This article provides three key state business startup requirements for self-employed sole proprietors and general partners who run residential house cleaning businesses. Information from the Secretary of State, the Hawaii Department of Taxation and selected city and county government sources were used to research this article.
Be aware that sole proprietor and general partner startup requirements in this state are always changing. Some requirements even vary from county to county. It is important that you call or visit your local county or city government to find out local requirements for residential house cleaning businesses and home-based businesses. This article is not intended to be exhaustive or a substitute for qualified legal or tax advice.
Business Name Registration
Sole proprietors and general partners who want a business name that does not include the owner(s) full names (for example, Janice Smith’s Cleaning Service or Martha Harris and Tom Graham’s Maid Service) are not required under state law to register a DBA (“doing business as” or trade name) or service mark. Most trade names in Hawaii are not registered with the state.
If you choose to register a trade name or service mark, start with a search for Business Entity and Documents to find out whether the business name you have chosen is available.
Then do an online search for names similar to the one you plan to use. For example, if you want to use the name, Crystal Clean Maid Service, do simple Google searches for “Crystal Clean Maid Service+Hawaii” plus Crystal Clean Maid Service+your county” and “Crystal Clean Maid Service+your town or city”. Search beyond the first page of results. Go at least five pages deep into the search results to see if the name you want or similar names are being used in your state, county or city.
Register a business name along with a state business license and tax registration online here.
In the state of Hawaii, filing a fictitious or trade name does not guarantee a business sole rights to the use of that name. Other businesses in the state may also register the same fictitious name. Registered businesses are expected to legally defend their trade names. In Hawaii, a trade name is owned by a business simply by using the name before the public. The basic rule is that the first person to make active and continuous use of the name is the person who owns the name.
Business License Registration
All businesses in Hawaii must be licensed by the state. Hawaii provides an online business license and tax registration portal, the Hawaii Business Express (HBE).
In Hawaii, a general partnership is created when two or more owners form an oral or written agreement to start a business together. A written partnership agreement drawn up by a lawyer is important for both or all partners. Partnership agreements do not have to be filed with the state.
Sole proprietors and general partners may apply for an Employer Identification Number (EIN) from the IRS even if they do not plan to hire employees. Getting an EIN may make it easier to open a bank account and reduce your risk of identity theft. You can apply for an EIN online. In addition, some business registration forms will require a a NAICS business classification number for the house cleaning industry.
Business Tax Registration
Register a sole proprietor or general partnership business with the state tax agency through the Hawaii Business Express (HBE).
Residential house cleaning services are not taxable in Hawaii. House cleaning services do not have to collect and send sales taxes to the Department of Taxation.
Sole proprietors and general partners must pay a general excise tax (GET) on gross sales to the state. Each of Hawaii’s four counties adds a surcharge to the state general excise tax. It is common for businesses to charge their customers GET by visibly passing it on, but it is not required by law. Businesses must pay GET whether or not they charge their customers for it. GET is tax on the business, not a sales tax on the customer.
Sole proprietors and general partners pay tax on business income to the state of Hawaii through their personal state tax return. Sole proprietors and general partners may be responsible for paying estimated self-employment income taxes in Hawaii (on Form N-1) similar to the way self employment taxes are paid to the federal government. Get more information about estimated tax requirements by calling the Department of Taxation at (808) 587-4242 or toll-free (800) 222-3229.
Hawaii general partnerships that file a Federal partnership information Form 1065, may need to file state income tax Form N-20. Get more information from a CPA or qualified tax preparer to find out if your partnership must file those returns.
Hawaii City and County Licenses
In Hawaii, the state business license is the main license for sole proprietors and general partners. City or county business licenses are not required.