Steps to Start a Business in Hawaii
Start a Hawaii business to turn your business idea into a career. Below is a step-by-step guide for starting a business. Business formation services can help you to start, manage and grow your business. If you to form an LLC you should visit our list of the best LLC services.
Are you ready to start your Hawaii business? This checklist will help you get started on your adventure in Hawaii.
Step 1: Make a business plan
Are you ready to start your entrepreneurial journey? Before you start your journey down the startup path, it is important to first create a business plan. This plan will be required by lenders, investors, and grantors if you need financial assistance. This plan will serve as your guide when you are faced with difficult situations, so don’t skimp on it.
To write your business plan:
- Describe your Hawaii business idea. What problem is it solving or what do you want it to accomplish? This is the best way for you to begin your business plan.
- Conduct market research: This will allow you to identify what sets you apart from your competitors.
- Commit to “SMART” goals (Specific Measurable Attainable Realistic and Timely). Advisors at Hawaii SBDC can assist with this and other matters.
- Imagine what could go wrong: What happens if your supply chain gets disrupted? How can you continue to provide your product or service so that customers don’t lose it?
- Be specific about your ideal customer: Are they tourists? Residents? What about other businesses? What is their age? What age are they?
- Identify the costs: You’ll need to consider both people and things, as well any business loans that you might have.
- Selecting a location for your business: Kevin Kaji, American Savings Bank’s first vice president, says that it is as important as thinking about the business. It is important to take the time to learn about the differences and their pros and cons. This will make this part of your business plan much easier.
- Imagine growth: Hawaii ranks among the top 15% of the country for startups that survive one year. This means you can expect to be in business for a long time and grow. Now think about how you can lead your business to that growth.
Step 2: Select a small business structure
You will need to register the business with the IRS and Hawaii. The most common entity types are sole proprietorships and general partnerships, limited liability corporations ( LLCs), as well as corporations (S corpora or C corp).
When choosing a structure, the following are important considerations:
- Speed: General partnerships and sole proprietorships are the fastest to set up. You don’t need to fill out paperwork and can get started today.
- Liability: General partnerships and sole proprietorships do not offer any protection for personal assets in the event that the business is sued. Both LLCs and corporations have this protection. They can be used to separate your business and personal accounts.
- Tax implications A sole proprietorship, general partnership, LLC, and S corp finances are reported on your personal income tax. Double taxation is a burdensome requirement for a C corporation. Profits are taxed at both the corporate and individual levels.
Small businesses often choose to form an LLC because they have liability protection for their personal assets, unlike sole proprietorships. You will have separate expenses for personal and business purposes.
This type of business entity is exempt from double taxation, and can be filed online for your Hawaii LLC. You can get advice from the Hawaii DCC Professional and Vocational Licensing Division about what permits and business licenses may be needed for your business.
Step 3: Determine the cost of your Hawaii business
It is important to count your startup costs before you spend any money. It is helpful to consider costs in three different categories: fixed, ongoing, and one-time.
No One-Time Charges
Once-off costs are rare. One-time expenses include the design of a logo, website construction, prototyping, and purchasing office furniture.
Fixed costs
Fixed costs are something that happens regularly. However, they don’t change from one month to the next regardless of how much you sell. These include your accountant and attorney, rent, or business insurance.
Forgoing costs
For ongoing expenses, you will need to do more detailed planning and analysis. They can change depending on the business you have, but they are almost always there. Consider seasonal labor, product creation costs and shipping.
Step 4: Choose a business name
A business name is essential. Some entrepreneurs start the journey with a name in mind. Some entrepreneurs need to make the right choice. If you fall into this category, get out your whiteboard and markers. Write words about your industry, Hawaii, your name and the products that you will offer.
Register your business name
Take a look at the content you have written. See if there are any combinations that make it more understandable, memorable, or unique. Did some of your ideas jump out at you? Great! Check to see if they are registered at Hawaii Business Express. It is important not to be sued by anyone already using the name, or lose customers to someone who uses the same name.
Register your domain name
You can check the status of your name online if it isn’t already registered in Hawaii. Is there a website address that matches your business name? Register the domain to ensure that no one else is able to take it. Are the social media handles for this domain already in use? If they are, don’t be alarmed. You might be able to come up with a different name that you can use across social media.
A DBA Name is worth considering
You can create a “doing company as” or DBA name to do business in a different name. Although it is not required in Hawaii like other states, it can be helpful to discourage others from using the name. Hawaii’s DBA is also known as a “tradename” Hawaii. It is acquired by adopting it and then using it.
Step 5: Register your Hawaii business, open financial accounts and obtain business insurance
After you have chosen a business structure, register the small business with the State of Hawaii Department of Commerce and Consumer Affairs Business Registration Division.
Register for an EIN
Apply for a federal employer ID number (EIN) to obtain your federal tax ID, which you can use to hire employees. An EIN may be required to open a bank account for your business.
Notice: You can use your social safety number as your tax ID if you are a sole proprietor. However, most experts recommend that you obtain an EIN to avoid identity theft.
Business Bank Account
To avoid combining personal and business finances, create a business bank account. This can cause a lot of confusion when it comes to tax time, making it difficult for you see the actual income and expenses of your business. You may lose your liability protections, which can make your personal assets more vulnerable.
You might also want to open a business credit account at this point. This will allow you to make small purchases and build your credit.
Licenses and insurance for business
To find out what coverage you might need, speak to Hawaii’s business insurance agents.
To find out which permits and licenses are required for your business, you can consult the Department of Commerce and Consumer Affairs.
Step 6: Promote your Hawaii business
Many agencies can help you reach your local audience in Hawaii. They even offer free marketing support. It’s important to consider where your customers are located and to go there.
Events and printed materials
This could mean organizing special events, handing out business cards, posting flyers or hiring a plane for a sign trailing your business to beachgoers. Use your imagination!
SEO and Social Media
Also, think about how your business will be promoted online. 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. Keep track of your customers’ emails and send them helpful communications to keep your product(s), or any other products, top of mind.
Google My Business
Register with Google My Business to make it easy for customers to find you after they hear about your business.
The benefits of starting a business in Hawaii
The Hawaii Small Business Development Centers and SCORE chapters on Oahu, Maui and Hawaii offer local assistance to entrepreneurs. Since 2002, the Hawaii Angels have invested more than $50 million in 100+ businesses in the state.
The Hawaii Venture Capital Association provides capital to startups and recognizes outstanding entrepreneurs at its annual awards banquet. The Small Business Administration (SBA) provides assistance to veteran-owned and women-owned businesses.
Although Hawaii’s cost of living is higher than other areas, fees for incorporating a new business are much lower than those on the mainland.
Here are some examples of good businesses to start in Hawaii
The Hawaii State Trade Expansion Program offers assistance and support for export businesses. As the state recovers from the pandemic, companies that cater to Hawaii’s approximately 10 million tourists annually, such as Blue Hawaiian Helicopters and Hawaii Forest & Trail, Kipu Ranch Adventures and Alii Nui, Kailani Tours Hawaii, Kailani Tours Hawaii, and Hawaii Forest & Trail, will be able to succeed.
Hawaii Business FAQs
- Is there a great place to start a new business in Hawaii? According to the Hawaii Free Press, Hilo, Kahului and Waipahu are great cities for starting a business.
- What is the cost of opening an LLC in Hawaii? Registering an LLC in Hawaii costs $50. However, the fee has been reduced to $25 for 2020.
- Are Hawaii’s taxes high? In 2010, Hawaii’s combined state and local tax burden was $4,396. This is the 10th highest in the U.S.
