hawaii entrepreneur

Start a Business in Hawaii

Hawaii welcomes economic growth and diversification! The State of Hawaii has made an effort to create an environment conditioned for the start up and growth of new business ventures. Attempts to streamline the business registration process and by allowing a variety of tax credits, subsidies and exemptions available to small businesses, high technology companies and the film industry, are examples of the State’s recent efforts to improve the environment for business in Hawaii.

1. Sole Proprietor

(A) Characteristics

1. Owned and operated by one person
2. Smallest in size but most numerous
3. 1/4 profitable
4. 20% survive past 5 years

(B) Advantages

1. Easy to start
2. Easy to manage
3. Keep all profits
4. No business income tax
5. Personal freedom
6. Ease of closure

(C) Weaknesses

1. Provides all capital
2. Efficiency threatened due to size
3. Difficulty attracting qualified employees
4. Limited life

2. Partnership

(A) Characteristics

1. Owned & operated by two or more individuals
2. 1.5 million of all us businesses
3. Types
   • General – All parties responsible for financial & managerial activities
   • Limited – At least one partner not active in business

(B) Advantages

1. Ease of establishment
2. Ease of management
3. No special taxes
4. More capital
5. More efficient
6. Sometimes attracts better employees

(C) Weaknesses

1. Responsible for partners debt and actions (limited partnership limits debt to invest only)
2. Limited life
3. Conflict amongst partners
4. Unlimited liability

3. Corporation

(A) Characteristics

1. Business and ownership legally separated
2. 90% of businesses in the United States of America
3. Obtain Charter from state it intends to operate from
   • Includes: Name, address, purpose, operations, sale of stock
4. Stockholders are owners and investors
   • Divides profits (dividends)
   • Money used as capital
5. Board of Directors (runs business)
   • Hires managers to supervise production
   • Decision making body of corporation
   • Handles sale of stock

(B) Stocks & Bonds

1. Stocks
   • Prefered
     a. receive dividends first
     b. after all debts paid, get investment back first if corporation folds
     c. dividends fixed
   • Common
     a. dividends vary
     b. dividends after preferred
     c. voting power for board of directors – 1 stock = 1 vote
2. Bonds – Loan to corporation with interest
   • Registered
     a. name listed with corporation, interest payment automatically sent on specified date
   • Bearer
     a. coupons to be presented to obtain interest payment
     b. anonymity

(C) Advantages of Corporation

1. Ease of raising capital
2. Hire best managers to run business
3. Limited liability
4. Unlimited life
5. Ease of owner transfer

(D) Weaknesses

1. Complex to start
2. Share holders have little say in running the business
3. Double taxation – Capital gains & personal income tax
4. Government regulations

If you are searching for a home or commercial property in Hawaii, please use the form below to begin receiving free Hawaii real estate information & statistics to your inbox!

For the most up to date information regarding business start ups in Hawaii, please visit http://hawaii.gov/dbedt/business/start_grow/

Use this information at your own risk.  This information is provided ‘AS IS’.  No representations or warranties as to its accuracy, reliability or completeness are made or implied by Ocean Rock Properties, and all warranties are specifically disclaimed.