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Starting and Growing a Business in Hawaiʻi

Want to Start a Business?

The decision to start a business is an exciting one! But it’s often a decision that brings a lot of questions as well. 

The Business Development and Support Division of the Department of Business Economic Development and Tourism (DBEDT) is here to assist you by providing information and links to available resources that all small businesses should become familiar with.

Perhaps the best place to start is with the State of Hawaiʻi Business Action Center (BAC), a division within the Department of Commerce and Consumer Affairs (DCCA). For over 20 years the BAC has assisted entrepreneurs with personal help needed to start a new business in Hawaiʻi. They can help you with ensuring your business is up to date with registration, taxes, and other filing requirements. To streamline the process, visit the BAC website for more information.

The staff at the BAC work closely with other State Departments such as the DCCA, Department of Taxation, Department of Labor and Industrial Relations, and Hawaiʻi Compliance Express.They are experts on the regulatory laws of Hawaiʻi and can assist you in ensuring your business is compliant. Using their services allows you to focus on the operations of your business.

Once you’re ready to start a business, you’ll need to decide on what business structure is right for you. Each structure has its pros and cons and it’s important to understand them. While we’ve provided a short description of the most common types of business structures below, it may also be in your best interest to discuss this issue with an attorney who specializes in business set-up.

Sole Proprietorship

Perhaps the simplest and least expensive form of business structure, it’s the type of business favored by the majority of new businesses. Under a sole proprietorship, the owner operates the business, is liable for all of the business debts, can freely transfer all or part of the business, and can report profit and loss on his/her personal income taxes.

General Partnership

Similar to sole proprietorships, general partnerships are relatively easy and inexpensive to form. Partnerships require an agreement between two or more owners of a business. Profits and losses are split amongst the owners and each owner is responsible for company debt. Partnerships do not file taxes as a business (they are required to file an informational return with the IRS), but the owners of the business will report the profits and losses on their personal tax returns. Short term partnerships are also known as joint ventures.

Limited Liability Company (LLC)

An LLC is generally considered to be advantageous for a small business because it combines the limited personal liability feature of a corporation with the tax advantages of a partnership and a sole proprietorship. Profits and losses can be passed through the company to its members or the LLC can elect to be taxed as a corporation. LLCs do not have stock and are not required to observe corporate formalities. Owners are called members, and the LLC is managed by these members or by appointed managers.

To create an LLC in Hawaiʻi, you must file Articles Of Organization with the State using From LLC1.

See information on forming an LLC in Hawaiʻi.

C Corporation (Inc. or Ltd.)

A C Corporation is a more complex business structure that requires additional start-up costs as compared to other types of businesses. A corporation is a unique legal entity that is completely separate from its owners, who own stocks or shares of the company. Corporations can be formed as for-profit entities or non-profit entities and are subject to additional licensing fees and government regulations than other types of business structures. It is important to understand that there are different types of stocks that a corporation can issue. For instance, there may be stocks issued that provide for voting rights or stocks that only provide ownership and profit rights. Articles of Incorporation should provide information on the number of allowable shares that a corporation may issue and the rights that ownership of those shares provide.

Under a C Corporation, shareholders are not personally liable for corporate obligations and debts unless corporate formalities have not been followed: such formalities provide evidence that the corporation is a separate legal entity from its shareholders. Failure to follow corporate formalities may result in shareholders being held liable for the corporation’s debts. Corporate formalities include:

  • Issuing stock certificates
  • Holding annual meetings
  • Recording the minutes of the meetings
  • Electing directors or ratifying the status of existing directors


As corporations are subject to stricter oversight and greater government regulations, corporations should always employ the services of qualified corporate attorneys.

See how to register a corporation with the State of Hawaiʻi.

Sub Chapter S Corporation (Inc. or Ltd.)

In many ways, this business structure is similar to a C Corporation, but it reduces the tax burden. If a corporation qualifies with the IRS for an S status, it is taxed like a partnership and the corporation itself is not taxed. Income flows through the corporation to the shareholders who then report the income on their individual tax returns.

See a comparison of issues related to the differences between specific business structures.

Remember to consider all the factors listed when determining which business structure is right for you.

A good business plan is a road map for your business. And like any good road map, it should provide you with quality directions to where you’d like your business to go. The difference in business is that you may have to change how you get to where you want to go. In that case, you may need to make changes to your business plan. And that’s OK! It’s your business. A business plan should be dynamic and change as your business matures. It should serve a purpose and tell a story that provides insight into what your goals are and how you plan to achieve them. So how do you write a business plan and what should you include?

Executive Summary: a brief overview of your business. The executive summary should include a mission statement, what your business does, who owns/runs your business, and where your business is located.

Company Description: this should be more detailed than the executive summary. When describing your business, you should focus on the audience your company will serve, what will make your company better than other existing businesses and highlight any key personnel that will contribute to your success. Don’t be ashamed to highlight why your business will be great!

Market Research: the environment you will be operating in. The reader of your business plan will want to see that you have a good understanding of the existing market you’re entering. You should know who your competitors are and what makes them either successful or unsuccessful. The reader will also want to know what your business will do that will make it better than your competitors.

Organization: who operates/manages your business and how is your business structured. Let the reader know what type of business you have (LLC, C Corp, partnership, etc.) and who has control over the business. When providing information on management, highlight special qualifications an experience that indicate the potential for success. You may want to include an organization chart that shows the overall management structure.

Service or Product: what is it that your business will do. You obviously have a good idea of what services you will provide or products you will produce when you start your business. Here you will provide greater detail on that service or product. Include any patents you may have or new methods you will bring to the market for providing a service.

Marketing: how you reach your customers. You can’t survive in business without customers. Here you will describe what methods you will use to attract and retain clients. What strategy will you use and how might it change over time?

Funding Request: money! If you’re writing a business plan with the intent of seeking financial investment or a loan you will need to be specific. How much money are you asking for? What are the terms/length of the loan you’re seeking? What equity are you exchanging in return for investment? How will the money be used? What existing capital do you currently have to act as collateral? What is your financial outlook over the next year, 3 years, 5 years? The shorter the terms of a loan, the more detailed you should be: consider detailing your financial outlook by quarter or even monthly. A prospective investor or lending institution will want to know that you are a good option for their money!

There are organizations that will assist you in writing and reviewing your business plan. The Small Business Administration (SBA) and the Small Business Development Center (SBDC) are two excellent resources you should seek out. They both employ staff that are experienced in helping small businesses and are willing to help.

Chances are, that during the early phases of your business, you’ll need access to additional sources of funding. Where do you go to find those sources?

The Small Business Administration (SBA), while not providing a lending service itself, has worked with local financial institutions to make access to financial capital easier for small businesses.

Before applying for a business loan, understand what your financial requirements are and your ability to pay back a loan over a specific time period. Be realistic with your expectations for growth and expansion. You don’t want to incur significant debt without the ability to pay it off.

See the local financial institutions that have been certified by the SBA to offer loans to small businesses.

If you are having trouble getting a bank or credit union loan, you may want to consider the HiCAP program. 

Community Development Financial Institutions (CDFIs) also offer loans that may be appropriate. Organizations such as Feed the Hunger Fund, the Council for Native Hawaiian Advancement, and the Pakini Loan Fund all offer mission-driven programs to assist small businesses with their financing.

Another form of financial assistance is venture capital. Often, a business is too new or too risky for a financial institution to approve a loan. Venture capital may be another option. You can think of venture capital as a way to raise funds that come at the expense of sacrificing a portion of your ownership of the business. A venture capitalist is an individual (or group of individuals) or a company that is willing to invest in your business in return for a percentage of ownership. It’s important to understand that although you are surrendering a portion of your ownership, the venture capitalist is investing in your business model and taking substantial risk that they will return a profit. Many venture capitalists lose money on their investments in the hope of finding a company that will ultimately not only return a profit but will also cover their losses from prior unsuccessful investments. Those who engage in providing venture capital often have years of experience managing and owing their own businesses and can provide much needed mentorship to new businesses.

For additional information about venture capital opportunities in Hawaii, you may want to consider Hawaiʻi Angels, a local network of seed-level investors looking for small businesses with great potential.

Another source of venture capital to consider is the Hawaiʻi Venture Capital Association (HVCA).

Often, when starting your own business, your finances are stretched thin and you need to work as efficiently as possible. Through the concept of co-working space, you may be able to leverage a shared facility with your business requirements. Co-working spaces offer many of the same benefits of a traditional office space (meeting rooms, communication equipment, break aeras, etc.) without the high cost of leased office space. If co-working spaces are of interest to you, here are some spaces to consider:

Note: Due to COVID-19 restrictions, please confirm availability directly with the establishment.

You’ve been in business for about a year and you feel confident in your decision that starting your own business was the right choice. Perhaps you’ve found a niche in the market or you have a steady client base. How do you take the next steps? Perhaps the use of a business accelerator program would be a good place to start. Business accelerator programs are designed to assist existing businesses with additional resources that help them further expand their operations. Through a business accelerator, you can, among other things, gain valuable mentorship from other successful business owners, increase your access to investment capital, and network with other entrepreneurs.

Some business accelerators in Hawaiʻi are:

Blue Startups: Founded with the goal of diversifying Hawaiʻi’s economy by leveraging its unique strengths. Historically dependent on the tourism industry, Blue Startups envisions a Hawaiʻi with a thriving technology sector, creating high-paying and interesting jobs for our keiki (children).

Elemental Impact: With a focus on environmental sustainability and climate change, Elemental Impact seeks to promote fair and equitable access for businesses focused on energy, water, agriculture, mobility, and the circular economy.

Hawaiʻi Investment Ready: Focusing on sustainable and inclusive technologies, Hawaiʻi Investment Ready seeks to assist businesses working to solve societal and environmental challenges and to empower entrepreneurs to increase impact while building a resilient enterprise.

Mana Up: Accelerating growth for Hawaiʻi products. Mana Up’s accelerator is a 12-week intensive program designed to uncover high-impact sales opportunities, tackle production challenges, and develop executive leadership. The program includes workshops, connections to a network of advisers, help in crafting an attractive narrative for expansion, and access to distribution channels through partners and digital platforms.

The Purple Prize: Since 2016, the Purple Prize has empowered the people of Hawaiʻi to create impactful technology startups that are truly rooted in Hawaiian values. To date we have worked with over 40 teams and deployed significant monetary award to those with the highest potential to create real impact in Hawaiʻi nei. 

XLR8UH: a public-private partnership between Sultan Ventures and the University of Hawaiʻi (UH), is designed to create economic prosperity through the science, technology, innovation and entrepreneurship formed at UH, and to convert our state’s regional strength of groundbreaking research into new businesses and jobs.

Once you’ve decided upon the business structure that’s right for you and you’ve registered your business, there are additional resources that can provide valuable assistance: