Registration Requirements in Hawaii

All businesses in Hawaii must register with the Department of Commerce, and the Department of Consumer Affairs. Hawaii allows new businesses to register with these departments through their online business registration system found here: 

https://hbe.ehawaii.gov/BizEx/home.eb;jsessionid=8731524904B15FA45F2BE36C9C26C607.lana

In order to obtain a Hawaii Tax ID businesses will need to register with the Hawaii Department of Taxation at the following link: 

https://hitax.hawaii.gov/_/#8

S Corporation Tax 

Hawaii recognizes the federal S-election, and Hawaii S corporations are not required to pay income tax to the state. However, individual S corporation shareholders will owe state tax on their share of the company’s income. S corporations must still file Form N-35 S Corporation Income Tax Return. 

LLC/Partnership Tax 

LLC’s and partnerships are not required to pay income tax to Hawaii. Business income is passed to partners who pay Hawaii income tax on their personal return. Partnerships and LLCs must still file N-20 Partnership Tax Return. 

Composite Tax

Hawaii allows S corporations having nonresident shareholders to file composite returns and make composite payments on behalf of some or all of their nonresident shareholders. The corporation must get a statement from each nonresident shareholder electing to be in the composite return stating that they elect to be included in the return. Composite taxes are filed on N-15, which can be found below

Partnerships are allowed to elect to file composite Hawaii nonresident income tax returns on behalf of partners, who are nonresidents and make composite payments for their share of Hawaii source income. This is completed on form N-15 Income Tax Return Nonresident found below: 

http://files.hawaii.gov/tax/forms/2017/n15_f.pdf

Individual Income Tax

Shareholders and partners with income assignable to Hawaii may need to file an individual income tax return that reflects their portion of Hawaii income. Shareholders and partners will report their income on Hawaii Form N-11.

Individual income tax brackets vary by income and filing status and are found below:

Due Date

S corporations and partnership returns must be filed on or before the 20th day of the fourth month following the close of the taxable year. If the date falls on a weekend or legal holiday, the return is due the following business day. 

Individual income tax returns generally follow the federal due date and are due on the 20th day of the fourth month following the end of the tax year. If the date falls on a weekend or legal holiday, the return is due the following business day. 

Estimated Payments

Both s corporations and individuals who expect to have a tax liability over $500 by the end of the tax year will need to make estimated payments. The due date for the payments are the 20th day of April, June, September, and January of the following tax year for calendar returns. 

S corporations need to use form N-3 - Declaration of Estimated Income Tax For Corporations and S Corporations

http://files.hawaii.gov/tax/forms/2017/n3_b.pdf

Individuals use form N-1 - Declaration of Estimated Income Tax for Individuals 

http://files.hawaii.gov/tax/forms/2017/n1_b.pdf

Extension Requirements

S corporations and Partnerships must use form N-301 - Application for automatic extension of time for corporation, partnership, trust.

http://files.hawaii.gov/tax/forms/2017/n301_f.pdf

This form is due by the original due date of the return that taxpayers are requesting an extension for. If filed, it will allow a business a 6 month extension to file their return. This extension does not allow an extension to pay. If a balance will be due, businesses will need to make a payment in a timely manner. 

Individuals will use form N-101A - Application for automatic extension of time for individual.

http://files.hawaii.gov/tax/forms/2017/n101a_b.pdf

This extension is due by the due date of the individual income tax return. It will allow taxpayers a 6 month extension. This extension applied to the filing of the return and taxpayers will need to make a timely payment if a balance is due. 

Penalties

S corporations will be assessed a penalty for filing returns late. This penalty will equal 5% of the tax due per month, up to a maximum of 25%. 

Failure to pay in a timely manner will result in a 20% penalty on any unpaid portion of tax due. 

Interest will accrue at a rate of ⅔ of 1% per month. 

Individuals who file late will also be subject to a 5% per month penalty up to a maximum of 25%. 

Failure to pay the tax after filing a timely return is 20% of the unpaid balance. 

Additional Information

If your business was formed or is located in another state, but generates income in Hawaii, it may be subject to Hawaii taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.

Hawaii Department of Commerce: 

http://cca.hawaii.gov/

Hawaii Department of Taxation: 

https://portal.ehawaii.gov/

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