Sole Proprietorship in Hawaii: How to Start One

A sole proprietorship is the default business structure in Hawaii: if you start selling goods or services under your own name without filing anything with the state, you are already operating as a sole proprietor. There is no formation document to file and no fee to "become" one. What you do need to handle, before you take your first payment, are a few registrations that apply to sole proprietors specifically: a trade name filing if you're using a business name other than your own legal name, and a General Excise Tax (GET) license, which Hawaii requires of essentially everyone doing business in the state. This guide walks through exactly what a Hawaii sole proprietor needs to set up, in order, with actual costs and where to file.

This article is informational only. It is not legal or tax advice. For anything involving liability exposure, contracts, or your specific tax situation, talk to a Hawaii-licensed attorney or a CPA before you commit to a structure or a filing.

What Is a Sole Proprietorship in Hawaii?

A sole proprietorship is an unincorporated business owned and run by one person, where the owner and the business are legally the same entity. There is no separation between your personal assets and your business assets, which means if the business is sued or can't pay a debt, your personal bank accounts, car, or home could be at risk. This is the main tradeoff against forming an LLC, which does not require the same kind of active state filing to create but shields personal assets in most cases.

Because Hawaii does not require you to register a sole proprietorship with the Department of Commerce and Consumer Affairs, Business Registration Division (BREG) the way it requires LLCs and corporations to file Articles of Organization or Incorporation, a sole proprietorship in Hawaii is largely defined by what you do to operate legally, not by a single filing. That includes naming, tax registration, and any licenses tied to your specific industry or county.

What You'll Need Before You Start

• A business name. You can operate under your own legal name at no cost, or choose a trade name (also called a "doing business as" or DBA name).
• Trade Name Registration (Form T-1), if you're using a name other than your own, filed with BREG for $50.00 plus a $1.00 State Archives fee.
• A federal Employer Identification Number (EIN) from the IRS, free to obtain, needed if you plan to hire employees or if you'd rather not put your Social Security number on business paperwork. Sole proprietors with no employees can generally use their SSN instead.
• A Hawaii General Excise Tax (GET) license, a one-time $20 fee through the Hawaii Department of Taxation, required before you conduct any business activity in the state.
• Any professional, vocational, or county-level permits that apply to your specific trade (contracting, food service, cosmetology, and similar fields commonly require these).
• A separate business bank account, which is not legally required for a sole proprietorship but is strongly recommended.

Step-by-Step: How to Start a Sole Proprietorship in Hawaii

1. Choose your business name

   Decide whether you'll operate under your own full legal name or a trade name. If you use your own name exactly as it appears on your identification (for example, "Keola Kahale" with no additional words), you generally do not need to register a trade name. The moment you add anything to it, such as "Keola Kahale Landscaping," or invent a name entirely, you're using a trade name and need to register it. Before you settle on a name, run it through BREG's free business name search at Hawaii Business Express to check that nothing confusingly similar is already registered.

2. Register your trade name, if you need one

   File Form T-1, Trade Name Registration, with the Hawaii Department of Commerce and Consumer Affairs, Business Registration Division. The fee is $50.00 plus a $1.00 State Archives preservation fee, for $51.00 total. An optional $20.00 expedited review fee is normally available, though BREG has noted that expedited processing may not be available during its transition to a new registration portal, so confirm current availability before you count on faster turnaround. You can file online through Hawaii Business Express or find the form and instructions at cca.hawaii.gov/breg/registration/trade. A registered trade name is valid for five years and must be renewed; the Department does not send renewal reminders, so mark your own calendar.

3. Get an EIN from the IRS (if you need one)

   If you plan to hire even one employee, or you simply prefer not to use your Social Security number for business banking and vendor forms, apply for a free EIN directly through the IRS. A sole proprietor with no employees is not required to have one, but many banks ask for it anyway when opening a business account.

4. Apply for your Hawaii General Excise Tax (GET) license

   This is the step sole proprietors most often overlook, because Hawaii has no general-purpose state business license and no sales tax, so it's easy to assume there's nothing to register. There is: the GET license, filed on Form BB-1 or through Hawaii Tax Online, costs a one-time $20 and applies to nearly everyone doing business in the state, sole proprietors included. Processing is immediate if you apply in person, typically 5 to 7 business days through Hawaii Tax Online, and 4 to 6 weeks if you file by mail. Apply at tax.hawaii.gov/get. Do not take your first payment from a customer before this is in place.

5. Check for county and industry-specific permits

   Depending on what you do and where you do it (Honolulu, Hawaii, Kauai, or Maui County), you may need additional permits: a home occupation permit if you're running the business from a residence, health permits for food-related work, or a professional or vocational license for regulated trades. These are separate from BREG and DOTAX filings and vary by county and profession, so check with your county planning department and, if applicable, the relevant state licensing board.

6. Open a business bank account

   Nothing in Hawaii law requires a sole proprietor to keep a separate business account, but doing so makes bookkeeping, tax filing, and any future move to an LLC far simpler. Most banks will ask for your trade name registration (if you have one) and your EIN or SSN to open the account.

7. Understand your ongoing tax obligations

   Once you have your GET license, you're required to file periodic GET returns (monthly, quarterly, or semiannually depending on your tax liability) and an annual GET return, even in a period where you had no income. GET is charged on your gross income or gross receipts, not passed to the customer the way sales tax is, at 4.0 percent state rate plus a 0.5 percent county surcharge for a combined 4.5 percent on most retail goods and services, 0.5 percent on wholesaling, and 0.15 percent on insurance commissions. If you itemize GET as a separate line on a customer's invoice, the maximum amount you can visibly pass on is 4.7120 percent. As a sole proprietor, your business income also flows through to your personal Hawaii income tax return; for 2025, single and married-filing-separate brackets ran from 1.40 percent up to 11.00 percent depending on taxable income, but confirm the current year's brackets with the Hawaii Department of Taxation or your CPA before filing.

8. Consider insurance and a liability plan

   Because a sole proprietorship offers no legal separation between you and the business, consider general liability insurance, and professional liability coverage if your work carries that kind of risk. This won't change your registration requirements, but it addresses the main downside of operating without an LLC or corporation.

Tips and Common Mistakes to Avoid

• Selling before you have a GET license. Because Hawaii has no sales tax and no general state business license, new sole proprietors sometimes assume there's no tax registration step at all. The GET license is the one that's easy to miss, and it's required before you conduct business, not after your first good month.
• Forgetting the trade name renewal. A T-1 registration lasts five years, and BREG does not send a reminder when it's about to lapse. If your registration expires while you're still using the name, someone else could register it.
• Skipping the free name search. Checking name availability through Hawaii Business Express before you print business cards or build a website avoids the cost and hassle of rebranding after the fact.
• Mixing personal and business money. Since a sole proprietorship provides no asset separation to begin with, commingling funds makes bookkeeping and tax prep harder and can create real headaches if you're ever audited or sued.
• Assuming a sole proprietorship is your only option. If you're taking on any real liability risk, it's worth comparing the cost of forming a Hawaii LLC (a $50 filing fee plus a $15 annual report) against the personal asset protection it provides, rather than defaulting to a sole proprietorship purely because it requires less initial paperwork.

What You Can Generally Expect

If you're using your own legal name and don't plan to hire anyone, you can typically be operating legally in Hawaii within about a week, largely limited by how quickly your GET license processes through Hawaii Tax Online. If you're registering a trade name as well, factor in the processing time for Form T-1 on top of that, since BREG has not published a standard turnaround for routine filings at this time. Actual timelines can vary based on filing method, current processing volume at BREG and DOTAX, and whether your specific business type requires additional county or professional licensing. None of this guarantees a specific approval date, so it's worth applying with some buffer before you intend to start taking customers.

Sole Proprietorship vs. LLC in Hawaii: A Quick Note

A sole proprietorship costs less to start (potentially $20 to $71 total, depending on whether you register a trade name) and has no annual report requirement of its own. An LLC costs more upfront ($50 to file Articles of Organization) and requires a $15 annual report each year, but it separates your personal assets from business liabilities in most circumstances. Many Hawaii sole proprietors start this way to test a business idea with minimal cost, then convert to an LLC once revenue or risk grows. That conversion is a separate filing process and is worth discussing with an attorney or CPA when the time comes.

Where to Get Help

The Hawaii Small Business Development Center (Hawaii SBDC) offers free, one-on-one advising for new business owners, including help thinking through structure and registration. The SBA's Hawaii District Office is another free resource for general startup guidance. For anything specific to your liability exposure, contracts, or tax position, work directly with a Hawaii-licensed attorney or CPA rather than relying on general guidance like this article.

This article is provided for general informational purposes only and does not constitute legal or tax advice. Business formation requirements, fees, and processing times can change; verify current details directly with the Hawaii Department of Commerce and Consumer Affairs, Business Registration Division, and the Hawaii Department of Taxation, and consult a qualified attorney or CPA for advice specific to your situation.