Starting a Business in Hawaii

Step 1: Create a business plan

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.

To write your business plan:

1. State your Hawaii business idea: What problem does it solve or desire does it meet? This is the best way to start your business plan.
2. Conduct Market Research: Market research to find competitors and similar businesses in your area will help you find what separates you from them.
3. Commit to “SMART” goals (Specific, Measurable, Attainable, Realistic, and Timely): Advisors at the Hawaii SBDC can help with this and more. 
4. Envision what could go wrong: What if your supply chain is impacted? How will you keep providing your service or product so as not to lose customers?
5. Describe your ideal customer and be specific: Are they tourists? Residents? Other businesses? What age? Why are they coming to your business?
6. Identify costs: Think about both things and people here, as well as any business loans you may have in mind, because you’ll want to include a payback plan.
7. Choose a business location: “As important as thinking about your business,” says Kevin Kaji, first vice president and business banking manager at American Savings Bank, “is deciding on where your business location. Take the time to understand the different islands and the pros and cons for each.” Running an online business? That makes this part of your business plan easy.
8. Envision growth: With Hawaii ranking in the top 15% in the nation for startups surviving a year after launch, chances are you’ll be in business long enough to grow. Identify now how you might lead the business into that growth. 

Step 2: Choose a small business structure

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:

• Speed: Sole proprietorships and general partnerships are the quickest to start up. There’s no paperwork to file, and you can start up today.
• Liability: Sole proprietorships and general partnerships do not provide any liability protection for your personal assets if the business hits a snag, such as being sued. Both LLC and corporation structures do. They will separate your personal and business accounts.
• Tax implications: A sole proprietorship’s, general partnership’s, LLC’s, and S corp’s finances get reported on your personal income tax. A C corporation comes with the burdensome requirement of double taxation. That is, profits are taxed at the corporate level, and then again on members’ personal tax returns.

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.

Step 3: Identify your Hawaii business costs

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

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

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 Costs

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. 

Step 4: Select a business name

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.

Register Your Business Name

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.

Register Your Domain 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.

Consider a DBA Name

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.

Step 5: Register your Hawaii company, open financial accounts, and get business insurance

Once you’ve chosen a business structure, register your small business with the the State of Hawaii Department of Commerce and Consumer Affairs, Business Registration Division.

Get an EIN

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.

Business Bank Account

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.

Business Insurance and Licenses

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.

Step 6: Promote your Hawaii business

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.

Events and Print Materials

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! 

SEO and Social Media

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.

Google My Business

Also, register with Google My Business so that customers can find you once they hear about you.

Benefits of Starting a Business in Hawaii

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.

Start your Hawaii business now

Our formation services can help make it easier to start a business in Hawaii. Choose a legal business entity below:

• Hawaii Limited Liability Company (LLC): Use our Hawaii LLC service.
• Hawaii Corporation: Start and run your corporation with our help.

Examples of Good Businesses to Start in Hawaii

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.

Top Hawaii Cities to Form Businesses

Honolulu (Oahu): Capital and largest city, primary business hub. Diverse economy with strengths in tourism, healthcare, and retail. Supports a growing tech sector; major transportation and government hub.

Hilo (Big Island): Home to the University of Hawaii at Hilo. Economy supported by agriculture (tropical fruits, flowers) and renewable energy (geothermal power). Important educational and governmental center.

Kahului-Wailuku (Maui): Commercial and industrial hub of Maui. Strong sectors in retail, healthcare, and construction. Hosts main airport and port facilities, supporting local and tourist activities.

Kailua-Kona (Big Island): Known for Kona coffee production. Benefits from marine activities and sports tourism. Attractive destination for beach and outdoor activities.

Lihue (Kauai): Governmental and commercial center of Kauai. Mixed economy with tourism, retail, and agriculture. Location of the main airport on the island, supporting transportation and tourism.

Each city offers unique advantages, whether through its industrial strengths, strategic locations, or natural resources, making them suitable for various types of business ventures in Hawaii.