Hawaii LLC Taxes

LLC Pass-Through Taxation

By default, LLCs don't pay taxes directly. Instead, the LLC members report the income (or losses) on their personal Form 1040 tax return. This is called pass-through taxation — tax responsibility "passes through" the LLC to its owners.

How Are LLCs Taxed in Hawaii?

By default, a Hawaii LLC is taxed by the IRS based on the number of members:

• An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship
• An LLC with 2+ owners (Multi-Member LLC) is taxed like a Partnership

These are the "default" statuses — automatically applied based on member count. You can also elect to have your LLC taxed as a Corporation (S-Corp or C-Corp) by filing extra paperwork with the IRS.

Single-Member LLC (default)

The IRS treats Single-Member LLCs as Disregarded Entities — the LLC doesn't file its own federal return. Instead, the owner reports LLC income on their personal Form 1040 (Schedule C if owned by an individual).

Multi-Member LLC (default)

Multi-Member LLCs file a Form 1065 Partnership Return and issue a Schedule K-1 to each member. Each member then reports their share of profits on their personal Form 1040.

Electing Corporate Taxation

• S-Corporation: File Form 2553 with the IRS. Can reduce self-employment taxes once the LLC has consistent profits (generally $70,000+ net income per member). Speak with an accountant first.
• C-Corporation: File Form 8832 with the IRS. Uncommon for small LLCs. Primarily useful for large employers offering healthcare fringe benefits.

Hawaii State Income Tax

Hawaii has a state income tax at rates of 1.4%–11% (graduated — one of the highest top rates in the US). LLC members report their share of LLC profits on their Hawaii state tax return.

Single-Member LLC owners file Hawaii Form N-11 (Individual Income Tax Return) and include LLC income. Multi-Member LLCs file Hawaii Form N-20 (Partnership Return) and issue Hawaii Schedule K-1s to members.

Contact the Hawaii Department of Taxation at 808-587-4242 for more information.

Hawaii Special LLC Taxes

Hawaii General Excise Tax (GET)

Hawaii's General Excise Tax (GET) is unlike any other state tax. It applies to virtually ALL business activity in Hawaii — not just retail sales. The GET is paid by the business (not the customer), though most businesses pass it on.

• State GET rate: 4% (4.5% in Honolulu County)
• Wholesalers/manufacturers: 0.5%
• Register using Hawaii Form BB-1 (Basic Business Application), fee $20
• Filing frequency: Monthly, quarterly, or semi-annually depending on GET liability
• The GET is required for all Hawaii LLCs, regardless of business type

Local Income Tax

You and/or your LLC may also need to file and pay income taxes with your local municipality (city, county, etc.). Contact your local government or hire an accountant to confirm local requirements.

Hawaii Sales Tax

If your LLC sells taxable products (and sometimes services) in Hawaii, you may need to collect sales tax and register for a Seller's Permit (also called a resale license or sales tax permit).

Hawaii does not have a traditional sales tax. Instead, it has a General Excise Tax (GET) — see special taxes section below.

Register for Hawaii Seller's Permit →

Contact the Hawaii Department of Taxation at 808-587-4242 with questions.

Hawaii LLC Payroll Taxes

If your Hawaii LLC has employees, you must handle payroll taxes, which include:

• Federal income tax withholding
• Hawaii state income tax withholding
• Social Security and Medicare taxes (FICA)
• Federal unemployment tax (FUTA)
• Hawaii state unemployment tax (SUTA)

Payroll calculations are complex — most LLC owners hire a payroll service or accountant.

Hawaii Tax Agency Contact

Hawaii LLC Taxes — FAQs