Forming your business entity in Delaware—specifically, a corporation—gives you a lot of flexibility, but you may still need to follow local laws depending on what state you operate in.
Specifically, if you do business in Hawaii, you need to register with the state. We’ll walk through the process and simplify it. But first, how can you tell whether you’re legally doing business in Hawaii?
When to register as doing business in Hawaii
Delaware C corps—and all other corporations formed outside of Hawaii—are referred to as “foreign” corporations by the State.
Hawaii statutes do not specifically define what is considered doing business in the state. However, Hawaii statutes provide that the following activities would not require you to register with the State:
- Defending or settling a lawsuit
- Having a bank account in the state
- Selling through independent contractors
When to register to collect sales tax in Hawaii
Every state has rules about when a company is required to pay sales tax. These are called sales tax nexus rules.
You can think of the nexus as a special version of that state’s border; if you perform certain business activities within that border, you fall into the state’s sales tax nexus, and you’re required to register for and collect state sales tax.
Typically, these actions take the form of buying and selling goods and services.
In Hawaii, the sales tax nexus rules only apply to sellers who sell physical goods or services to Hawaii residents.
Until 2018, selling or buying non-physical goods—like subscriptions to streaming services, SaaS memberships, etc.—did not, generally speaking, qualify you for sales tax nexus. After an important court ruling in 2018, that changed. Now, if you buy or sell non-physical goods or services in a state, you may fall within its sales tax nexus.
Hawaii sales tax nexus (physical goods and property)
If you have physical presence in Hawaii, then you will likely need to collect and remit sales tax. You may be physically present in a state if you have warehouses, retail spaces, or employees and/or representatives of the business in the state.
You will need to pay sales tax as long as you have physical presence regardless of any minimum thresholds. You can learn more about physical presence for sales tax purposes through the State's website.
Hawaii sales tax nexus (non-physical goods and property)
The new state sales tax laws applying to non-physical (ie. internet) sales allow you to qualify for sales tax nexus even without physical presence or goods. In Hawaii, you need to cross a certain threshold to qualify.
You will need to collect and remit sales tax if you do the following in the current or previous year:
- Collect $100,000 or more in retail sales from Hawaii; or
- Have 200 or more separate transactions into Hawaii
If you would like to take a deep dive, you can check out the State website.
As usual, this isn’t legal advice—just a guide. If you’re not 100% clear on whether you fall within Wyoming’s sales tax nexus, it’s best to confer with your legal counsel and/or an accountant that has expertise in Wyoming’s legal code and tax regulations.
How to register to do business in Hawaii
Select a name under which to do business. This doesn’t have to be the name you registered when incorporating in Delaware, but it can be.
Fill out an application. You’ll need to file a Application for Certificate of Authority for Foreign Corporation to the Hawaii Department of Commerce and Consumer Affairs.
Pay the fee. Now you pay the Hawaii Department of Commerce and Consumer Affairs a $50 filing fee.
Submit your Foreign Profit Corporation Application for Certificate of Authority.
Wait. Processing typically takes two to four weeks.
Once you’re approved to operate as a qualified foreign business in Wyoming, you’ll need to comply with certain requirements.
Compliance has a qualified business in Hawaii
To stay in compliance and continue legally doing business in Hawaii, you need to meet two requirements: maintaining a registered agent and filing your annual report. On top of that you will also need to pay your corporate income tax and a franchise tax.
Registered agent in Hawaii
Your registered agent in Hawaii is your point of contact with local authorities. If you don’t have a physical address for your company in Hawaii, it may be advantageous to find a registered agent to receive state notices on your behalf.
Foreign corporations are required to have a registered office in Hawaii. The office cannot be a P.O. box, rather it must be a physical address of your registered agent or a licensed registered agent service.
Your registered agent will forward any important information, such as business mail, to you. There are a number of firms that contract out registered agents. They typically cost $50 – $100 per year.
Annual reporting in Hawaii
Every two years, you must file a statement with the State, updating any changes to the company address or the composition of the Board and officers. You’ll include info like:
- The legal name of your business
- The name and address of your registered agent
- The names and addresses of board members, managers, and officers
Your annual report filing fee is $15.
Paying your corporate income tax
Hawaii has a corporate income tax. A corporate income tax is a direct tax imposed on the income of a corporation. For more information on paying your corporation income tax, please see the following guidance from Hawaii’s Department of Taxation.
Paying your franchise tax
Hawaii has a franchise tax. A franchise tax is imposed on the net worth of a corporation, levied in exchange for the privilege of doing business in a state. For more information on paying your corporation income tax, please see the following guidance from Hawaii’s Department of Taxation.
Registering for sales tax in Hawaii
If you meet the requirements to collect sales tax in Hawaii, you will need to register with the Hawaii Department of Taxation. Unlike most states, you will need to register with the department by mailing in relevant forms. Hawaii’s Department of Taxation provides the following information on registering with the state.
Hiring and paying employees in Hawaii
When you hire a new employee in Hawaii, federal and state laws require that you report new hires to the state within 20 days from the employee’s first day of work. You can report your new hires online.
Your payroll provider should be able to take care of paycheck withholdings, but it’s up to you to register as an employer with the State and set up an online employer account.
For a comprehensive guide of your responsibilities, Hawaii provides the following information.
The easiest way to register your business in Hawaii
To register your business in Hawaii, you’ve got to keep track of a lot of moving parts. Failing to file the right forms, provide the right information, or stay on top of compliance laws can lead to serious headaches.
Capbase makes it easy. When you incorporate your Delaware corporation on Capbase, we will generate the required information needed to register to do business in Hawaii and keep you up to date on any required filings.
The compliance calendar inside your Capbase account will notify you of upcoming fees, reporting, or other requirements, so you can keep your startup in good standing with Hawaii state officials. Try Capbase now.
Written by Capbase Staff
Capbase is a team of designers, engineers, and business professionals spread across 6 time zones on 3 continents united by our passion for dogs, coffee, and great software.
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