How to Use and Accept Resale Certificates in Hawaii

What Is a General Excise Tax License?

When conducting business in Hawaii, companies are subject to a General Excise Tax (GET) rather than a traditional sales tax. This tax is applied to all business activities, including retail sales, services, and rentals. Businesses must obtain a GET license to operate in Hawaii and collect this tax from consumers.

Using the GET license correctly is crucial for compliance. This tax is collected as a percentage of gross income from business activities, ensuring that businesses contribute to state revenue upon engaging in taxable transactions.

Who Needs a General Excise Tax License in Hawaii?

Businesses that must obtain a GET license in Hawaii include:

• Retailers selling tangible goods
• Service providers offering taxable services
• Rental property owners
• Any business entities generating revenue through operations within Hawaii

If your business falls under any of these categories, you are required to acquire a GET license to ensure compliance with Hawaii’s tax laws.

How to Get a General Excise Tax License in Hawaii

Follow these steps to obtain a GET license:

1. Register with the Hawaii Department of Taxation

All businesses must register for a GET license with the Hawaii Department of Taxation. Registration can be completed online or through paper forms available from the department.

Successful registration provides businesses with a tax identification number necessary for tax filings and payments.

2. Understand Hawaii’s Excise Tax Rules

Hawaii’s GET is distinct from sales tax systems in other states as it taxes gross income, including wholesale and retail transactions. It’s essential to familiarize yourself with the GET rules to apply the correct tax rate and ensure comprehensive tax compliance.

3. Display Your GET License

Businesses are required to prominently display their GET license at their business location, making tax compliance evident to consumers and authorities alike.

4. Maintain Accurate Records and Compliance

It’s crucial to keep accurate records of all transactions subject to GET, maintain compliance with filing frequencies, and ensure timely tax payments to avoid penalties.

If navigating Hawaii’s tax landscape becomes challenging, doola offers expert bookkeeping services to relieve the complexity of tax management. 

What Makes Hawaii Unique?

• Unlike states with traditional sales tax, Hawaii applies a GET on the gross income of businesses, affecting both goods and services.
• There is no exemption system akin to resale certificates in Hawaii, requiring businesses to account for GET in their pricing strategies.

Tax Filing for Businesses in Hawaii

Businesses must adhere to specific filing schedules for GET based on their total gross income. Key filing frequencies include monthly, quarterly, or semi-annual filing, which is determined during the registration process. Diligent adherence to the filing schedule is essential to ensure compliance and avoid penalties.

Common Pitfalls to Avoid

Mismanagement of GET obligations can lead to fines and compliance issues. Businesses should be wary of the following common errors:

• Underestimating gross receipts, not fully accounting for all taxable income
• Misapplying GET rates or failing to apply them to certain business activities
• Missing filing deadlines or incomplete filings, leading to late fees

Regular audits of your business processes can help mitigate these risks and maintain compliance with Hawaii’s tax regulations.

Staying Compliant With doola

The GET system in Hawaii is a critical aspect of operating a business in the state. By understanding these unique tax obligations, businesses can ensure smooth operations and avoid costly mistakes. For comprehensive support in fulfilling your Hawaii GET obligations, doola offers expert guidance to help you remain compliant with state tax requirements, assuring your business’s financial health and stability.