Sole Proprietorship in Hawaii (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

A sole proprietorship in Hawaii needs no state formation filing, but you must get a $20 General Excise Tax (GET) license from the Department of Taxation before doing business. GET is 4% of gross business income plus a county surcharge of up to 0.5%. Profit is reported on your Hawaii Form N-11 individual return and carries 15.3% federal self-employment tax.

What a Sole Proprietorship Is in Hawaii

A sole proprietorship is an unincorporated business owned by one person. It is the default structure everywhere, including Hawaii: begin selling goods or services on your own and you are automatically a sole proprietor. There is no legal wall between you and the business, so you receive all of the profit directly and are personally responsible for the business's debts, contracts, and liabilities. That simplicity is the main appeal — and the lack of a liability shield is the main drawback.

Because a sole proprietorship is not a separate legal entity, it does not file organizational documents with the state the way a corporation or a limited liability company does. There is no "sole proprietor certificate." What Hawaii does require is tax registration, and the state's tax system is unusual: instead of a retail sales tax, Hawaii imposes the General Excise Tax on business gross income. If you want liability protection, compare a sole proprietorship with an LLC and read our S-Corp vs LLC guide; the glossary defines the terms used here.

No State Formation Filing Required

Hawaii has no registration form or fee that creates a sole proprietorship. You will not find a sole-proprietor filing in the Department of Commerce and Consumer Affairs (DCCA) Business Registration Division, which handles entities such as LLCs and corporations. Forming an Hawaii LLC is a different, deliberate step that requires filing Articles of Organization and appointing an Hawaii registered agent.

What every sole proprietor must handle are the obligations that apply to any business: a General Excise Tax license, a trade-name registration if you use a business name, an EIN in certain situations, and any local or professional licenses. None of these make your business a separate entity; they simply let you operate lawfully and pay the taxes Hawaii requires. Each is covered in the sections below.

Registering a Trade Name in Hawaii

If you do business under your own full legal name, Hawaii does not require any name filing. If you use a fictitious or assumed name — a DBA — you may register that trade name with the DCCA Business Registration Division. Trade-name registration in Hawaii is generally optional for sole proprietors, but registering gives you a public record of the name and helps establish your use of it. It does not create a separate business or provide liability protection.

A registered trade name is also not the same as a trademark and does not give you exclusive statewide rights to a brand. To protect a brand name against competitors, look at a state or federal trademark registration. For the specific form, fee, and renewal period, confirm the current details with the DCCA and see our overview of Hawaii DBA filing.

EIN: When You Need One

An Employer Identification Number (EIN) is a free federal tax ID from the IRS. A sole proprietor without employees can usually use their Social Security number, making an EIN optional. You must obtain an EIN if you hire employees, file employment or certain excise tax returns, or establish a qualified retirement plan. Many banks also require an EIN to open a business account, and using one keeps your Social Security number off forms like the W-9.

Applying is free through the IRS online EIN assistant, and you receive the number immediately; avoid third-party sites that charge for it. Non-U.S. individuals without a Social Security number should review the IRS application rules and our guide to the ITIN. For a full walkthrough, read how to get an EIN.

Hawaii General Excise Tax (GET) License

Hawaii's signature requirement for any business is the General Excise Tax license. GET is not a sales tax added to the customer's bill — it is a tax on the business's gross income for the privilege of doing business in Hawaii. Almost every sole proprietor selling goods or services needs a GET license before making sales. You register on Form BB-1 with the Department of Taxation and pay a one-time $20 license fee.

The state GET rate on most retail activity is 4%, and counties may add a surcharge of up to 0.5%, so the effective rate reaches 4.5% in places like Oahu. Businesses commonly "pass on" the tax by adding a visible percentage to prices, but legally the tax is owed by the business on its gross income whether or not it is passed on. You file periodic GET returns (monthly, quarterly, or semiannually, depending on liability) plus an annual reconciliation. See business tax and Hawaii LLC tax filing for how GET interacts with entity taxes.

Taxes: Self-Employment and Hawaii Income Tax

A sole proprietorship is a pass-through for income tax: the business pays no separate federal income tax. You report business income and expenses on Schedule C with your Form 1040, and the net profit flows to your personal return. On that profit you owe self-employment tax of 15.3% — 12.4% Social Security up to the annual wage base plus 2.9% Medicare — figured on Schedule SE, half of which is deductible when computing adjusted gross income.

Because no employer withholds for you, you generally make quarterly estimated payments to the IRS (Form 1040-ES). Hawaii also taxes the income on your individual return, Form N-11, and expects estimated payments when withholding does not cover your liability. Remember that GET is separate from and in addition to income tax. To model the total burden and see how an S-corporation election could reduce self-employment tax as you grow, use the self-employment tax calculator and review S-corp election mechanics.

Liability and Moving to an LLC

The core trade-off is liability. With no legal separation, a business debt or lawsuit is a claim against you personally, putting your home, savings, and other assets at risk. A sole proprietorship also cannot be sold as an entity and ends when you stop operating. For a small, low-risk venture, the simplicity is often worth it. As revenue, contracts, employees, or exposure grow, many owners convert to an Hawaii LLC for a liability shield and cleaner finances.

Converting means forming the LLC, moving accounts and contracts into it, and adopting an operating agreement. Your GET license, EIN, and income-tax duties continue in the new structure. Before choosing a name, run the Hawaii business entity search, and compare a single-member LLC setup with staying a sole proprietor.

Frequently Asked Questions

Do you register a sole proprietorship with the state in Hawaii?

There is no formation filing that creates a sole proprietorship. But before doing business you must get a General Excise Tax license from the Department of Taxation, and you may register a trade name with the DCCA if you use a business name other than your own.

How much is a Hawaii GET license?

The one-time GET license fee is $20, paid to the Department of Taxation when you register on Form BB-1. Nearly every business operating in Hawaii needs a GET license before making sales.

What is Hawaii's General Excise Tax rate?

The state GET rate on most retail income is 4%. Counties may add up to 0.5%, making the effective rate as high as 4.5% (for example, on Oahu). GET is levied on the business, not added as a separate sales tax.

Does a Hawaii sole proprietor need an EIN?

A sole proprietor with no employees can use a Social Security number. You must get a free EIN if you hire employees, file certain excise or pension returns, or a bank requires one for a business account.

How is a Hawaii sole proprietorship taxed?

Profit is reported on federal Schedule C with 15.3% self-employment tax on Schedule SE, and on your Hawaii Form N-11 individual return. You also file periodic GET returns on your gross business income.

Related

• Sole proprietorship (cluster hub)
• How to form an LLC in Hawaii
• Hawaii DBA filing
• How to get an EIN
• Business tax basics
• Sole proprietorship in Arkansas (sibling)
• Sole proprietorship in Indiana (sibling)

Sources

1. IRS — Sole Proprietorships.
2. IRS — About Schedule C (Form 1040).
3. IRS — Self-Employment Tax (15.3%).
4. IRS — About Schedule SE (Form 1040).
5. IRS — Get an Employer Identification Number.
6. IRS — Do You Need an EIN?
7. IRS — Estimated Taxes.
8. Hawaii Department of Taxation — General Excise Tax (GET) (4% rate; license).
9. Hawaii Department of Taxation — Form BB-1 Basic Business Application ($20 GET license).
10. Hawaii Department of Taxation — County Surcharge on GET (up to 0.5%).
11. Hawaii Department of Taxation — Individual Income Tax (Form N-11).
12. Hawaii DCCA — Trade Name (DBA) Registration.
13. Hawaii Revised Statutes — Chapter 237, General Excise Tax Law (via Justia).
14. U.S. Small Business Administration — Choose a Business Structure.
15. IRS — About Form 1040-ES (estimated tax).

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and rates change; verify current requirements with the Hawaii Department of Taxation, the DCCA, and the IRS before acting.