Hiring your first employee in Hawaii

What do you have to register for before your first payroll?

Hawaii gives you a partial front door, not a single one. Form BB-1, the State of Hawaii Basic Business Application, opens your general excise tax licence and your employer's withholding licence together under one Hawaii Tax ID, and you can add the withholding licence later to an existing ID without getting a second number. Everything on the labour side is separate. Unemployment insurance is its own registration at uiclaims.hawaii.gov with the Department of Labor and Industrial Relations, and the three Disability Compensation Division mandates, workers compensation, temporary disability insurance and prepaid health care, are not government accounts at all. They are private insurance policies you have to buy from an authorised carrier or get approved to self-insure. An employer new to Hawaii who files the BB-1 and stops there has done maybe a third of the job.

Does Hawaii require income tax withholding?

Yes. You register with the Hawaii Department of Taxation, file form bb-1 before your first hawaii payroll; the withholding licence itself carries no fee and can be added to an existing hawaii tax id.

The withholding licence is free. The $20 you pay with Form BB-1 is the general excise tax licence fee, and the BB-1 fee table lists withholding as no fee. Two things catch new employers. First, Hawaii does not allow exempt status on the state withholding certificate the way federal Form W-4 does, so if an employee gives you no Form HW-4 you must withhold as single with zero allowances rather than withholding nothing. Second, your payment frequency is set by size and can be much faster than the return frequency: returns on Form HW-14 are quarterly, but payments are due semi-weekly once your annual withholding liability exceeds $40,000, monthly above $5,000, and quarterly at $5,000 or less. Employers over $40,000 a year must also file electronically or hold a waiver, with a 2 percent penalty for filing on paper without one.

What unemployment insurance does Hawaii charge a new employer?

A new Hawaii employer pays 2.4% on the first $64,500 each employee earns, so roughly $1,548 per employee in the first year. For 2026 Hawaii is on contribution rate Schedule C, a new employer pays 2.4 percent, the maximum experience rate is 5.6 percent, and tax is owed on the first $64,500 of each employee's wages. That wage base is among the highest in the country and it moves every year, from $62,000 in 2025 and $59,100 in 2024, because it is set to the state's average annual wage. The whole schedule also shifts with the health of the trust fund, which is why the new employer rate was 4.0 percent as recently as 2023. On top of the contribution there is a separate employment and training assessment of 0.01 percent of taxable wages, and note that two Division pages disagree about it: the tax rate schedule page says 0.01 percent and the contribution rates explained page says 0.1 percent. Section 383-129 of the Hawaii Revised Statutes settles it at .01 per cent, so 0.01 percent is correct and the higher figure is a typo. Employers sitting at a zero rate or at the schedule maximum owe no assessment, and it can never be deducted from wages. Register within 20 days of hiring your first employee by filing a status report online at uiclaims.hawaii.gov; paper Form UC-1 is no longer accepted. Form UC-B6 is then due every quarter even in quarters when you paid nobody, and a late one costs $30.

Do you need workers compensation insurance in Hawaii?

Yes, from your first employee. Hawaii sets no headcount to reach, so there is no free window before coverage is required.

There is no free headcount. Any employer with one or more employees, full time or part time, permanent or temporary, must carry coverage unless the work falls in one of the narrow exclusions in section 386-1 of the Hawaii Revised Statutes, which cover things like unpaid volunteers for a nonprofit, ordained ministers, and household help paid less than $225 in the quarter. You buy from a private carrier authorised to write workers compensation in Hawaii or get approved to self-insure by proving financial solvency; there is no state fund monopoly. You are forbidden from making employees contribute toward the premium, which is different from temporary disability insurance and prepaid health care where cost sharing is allowed. You must also post a benefit rights notice where employees can read it, hand an injured employee the Highlights brochure within three working days of notice of injury, and file Form WC-1 with the Division within seven working days of the injury.

How quickly must you report a new hire in Hawaii?

Within 20 days after the date the employee starts work; a returning worker counts as a new hire again if the break in service was at least 60 consecutive days. Reports go to the Hawaii Child Support Enforcement Agency, State Directory of New Hires.

Section 576D-16 of the Hawaii Revised Statutes requires every employer to report each new hire to the Child Support Enforcement Agency within 20 days, giving the worker's name, address, social security number and first day of paid service plus your own name, federal identification number and address. A copy of the Form W-4, or its equivalent, is an accepted report. If you send reports magnetically or electronically instead, you switch to a twice monthly rhythm, not less than 12 and not more than 16 days apart, which is a stricter cadence than the 20 day rule it replaces. The civil penalty is only $25 per failure, but it rises to $500 where the employer and the worker colluded to skip the report or file a false one. This report goes to the Attorney General's office, not to the tax or labour departments, so it is easy to miss when you set up payroll.

Does Hawaii have paid family leave or state disability insurance?

Hawaii has run a real state disability programme since 1969, but it is not a state fund and there is no payroll tax that goes to the government. Temporary disability insurance is coverage you buy from an authorised carrier, self-insure with Division approval, or provide through a collective bargaining agreement with sick leave at least as good as the law requires. The employer may pay the whole premium or split it, and the 0.5 percent recorded here is the statutory ceiling on the employee's half rather than a fixed levy: you may withhold up to half the premium, never more than 0.5 percent of weekly wages, and never more than the maximum weekly deduction, which the Division set at $7.50 for 2026 against a maximum weekly wage base of $1,500.21. The employer contribution rate is null because there is no published rate. Your cost is whatever premium your carrier quotes, so it varies by insurer and workforce. A statutory plan pays 58 percent of average weekly wages from the eighth day of disability for up to 26 weeks, capped at $871 a week in 2026. An employee qualifies after 14 weeks of Hawaii employment, not necessarily consecutive or with one employer, each paid for 20 or more hours and at least $400, in the 52 weeks before the disability. The second Hawaii mandate is the one that genuinely has no equivalent anywhere else: the Prepaid Health Care Act, chapter 393, has required employers to provide health coverage since 1974 and is the only state health insurance mandate to survive federal preemption, by exemption granted in 1983. It bites at 20 hours a week: any employee working 20 or more hours a week who earns at least 86.67 times the state minimum hourly wage in a month, which the Division computes as $1,387.00 a month for 2026, must be enrolled after four consecutive weeks of employment. You must pay at least half the premium, and the employee's share is capped at the lesser of half the premium or 1.5 percent of monthly gross wages, so on a low wage worker the 1.5 percent cap usually leaves you paying far more than half. Plans must be approved by the Department against minimum standards, an out of state nationwide plan has to be submitted for approval before you can use it here, and an employee can only opt out by filing Form HC-5, which must be renewed every 31 December. The penalty for going without is at least $25 or $1 per employee per day, whichever is greater, and after 30 days of default the state can close your business until you comply.

Do you need a sales tax permit in Hawaii?

Hawaii has no general sales tax, so there is no sales tax permit to apply for. That does not always mean nothing to register for, as the note explains.

There is no Hawaii sales tax permit, because Hawaii has no sales tax. The Department of Taxation says so in as many words: Hawaii does not have a sales tax, instead there is the general excise tax, which is assessed on all business activities. What you actually register for is a GET licence, applied for on Form BB-1 with a one-time $20 fee, and section 237-9 of the Hawaii Revised Statutes requires you to hold it before engaging in business rather than after your first sale. The fee field is null here because a permit fee only means something in a sales tax state; the real $20 figure is recorded in the gross receipts tax block below, which is where it belongs. A remote seller with no physical presence is treated as engaging in business once it has $100,000 or more of Hawaii sourced gross income, or 200 or more separate Hawaii transactions, in the current or preceding calendar year. Filing online returns your Hawaii Tax ID in about 5 to 7 days, by mail in 4 to 6 weeks, and in person immediately. No security deposit requirement was found on a primary page, so that field is null rather than zero.

Does a marketplace like Amazon or Etsy handle the tax for you?

Hawaii has a marketplace facilitator law, Act 2 of 2019, effective 1 January 2020, but it does not do what a sales tax state's version does. In a sales tax state the platform collects and the seller walks away. Here Act 2 deems the marketplace facilitator to be the retail seller and simultaneously deems your sale to the facilitator to be a wholesale sale, which means it is still your gross income and still yours to report. A marketplace seller who is engaging in business in Hawaii still has to hold a GET licence and file returns, paying the 0.5 percent wholesale rate on goods it ships to Hawaii buyers through a facilitator and on services sold through a facilitator that are used or consumed here, while paying the 4 percent retail rate on its own direct sales. The wholesale rate is not available for sales of intangible property, which stay at the retail rate. The threshold test is also combined: if the facilitator you sell through is itself engaging in business in Hawaii, you count your direct Hawaii sales together with the goods you ship into Hawaii through that facilitator and with intangibles and services used here, and test the $100,000 or 200 transaction thresholds against the total. Assuming marketplace sales are somebody else's problem is the single most expensive mistake an out of state seller can make in Hawaii.

If your sales drop, when can you stop collecting?

Act 41 of 2018 makes you engaged in business in Hawaii if you cross $100,000 of gross income or 200 transactions in the current or preceding calendar year, so a single strong year drags the whole of the following calendar year behind it whether or not you sell anything more. Plan on staying licensed and filing, including zero returns, through that trailing year. The account does not lapse on its own either: the GET licence stays open until you cancel it on Form GEW-TA-RV-1, and Hawaii adds a sting most states do not. Once a GET licence has been closed it cannot be reactivated. Coming back means a fresh application and another $20, so do not close the account during a quiet year you expect to trade out of.

Does Hawaii charge a tax on revenue rather than profit?

This is the single most misunderstood thing about doing business in Hawaii, and getting it wrong costs money. The GET is not a sales tax with a different name. It is a privilege tax on the seller, measured by gross income, with no deduction for cost of goods, payroll, rent or any other expense, so a business can owe it in a year it loses money. It reaches far more than a sales tax does: services, professional fees, commissions and rental income are all taxable, which is why a consultant or landlord with no physical product still owes it. Because the tax is legally yours rather than the customer's, you are allowed to pass it on visibly but you are not required to, and if you do the pass-on is capped. With the county surcharge the maximum pass-on rate is 4.7120 percent in Honolulu, Hawaii, Kauai and Maui counties. That 4.712 percent is arithmetic on a tax-on-tax, not a rate, which is why it does not equal 4.5 percent. You register with a one-time $20 fee on Form BB-1, and a duplicate licence costs nothing. Periodic returns are due on the 20th of the month after the period closes, monthly, quarterly or semiannually depending on your annual liability, plus an annual return due on the 20th day of the fourth month after your tax year ends. Late filing costs 5 percent a month up to 25 percent, and interest runs at two thirds of one percent a month. No general small business exclusion threshold was found on a primary page, so exclusionThreshold is null; Hawaii's relief comes through activity specific exemptions and deductions rather than a revenue floor.

Do you have to register your out-of-state company in Hawaii?

$50 for a foreign limited liability company's Application for Certificate of Authority under chapter 428, and $50 for a foreign profit corporation's Application for a Certificate of Authority under chapter 414. A foreign limited partnership is also $50 and a foreign limited liability partnership's Statement of Foreign Qualification is $50. Add $1 for the State Archives preservation fee on permanent records. Expedited review is an optional $25.

Hawaii is one of the cheaper states to qualify into and it charges the same $50 whichever entity type you are, which is unusual. Sole proprietorships do not register with the Business Registration Division at all. Registering here does not license you to operate or open any tax account: you still file Form BB-1 with the Department of Taxation for your Hawaii Tax ID and GET licence, and you still register separately for unemployment insurance with the Department of Labor and Industrial Relations. Budget for the annual report as well, $15 for a foreign corporation or foreign LLC, and note that the way out costs money too, $25 to withdraw a foreign corporation and $25 to cancel a foreign LLC. The published fee schedule is dated December 2022 and the underlying amounts have been in place since 2005, so these figures are stable rather than annual.

Where these figures come from

Every number on this page was read on Hawaii's own agency pages, its statute, or a current-year official form, and this record was last reviewed on 2026-09-08. Where a state's explainer page disagreed with its statute or its current form, we followed the statute or the form and said so in the relevant section, because a state's consumer-facing pages are often the last thing updated when a figure changes.

Anything we could not confirm on a primary source is left blank rather than estimated. A missing figure on this page means we could not verify it, not that it is zero.

This is general information, not legal or tax advice. Rules change and your circumstances matter. Confirm anything you are about to act on with the agency named beside it.