLCs are among the most popular entity types among business owners generally, as they’re easy to form and maintain, and they provide the owner with personal liability protection in case their business is sued. LLC owners can also choose whether they’d like to be taxed as a corporation or an individual.

For more information, we’d recommend consulting our guide on the details, advantages, and disadvantages of the major types of business entities. The Hawaii Department of Commerce and Consumer Affairs (DCCA) also has a handy business entity comparison chart that breaks down each legal structure into their need-to-know information.

That said, there’s only so much information you can glean on your own. Because this step is so crucially important, we’d highly recommend consulting an attorney, accountant, or another business professional to help you determine which legal entity makes the most sense for your particular business. 

4. Register Your Business

With your business name and business entity at the ready, you can go ahead and register your business with the state’s Business Registration Division, Department of Commerce and Consumer Affairs. It should only take you a matter of minutes to register online. (Keep in mind that sole proprietorships aren’t required to register with the state.)

5. Understand Your Tax Obligations

Next, you’ll need to understand your tax obligations at a local, state, and federal level.

Start by applying for an employer identification number (EIN) through the IRS website. This nine-digit number works similarly to a social security number, since it’s how the federal government identifies your business for tax and other purposes. Sole proprietorships and LLCs with no employees aren’t required to apply for an EIN, but even these businesses will likely need this number to open a business bank account, hire employees, and apply for a business loan down the line. Applying for an EIN online is fast and easy, so there’s no reason why you shouldn’t complete this step from the get-go.

Then, you’ll need to gather relevant, state-level tax information from the Hawaii State Department of Taxation. All Hawaii businesses must obtain a general excise tax license, but you can use this portal to understand your other tax requirements according to your business entity type, industry, and business activities. Finally, you can contact your county government for information on real property taxes, which are leveraged at a local level.   

6. Obtain Permits, Licenses, and Business Insurance

Other than the general excise tax license, your business may need to obtain additional permits and licenses depending on your industry and business activities. Take a look at the DCCA’s list of issuing agencies you can contact for the appropriate licenses. This list also provides contact information for county governments, who can provide you with local permitting and licensing information.

Next, look into your business insurance options. The exact type of coverage you should get depends on your industry, business activities, and other risk factors particular to your business. Generally, we recommend that businesses think seriously about general liability insurance, which covers a range of common claims that may be leveraged against your business by a customer, vendor, or another company. 

Also, note that you’ll need to purchase unemployment insurance if you have employees. Certain businesses will need to purchase other types of employee coverage as well, like workers comp and disability insurance. You can find out about Hawaii employer responsibilities on the DCCA website.      

7. Separate Your Finances

Maintaining a separation between your personal and business finances is necessary for a few reasons. Firstly, that barrier keeps your personal assets safe in case your business runs into legal trouble; and on a logistical (but no less important) level, maintaining separate financial records makes your bookkeeping and accounting so much easier, both on you and/or your tax professional.

Opening a business bank account is the first step in creating this financial barrier. More specifically, we’d recommend opening a business checking account for easy access to your funds. (Of course, you should only use your business bank account to maintain your business’s revenue and expenses, not your own.)

It’s a good idea to open a business account with your personal bank, especially because banks tend to offer incentives for their consumer clients to open business accounts. But if you want to explore your options—which we always recommend—take a look at our guide to the best business bank accounts for small businesses. And remember that you’re not limited to brick-and-mortar banks. Opening an account with an online-only bank is a great option for people who are comfortable maintaining their money digitally.

Most of the time, applying for a business credit card is even easier than opening a business bank account: You can apply entirely online, while most brick-and-mortar banks require that you open an account in person; and you don’t technically need an EIN to get a business credit card (you can use your social security number instead). The barrier to entry is relatively low, too, because you can usually provide your personal financial information in lieu of your business’s. Here again, be sure to use your business credit card only for your business-related expenses, and practice healthy spending habits to boost your all-important credit score.

Finally, we highly recommend getting accounting software to manage your finances. These powerful platforms can automate, streamline, and even entirely outsource crucial accounting tasks that most of us aren’t trained to do on our own.     

8. Gather Startup Funding

Hopefully, you’ve put together a preliminary budget and financial forecast back in step one—and it’s likely that you came to the conclusion that you need outside funding to start and run your business.

We won’t discourage you from applying for a bank loan. But realistically, brand-new businesses have a very hard time getting their loan applications approved from traditional lending institutions, for the simple reason that new businesses don’t have the required financial track records. Instead, we’d recommend looking into more accessible forms of startup funding.

Other than tapping your personal savings, you may consider applying for a personal loan from your bank—which, if you have the credit score and financial history, is much more accessible than a business loan, and you can use it for business purposes. Depending on the type of business you’re starting and your financial needs, you may also borrow from your family and friends, look into crowdfunding, scour your network for angel investors or other forms of equity financing, or apply for non-traditional Kiva loans. It’s also a great idea to contact both the state’s and your county’s Chamber of Commerce to find out about government-sponsored grants and funding initiatives.

The Bottom Line

It’s safe to say that starting a business in Hawaii isn’t the easiest thing you’ll do in your life. But by following the eight steps we’ve outlined above, you’re setting up your business on a solid foundation, which will help you safely weather the storms that may arise as you continue to grow your business.

Article Sources:

  1. “The Ultimate Newcomer’s Guide to Hawaii
  2. “Hawaii Small Business Profile
Sally Lauckner
Editor-in-Chief at JustBusiness

Sally Lauckner

Sally Lauckner is the editor-in-chief of JustBusiness and the editorial director at Fundera.

Sally joined Fundera in 2018 and has almost 15 years of experience in print and online journalism. Previously she was the senior editor at SmartAsset—a Y Combinator-backed fintech startup that provides personal finance advice. There, she edited articles and data reports on topics including taxes, mortgages, banking, credit cards, investing, insurance, and retirement planning. She has also held various editorial roles at, Huffington Post, and Glamour magazine. Her work has also appeared in Marie Claire, Teen Vogue, Cosmopolitan, and ColoradoBiz magazines, as well as Yelp, SmallBizClub, and BizCrat.

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