What is required to apply for a business license in Honolulu, Hawaii?
Honolulu, as a city and county, does not have a general business license. The city and county of Honolulu, as well as other cities and counties in Hawaii, including Maui County, all have special business licenses for certain types of businesses only. However, unlike most cities in other States on the mainland United States, the main business license in Hawaii is obtained from the State of Hawaii, not from the cities.
In Hawaii the main business license is actually a Tax license, called the General Excise Tax License. Anyone that wants to do business in any city in Hawaii, including Honolulu, whether operating as a corporation, LLC, or sole proprietor, is required to submit the General Excise Tax License Application to obtain a General Excise Tax Number. The General Excise Tax License application is call the “Basic Business Application” or “BB-1.” This is similar to obtaining a Federal Tax ID number with the U.S. Government, as this essentially registers your business with the Hawaii Department of Taxation so that General Excise Tax and other taxes can be collected from the company.
The form BB-1 can be obtained from the Department of Taxation in person at 830 Punchbowl Street, Honolulu, HI 96813-5094 or online at the Department of Taxation website: http://www6.hawaii.gov/tax/a1_1alphalist.htm. You can use the online application process using Business Express on the Hawaii State website: https://hbe.ehawaii.gov/BizEx/home.eb.
What is the General Excise Tax?
Unlike many states that only require sales tax on the retail sale of goods, Hawaii charges a general excise tax on all goods and services, whether from retail, wholesale, services, the rental of property, apartments, construction activities, and any other gross income from business activity. This type of tax is also known as a privilege tax. You are basically taxed on all gross income for the privilege of doing business in the State of Hawaii. Every business is thus required to register for a General Excise Tax Number and to file General Excise Tax Returns (on a periodic basis, depending on how much gross income your company makes).
What is a Use Tax?
The State of Hawaii also imposes a tax on business if the business uses tangible personal property or services in the State of Hawaii that it bought in another State and brought into Hawaii for use. For example, if you have a construction business and you buy equipment on the mainland U.S. and ship it to Hawaii to use in a construction project in Honolulu, you will likely need to pay use tax on that equipment in addition to General Excise Tax from gross income from such construction activities.
There are of course exceptions to the General Excise Tax and Use Tax rules, but as a general rule every business must pay them. An accountant or other tax professional should be consulted.
How much does a General Excise Tax License cost?
The basic license fee is $20.00. In addition, if you operate certain types of businesses you may need to pay some additional fees. For example if you are going to require a liquor license or are operating a vacation rental (Transient Accommodation).
What information should I have ready to fill in the Basic Business Application?
The form BB-1 asks for the following types of information:
- The type of business you will operate and application type. Most businesses will check General Excise Tax.
- The business or sole proprietor’s name
- Federal Tax ID Number of Social Security Number, as applicable.
- Type of entity, corporation, LLC, partnership, etc.
- The date the entity was organized and the state of organization. (This would apply, for example, if you had a California corporation that was doing business in Hawaii.)
- The date the business started.
- Accounting period (calendar or fiscal year)
- Accounting method (cash or accrual basis)
- Address, phone number, and email
- A list of all sole proprietors, partners (if a partnership), members (if an LLC), or corporate officers (if a corporation), along with the person's title, social security number, residential address, and phone number
- North American Industry Classification System (NAICS) code (obtained from www.census.gov)
- If you will have employees, you’ll also need to fill out the portion entitled “UC-1” in order to apply for Employer’s Withholding Tax (WH) and Unemployment Insurance (UI).
What special licenses or permits are required in Honolulu?
There are various professional and vocational licenses required by the State of Hawaii, such as for accountants, lawyers, chiropractors, dentists, optometrists, social workers, travel agencies, real estate agencies, and similar professions. For more information see http://hawaii.gov/dcca/pvl.
CLICK THE LINK TO YOUR CITY BELOW TO APPLY FOR A BUSINESS LICENSE