Everything You Need to Know About The Hawaii General Excise Tax

QUICK LINKS 

Looking for information about the General Excise Tax? Use these links to find what you need.

  • Hawaii Tax Forms. Printable tax forms: G-45 (periodic) or G-49 (annual reconciliation).
  • Pay Hawaii taxes online. Pay your state taxes or general excise taxes online. There is a $1 electronic check fee or a variable fee for paying with a credit card.
  • Register with eHawaii. Register your business in Hawaii online.

general-excise-tax
What is that additional charge on our receipts? It’s none other than our good friend, the General Excise Tax (GET).

Updated 2/28/2019: Sorry for the issues with this page info going missing and comments not being available  — I was recently hacked and had to deal with it along with a backdoor that would reset the issue until solved.

Updated 1/28/2019: To increase site speed, I’ve had to limit the comments loaded per page to 15 comments (replies don’t count) — click “OLDER COMMENTS” to view older comments.

Updated 5/30/2018: I am slowly making updates to the article. If you post 2 or more links, your comment will be auto-marked as spam by the system. Thanks to DAVID W RISTAU CPA for helping to answer some of the questions in the comments section. There are now over 300 questions and answers — you might find your answer in the comments.

Updated 10/18/2014: I am not a CPA or affiliated with the Hawaii State Department of Tax. If you have questions about taxes, call them at 808-587-4242 or contact them. You can also contact VITA with questions, a nonprofit that helps people with tax information. Please do not contact me for detailed tax advice — everything I know about the GET is right here in this article .

***

Have you ever wondered where states get their money from? Each state has their own methods (sales taxes, lottery, gambling), but for Hawaii, the biggest source of income is the General Excise Tax (GET). The tax is on gross income by businesses, meaning that part of every single business transaction goes to the state, whether it’s you buying a pack of gum at the 7-Eleven, or you constructing an office for someone.

 

Who has to pay the General Excise Tax?

Most businesses that have business transactions occur in Hawaii have to pay the GET. This applies to business that sell goods or provide services.

If you are an independent contractor, a small business owner, a freelancer, a self-employed person, or do “side gigs,” you will need to pay the excise tax, since you are considered a business. Businesses located in another state with a physical presence in Hawaii also have to pay the GET.

There are some business types who are exempt and there are some business types who have a different rate. More on this later.

 

Is the General Excise Tax a sales tax?

No, it is not. Although both have the same purpose (give money to the state), the two are a bit different. The main difference is who pays the tax. In states that have a sales tax, the tax is on consumers who buy retail goods. In those situations, business help the state by collecting the sales tax for the state. With the GET, the tax is on businesses. Furthermore, it’s not just goods getting taxed — services, wholesale goods, and rents are also taxed.

 

How much is the General Excise Tax?

The base rate for the GET is currently 4% of gross sales (as of 4/11/2013). In the City and County of Honolulu aka Oahu, the rate is 4.5%. The extra .5% for Oahu is to help pay for the mass-transit rail project on Oahu. Also, anyone conducting business on Oahu or has a “physical presence” on Oahu has to pay the extra .5%.

For example, if you’re renting out apartments in Oahu and Maui, you’ll be paying 4% GET on the Maui apartments and 4.5% on the Oahu apartments.

But why do I see 4.712% tax on my receipt on Oahu?

The answer is a bit complicated, so pay attention to this example:

You own a lunch truck. Jerry Maguire comes one day and buys a loco moco plate from you. The loco moco plate has a price of $10.

As a lunch truck business, you have 2 choices regarding the GET:

Choice 1: You pay the GET. If you choose to pay the GET, Jerry Maguire will be billed $10 and you will collect only $10 from him. When the time comes to pay your GET to the state tax department, you will pay 4.5% multiplied by your gross sales (on Oahu), which will mean you pay 45 cents of that $10 you collected.

Choice 2: You make the customer pay the GET (the common method). If you want to have Jerry Maguire pay the GET instead, you will add 4.5% to the total bill. So, the $10 loco moco should become $10.45, after tax. But you’ll still have to pay taxes out of your pocket. Why? Because the state considers the 45 cents tax you collected to be income too, so you will pay a tax on that tax you collect (confusing right?). Paying 4.5% tax on the 4.5% tax actually equals 4.7025%, but the state allows you to round up a bit and you end up with a GET rate of 4.712% of the sale amount of that plate lunch. Most businesses force customers to pay the excise tax and then the excise tax on the excise tax, so you’ll see 4.712% on your bill, not 4.5%. On outer islands (no .5% Oahu surcharge), this means a GET rate of 4.166%. Most businesses do this because it’s common and it means that they won’t have to pay GET out of their pocket, as the customers paid it already.

 

Should I make my customers pay the excise tax?

Probably.

People in Hawaii are accustomed to the tax. Furthermore, it is a surcharge, so it’s added onto the bill, but doesn’t make your sticker price higher, meaning people only see if when it comes time to pay. Furthermore, your competitors probably pass the excise tax onto customers, so if you decide to absorb the excise tax yourself, that means you’re at a financial disadvantage compared to them.

For my business, I don’t pass the GET onto my clients because it makes my accounting easier. Also, I think giving a client an invoice of $800 is much more presentable than a bill of $622.83. Round numbers also make it easier for clients to pay me with cash, which is my preferred method of payment. But really, it’s up to you.

Exception: certain industries are not allowed to charge their customers for GET, such as travel agents (see this article for more info).

 

Is it okay to pass the General Excise Tax onto my customers? How about for quotes?

As a business, you can tack on the GET onto your client or customer’s bill or invoice. This is also known as “visibly passing the tax onto the customer.” This method makes your customer pay it instead of you paying it out of the money you collect from the sale. You can also have the tax show up as a surcharge, meaning it shows up on a separate line on the bill/receipt/invoice.

Quoting: If you give quotes in your line of business like me, you can pass the GET to your customer only if you tell them or write that there is a certain % tax in addition to the quote.

Examples:

If I say, “I want to make you an awesome website! Your quote: $50,000!”
>>
 I cannot tack on GET — my bill must be for $50,000 flat.

If I say, “I want to make you an awesome website! Your quote: $50,000 plus tax!”
>> I still cannot tack on GET because I need to be specific about the rate (4%? 4.1666%? 4.5%? 4.712%?).

If I say “I want to make you an awesome website! Your quote: $50,000! (Plus 4.712% tax)”
>> Now I can tack on GET, because it is clear to the customer that they will have to pay tax in addition to the quoted amount.

 

How often do I pay the General Excise Tax? What’s a filing period?

Anywhere from every month to every 6 months – it depends on how much GET you expect to pay. The higher your expected GET, the more frequently you should pay.

If you pay this much in General Excise Taxes per year… You pay this often
less than or equal to $2000 every 6 months
more than $2000, but less than or equal to $4000 every 3 months
more than $4000 every month

Basically, the more money you make, the more often you pay, cause the state wants that tax money!

View original article

The filing period depends on when your tax year begins. Most of us use a calendar year, meaning our tax year starts on January 1st and ends on December 31st. If you pay quarterly, then that means your 4 filing periods will be January to March, April to June, July to September, and October to December.

Note: You need to also file an annual reconciliation. The G-45 is for periodic payments, as mentioned above. However, you will also need to file a G-49, an annual return and reconciliation. It’s basically a form that checks to make sure the GET you paid is accurate at the end of the year. You need to file this to let the state mark you as filed for the year.

Why do you need a reconciliation? Let’s say you sell hula skirts and had $10,000 gross sales in January. You pay your GET that quarter. But then in October, that same customer returns all the hula skirts. You then refund his money. Those $10,000 of hula skirts are no longer a sale, so you should not have to pay GET on them. However, because you already paid GET on those hula skirts, you’ve overpaid GET. So, you then can use the reconciliation to get a refund. Or you can use the reconciliation to find out that you owe more than you’ve paid for the year.

Basically, it works the same way as regular taxes: you or your employer pay taxes periodically, and then at the end of the tax year, you check to see if you owe or if you’ll get a refund.

 

When are General Excise Taxes due?

For period GET (form G-45), your taxes are due 20 days after your filing period ends (as I said before, your filing period depends on how much you make). So if your tax year starts on January 1st, your quarters end on March 31, June 30, September 30, December 31. And then your GET is due on April 20, July 20, October 20, and January 20 respectively.

Here is an example of someone who pays quarterly GET:

Event Date
Tax year starts January 1, 2013
Quarter 1 ends March 31, 2013
Quarter 1 GET due April 20, 2013
Quarter 2 ends June 30, 2013
Quarter 2 GET due July 20, 2013
Quarter 3 ends September 30, 2013
Quarter 3 GET due October 20, 2013
Quarter 4 ends December 31, 2013
Quarter 4 GET due January 20, 2014

* this is only an example, you might pay monthly or only 2x a year, depending on your gross income.

For annual reconciliation (form G-49), your taxes are due on the 3 months and 20 days after your tax year ends. So if your tax year started on January 1, 2013, it ended December 31, 2013, and so your G-49 will be due on April 20, 2014.

Event Date
2013 Tax year started January 1, 2013
2013 Tax year ended December 31, 2013
2013 G.E.T. G-49 due date April 20, 2014

 

How do I get a General Excise license and how do I pay my GE taxes?

The business and GET registration process is very easy, thanks to the state making the entire process available online. You can also do it in person or mail in your forms, but it’s much easier to do it all online.

Note: there is a $20 application + $2.50 online charge. You can pay during the online process with a credit card.

Here’s how to get your General Excise Tax license:

  1. Register your business with the state of Hawaii (link here) and you will also apply for a State Tax ID (aka your General Excise Tax License Number) along the way. You need to consider what type of business you want to register as. Sole-Proprietor and Limited Liability Corporation are common choices, but you should talk with a CPA if you want to know the pros and cons of the different choices (scroll to the bottom for my CPA recommendation). If you’re a sole proprietor, you can also apply for a trade name (aka a business alias). Make the one-time registration payment and wait for your license to come in the mail. The registration process is for the purpose of getting your tax license. If your business is already registered with the State of Hawaii but you don’t have a General Excise Tax License Number or State Tax ID, then you can simply go here, search for your business name and then apply for a license number.
  2. Register for e-filing with eHawaii.gov. This will create an online account for you to pay your General Excise taxes online with a credit card.
  3. When it comes time to pay your GET, go to eHawaii.gov’s eFile, select form G-45 (General Excise Payments),  fill in the fields, your tax liability should be calculated automatically, and pay with your credit card.
  4. The business registration directory is public. To view your listing, go to Hawaii’s Business Registration Division or Department of Taxation – Tax Licenses.
This is the tax license the state gives you. Make it visible to show your clients that you are a law-abiding and responsible business owner.
This is the tax license the state gives you. Make it visible to show your clients that you are a law-abiding and responsible business owner.

 

What if I need to make changes to my business or to my payments?

There are a lot of things that can happen to your business. Here are some forms that might be helpful.

Name of Form Why Do We Need This Form?
GEW-TA-RV1 Cancel your GET license
GEW-TA-RV5 Make changes to your license (your name, officers, filing frequency)
ITPS-COA Change of address
amended G-45 Amend/change a previous G-45 filing
amended G-49 Amend/change a previous G-49 filing

Hawaii Tax Form List

 

Who doesn’t have to pay? Are there exceptions?

Here is a screenshot of the exemptions if you file online:

ge-exceptions
snapshot of exemptions during online filing of g45

As you can see, most of these exemptions make a lot of sense. For example, if you have bad debts (aka non payment) that means you never received the income, yet it was included in gross billings, so you need to exclude them. Or reimbursements, which if you buy something for your client at no markup as a matter of convenience, then you should not be paying GE tax on that. Non profit organizations is in there as well.

In general, if you have to ask this question, then you probably aren’t exempt from the GET. Entities like Non Profits, utility companies, and some selling securities/commodities are exempt from the GET. See this long document for details (Hawaii Revised Statute 237-23, 12/31/2012).

Organizations looking for GET exempt status would file G-6 (Application for Exempt Status for General Excise Taxes).

Reimbursements: if you paying for something on behalf of a client and there is no mark-up (meaning that you’re not profiting), then the amount is exempt from GET.

Example: I build a website for a client and it requires a special plugin software for $50. I buy it on behalf of my client then I tack the cost onto his final invoice along with the fee for the website. I don’t pay GET on that $50 reimbursement I get from the client.  If I pay $50 for the plugin and charge my client $150, then it’s not a reimbursement and I have to pay GET on the $150.

Out of state sales: if you’re selling tangible personal property out of the state, like, selling hula skirts to someone in Minnesota, the money you get from the sale is exempt from the GET (section 237-29.5(1), thanks Eva for mentioning this). The purchaser needs to fill out form G-61, “EXPORT EXEMPTION CERTIFICATE FOR GENERAL EXCISE AND LIQUOR TAXES” to cerify that they are out of state.

Wholesale customers pay a special rate of .5%.

Insurance commissions (Chapter 431, HRS) pay  .15%

Nonprofits don’t pay on donations received, but must on goods and services sold through fundraising.

 

Do Nonprofits pay no General Excise Tax?

Yes for donations received, but businesses can still pass their GET onto a nonprofit. Also, update: nonprofits still pay general excise tax on monies received from fundraising events because they are selling goods and services.

Registered nonprofits are exempt from paying GET on their business income. However, if that nonprofit contracts a business, then the nonprofit may be paying that business’ GET.

 

Example:

A church receives a $10,000 donation (that’s business income for them). The church is a registered nonprofit, meaning it’s GET-exempt, so they don’t pay any GET to the state for that donation.

Then the church hires me to build an online store for them for $10,000. I am for-profit and need to pay GET on my business income. I decide to pass the 4.712% GET onto the church as a surcharge. So, in the end, the church ends up paying me $10,471.20 ($10,000 base + GET surcharge). Then I put aside the $471.20 to pay to the state when time comes to pay my GET.

 

What is a wholesaler?

Wholesalers get a special GET rate of .5%.

What’s a wholesaler? Someone who sells goods in bulk to other businesses to sell for retail. An example would be an electronics company, who sell and deliver mass electronics to places like Best Buy, Radioshack, or Walmart. Wholesalers usually have smaller margins than retailers because they make money on large quantities of transactions, which is why the tax rate is lower for them.

If you’re selling to customers or end users, you are not a wholesaler.

Do rates change if you’re a sub-contractor?

If there are subcontractors involved, no there is not an endless tax on every subcontractor in the chain. Rather, the the sub-contractor working directly with the end customer(s) will be charged the full rate, while the transaction between the sub-contractor and contractor is at a lower rate of .5%.

Answer from DAVID W RISTAU CPA‘s conversation:

Roland: “I am a contractor. I use subcontractors.The build in their 4.5% GET on their invoices to me. I do the same with my invoice to my client, including paying 4.5% GET on the amount of subcontractor cost built into my price. So the state is collecting at least twice (maybe more, since the subs buy materials from local businesses). No wonder the state is bankrupting local businesses.”
David Ristau: “If you’re being charged 4.5% by your subs, something is wrong in the preparation of your returns. The subs should be charging you 0.5% GE tax and you charge your end customer 4.5% and deduct the sub-contractors on your GE filings via Schedule GE to report the subs. State isn’t bankrupting businesses because of incorrectly prepared and filed GE forms…the small business is shooting itself in the foot by not seeking competent help in preparing the GE forms.”

 

Additional Reading

Big article right? If you have more questions, you might want to look at these articles:

Passing On Hawaii’s General Excise Tax Not Possible for Some by Lowell Kapala, Hawaii Reporter

Oahu County Surcharge FAQs by Hawaii Department of Taxation

FAQs by Hawaii Department of Taxation

General Excise Tax License Required for Business Activity by Fred Pablo, Hawaii Tax Director

Tax Facts 96-1: General Excise Tax vs Sales Tax by Hawaii Department of Taxation

Tax Facts 97-3: Starting a Business, Licenses and Taxes by Hawaii Department of Taxation

O’ahu stores can tax up to 4.712% by Greg Wiles

***

Disclaimer / Last Note: I am not a tax professional nor do I work for the Hawaii tax department. If you have more questions, look through the comments or call the State Tax Department.

360 comments on “Everything You Need to Know About The Hawaii General Excise Tax

  1. i am a consultant giving advise to a client who owns a rental community in waikiki. They are paying my corporation in Texas. Do i have to collect the GET tax from them ?

    1. If your business is located in Texas, then Texas state tax laws would apply, not GET. The Hawaii GET is for businesses registered to do business in Hawaii. Your client would probably have to pay GET on the rent money she collects though. Makes sense, right?

  2. aloha ron!

    i just wanted to say THANK YOU!!! After seemingly countless hours of trying to locate all the information presented here, i found u!!! i don’t even need to ask anymore questions because they were already answered here! i truly appreciate the clarity u provide and the easy to understand terminology, not to mention ur polite humor and straight forward attitude.

    THANK YOU!!!

  3. GET is very confusing, thank you for this article! If I pass on GET to clients (4.712% 4.166%) when I file & pay G-45 form I pay ONLY the amount that was passed on to the client correct? Some articles make it sound like I have to pay tax on top of tax! If that is the case, wouldn’t it be better to not pass on GET to client so gross income is less and just pay the 4% and 4.5% rate? Thank you so much in advance!

    1. Marrissa, you actually do pay GET on GET. If you charged your customers 4.5% for GET (Oahu), then you’d still have to pay 4.5% on that 4.5% GET. But people simplify by either charging customers 4.712% OR by not adding a GET but instead paying GET out of the money from the sale.

      1. Hi Ron, I am filing my G-45 for the first time. My rental management company charged the customer %4.166 of the total revenue. However, when I enter the total revenue in the e-file form it automatically fills in a GET rate of %4. Any suggestions? Who would’ve thought it would be so complicated. Your site is the most informative I have seen. Thanks, Joy

  4. Ron, I am non resident and was told that the tax my landlord charges me on my rent could be reimbursed on n-15 form for state taxes. Smile, n Smh. I am having issues with getting my money- any suggestions

  5. Ron.
    I am not sure how to get this answer back to you (I promised I would) so I am just posting it here. Feel free to reformat and repost if needed.

    QUESTION (to you and to State):
    “I am an independent professional consultant (scientist) reporting my GE Tax taxable consulting income on Form-45. I have been reimbursed for travel at no mark up cost to my customer which I have been told is GE Tax exempt since it was separately invoiced and at no mark up.
    Question: How do I report this reimbursement on my Form 45? Do I include it in Column A (Gross) and then take the exemption in Column B and file Schedule GE? If so, under what HRS paragraph does that fall with respect to the Schedule GE categories?”

    RESPONSE from the SoH:
    “Aloha,
    Please reference to HAR 18 at http://files.hawaii.gov/tax/legal/har/har_237.pdf, it provides that “the reimbursement of a cost or advance made for or on behalf of one person by the taxpayer shall not constitute gross income to the taxpayer, unless the taxpayer receiving such reimbursement also receives additional monetary consideration for making such cost or advance.”
    The department of taxation issued regulations interpreting this change as Hawaii Administrative Rules section 18-237-20. The Reimbursement exemption applies when:
    1) Taxpayer pays a cost or advance to Thrid Party;
    2) For or on behalf of Reimbursing Party; and
    3) Taxpayer is repaid the cost or advance and receives no additional monetary consideration for making the cost or advance.
    Mahalo
    Jenny
    Taxpayer Services”

    So, that’s the answer! Critical part is “…receives no additional monetary consideration for making the advance.” I fortunately invoiced my customer separately for the travel stating that no markup was added so it is clearly an “advance” as defined by the SoH GET law.

    Thanks for the wonderful site.
    Jon

  6. I went and got my General Exersice license about 4 years ago and
    never did anything with it. Is it still good or do i have to get another one? I looking in to trying to start up my business full time now. What do i need to do?

  7. I live in Hawaii, but do research and writing for a single client in New York. I’m paid as a contractor. Since all off this work is for someone out of state, whom I only communicate with via Skype, email, and phone, is this different from the commenter below who teaches guitar to people on the mainland by Skype? Is what I do subject to GET?

    1. I have the same situation and am trying to figure this out! Any help would be amazing!
      I have one main client in CA that pays me as a contractor. All work is done virtually, just emails and organizing things kind of like a virtual assistant.

  8. Ron,
    Your information is excellent and clears up a lot of the confusion about this tax.
    I have one very simple question. When it says that the (quarterly) tax is “due” on, say, April 20, does that mean actually received by the tax dept. or simply post-marked by that date?
    Thanks for your reply.
    Dave

  9. Hi Ron,

    This is one of the most helpful article about GET out there. Thank you for sharing. I got my GET license last year as a requirement to be a registered interpreter. I was so busy with my full-time, I ended up didn’t take any translation job. Do I need to file GET tax? Will there be a penalty fee for late filling even if I didn’t have any business income? Thank you.

  10. Ron,
    I was vague with my the previous question.
    The question should have been written as:
    “Do I record all income (Gross) in Column A and report this reimbursement as an ‘exemption’ in Column B to get my taxable income (Column C)? “

  11. Ron,
    I did some consulting work (I have license, etc.) and got reimbursed for travel costs (invoiced at cost, no markup). I’ve been told that this reimbursement is exempt from GET since there is no markup. How do I report this on my filing?
    Do I just not report this income on the G45? (doesn’t seem correct)
    OR
    Do I take record all income in column A and report this income as an “exemption” (Column B) to get my taxable income (column C)? (Columns A, B C form G45). If I claim an exemption I need to file Schedule GE (Schedule of Exemptions and Deductions) … but under what HR237 paragraph do I claim this exemption?

    1. Jon,

      Large reimbursements are usually associated with employees. The fact that they reimbursed you for a flight essentially translates to them paying you an amount (in addition to your work fee) equivalent to your travel expenses. It’d be the same if you were to buy a car and then have them reimburse you for it as part of a work negotiation. Well, basically, that car is part of your payment and thus needs to be considered part of your income. This is a key difference in employee vs contractor determination — bosses take care of employees’ stuff, but an independent contractor is expected to provide their own things (supplies, tools, software, travel expenses, classes, etc). However, the instructions for GE45/49 do not mention reimbursements for independent contractors, so I am just hypothesizing here. Best to call the State tax department… and hope they have a tax expert that has a firm stand on the issue.

      1. Ron,
        Thanks. I already have a call into them.
        From past experience in the 1980s and 90s when I served on committees for NASA, etc., and got paid honoraria and reimbursement for airfare back to where ever, I reported only the honoraria, if I ever got that, but I can’t remember the who, what, why and how of the justification. I would never have bothered to go if I had to pay 4% just for the honor of traveling away from HI – NASA was not going to reimburse me for a GE Tax line added onto the travel reimbursement request. Anyway, when I find the answer I’ll let you know. There must be others out there with the same issue, unless they just tack 4.5% onto the cost of the ticket and their customers are OK with that.
        Jonathan

        1. Couple things I want to add:

          1. Reimbursements have no real effect on federal income tax, as the expense and reimbursement amount offset.

          2. The Ge tax is only for doing business in Hawaii. If they flew you out to California to consult with a client there, then your earnings on that outside-of-Hawaii project would not be taxable by GET (though you’d still have state taxes as a resident of HI).

          1. Ron,
            Good point about the out-of-state aspect w.r.t. reimbursements and GE tax. Maybe that’s what the rational was years ago. I’ll still research and let you know.
            The income tax/business deductions is pretty straightforward/common sense as you point out.
            Great blog!
            Jon

  12. Hi ron,
    I was wondering how to change paying GET from 3 months to 6 months? My husband just got his GE license and while signing up he chose the 3 months. Are we able to change it online or is there someone we have to contact? Pls help.
    Thank you.

  13. Hi Ron, thanks for the article. I just signed up for a sole proprietor license from your link.

    My question is if the amount of GET I owe is small, do I still have to pay semi-annually (they didn’t have an “annual” choice during the signup)? Or can I just pay once a year using whatever the annual form (G49?) is?

    Mahalo

  14. 4.5% Tax on the 4.5% tax business collects for the State!?!?
    WTF
    And why is Insurance rate so low…Funny how they and the State have a similar racket.
    “The General Excise Tax (GET) is levied against a business’s gross receipts for the privilege of doing business in Hawaii.”
    Yeah. Privilege to make a living and eat!
    Thank you my overlords.
    King & Queens didn’t die…they just changed clothes.

    1. LOL. Thanks Tiki for cheering up my day with your rant/commentary.

      The 4.712% is pretty steep. It’s also on gross receipts, so businesses with low margins are absolutely gutted. But that’s the cost of doing business in Hawaii. I think we all either have to accept it, move to another state (hellooo Nevada) or do business “off the books.”

      With that said, have you heard the news that Hawaii mayors want the option to slap on another 1% for the GET? Time for me to either become an employee or plan to move states…

  15. Hey Ron, good article and a painful subject for some. I just found out from a tax accountant that my business is one that would be exempt from GET.

    I teach guitar, bass and ukulele on skype and do not have a single transaction from a student located in Hawaii.

    I plan to reside on Oahu and was told that since the “sale” of my lessons is happening to a student not on Hawaii I am exempt. This is great news and I feel the GET is very uncool.

  16. I started off my business paying taxes semi-annually. Now that the business is growing, am I able to change to quarterly, or do I have to keep it at semi-annual? (I still pay less than $500 in taxes semi-annually but it’s still a lot for my small budget)

  17. Ron,

    My wife and I recently purchased a condominium that we are renting to occasional tenants for which we will be responsible for paying a Transit Accommodation Tax and a General Excise Tax. We pass through both the TAT and the GET, as well as the expenses for the cleaning serve we use after each rental.

    In reading materials from the State, it appears that we can deduct the passed through TAT and GET amounts, as well as the passed through cleaning fees when we file out TAT return. However, while it appears that we can deduct the passed through TAT tax when filing out GET return, I do not see that we can deduct the amount of the passed through GET or the passed through cleaning fee (although we pay passed through GET to the cleaning service). As an aside, we have not been charging our tenants this additional passed through GET surcharge that we pay to our cleaning service.

    Is there a deduction that I am missing, or are we only allowed a deduction for the TAT that is passed through to our tenants. From your excellent explanation, I can wrap my head around not being able to deduct the passed through GET, but I am having trouble understanding why we may not be able to deduct the passed through cleaning fee.

    Thank you for any guidance you can give us.

    1. Ron,

      As an addendum to my query, above, in the alternative, is the passed through cleaning fee to our tenants considered income at all for purposes of calculating our GET on our condominium rentals? It appears that it clearly is considered income for purposes of filing the TAT, because we can deduct it from our gross proceeds. However, it now occurs to me that perhaps it is not income at all for purposes of determining our GET.

      Can you shed any light on that angle as well?

      Thank you.

    2. Sorry Jim, but your question is complex and expands far beyond the scope of my article. If you need a referral to a CPA who knows the GET, I can help, but otherwise, you should contact the appropriate tax departments.

  18. This is awesome information Ron! I’m thinking of starting a retail website but I wasn’t sure about the rules. Is having a GE license all I need to get started? And what about paying taxes, should I pay for it or charge the customer?

    Thanks a lot!

    1. Melanie,

      Registering your business and getting that license are the biggies. If you plan to do business as something other than a sole-proprietor, choosing the right type and filing the right papers would be important too.

      As for who to pay the GET, read the section “Should I make my customers pay the excise tax?” It’s in big, bold letters, just for you sistah!

  19. Ron,

    I have loaned money personally to my c corporation of which I own 100 % of the stock at the minimum required interest. When it is returned to me, am I required to pay Hawaii GET on the interest or is that just ordinary interest income taxed at whatever my current tax percentage is? I am not in the business of loaning money. Thank you.

    1. Jon,

      That’s a difficult series of questions to which I do not have the answers to. I would recommend consulting with a CPA. Let me know if you one. I could refer you to a knowledgeable one.

  20. Hi Ron,

    I applied for a GE license few month ago for a marketing business but since things have changed, I will be doing computer teaching class instead. Can I use the same GE License?

    1. The license is assigned to a business. If you are a sole-proprietor (a person-business), then you can use the same license. A business can make money doing many things.

  21. Do I still need to filled Taxes if we never make any income from our business for the parts of 2012 and the whole 2013. We started having income from the beginning of this Month February 2014.

    Mahalo

  22. Hello,
    So I talked to one CPA on kauai and he told me just to get a get license for tax purposes. He said that I didn’t need to start a business, just to have a seperate checking account for keeping track. We own a second property and are planning on renting it out. Is this correct and do I need a business?

    1. You can operate as a sole-proprietor, which means that you and your business are one and the same and that your income from your rentals just go on your regular, individual tax return (except you fill out a schedule.. I think A? to report rental income). Meanwhile, someone who creates an LLC for his rentals would have to file a return for himself and another separate return for his LLC.

      Also, Jaqueline, you should follow your CPAs advice. Afterall, he does taxes for a living. Me, I’m a guy on the internet. CPA > guy on internet. If you do need another CPA in the future for taxes or bookkeeping on Oahu, let me know and I could refer you to someone.

Leave a Reply

Your email address will not be published. Required fields are marked *