From choosing your entity structure to opening your first bank account — everything you need to start your business correctly. Each step builds on the last. Don't skip ahead.
Every step matters. Do them in this sequence — each one unlocks the next.
This is the most important decision — it affects your taxes, liability protection, and paperwork for as long as you're in business. Most founders start as a sole prop or LLC. S-Corp makes sense once you're consistently profitable.
See Entity Comparison tab for full breakdownSearch your state's business registry to make sure the name is available. In Hawaii, check the DCCA business registry. Also search the USPTO trademark database if you plan to operate nationally.
Hawaii: dcca.hawaii.gov · USPTO: tmsearch.uspto.govFile your Articles of Organization (LLC) or Articles of Incorporation (Corp) with your state's Secretary of State or equivalent agency. In Hawaii this is the DCCA — $50, processed in 1–5 business days online.
Hawaii LLC: $50 · businessregistrations.ehawaii.govYour Employer Identification Number is your business's federal tax ID — like a Social Security number for your business. Apply free at irs.gov/ein. Takes 15 minutes. Issued instantly. You need this before opening a business bank account or hiring anyone.
Free · instant · irs.gov/einEvery state has different requirements. Hawaii requires GET registration (Form BB-1 at hitax.hawaii.gov) before your first sale. California requires registration with the FTB. Check your state guide for exactly what applies to you.
⚠ Must do before first saleNever mix personal and business money. If you have an LLC, commingling funds can pierce the corporate veil and destroy your liability protection. Open a business checking account the same week you register — bring your EIN and state registration documents.
Critical for LLC liability protectionAn Operating Agreement defines how your LLC is run — who owns what, how decisions are made, what happens if an owner leaves. Not legally required in most states but strongly recommended. It proves your LLC is a legitimate separate entity, not just a personal asset protection strategy.
Single-member LLC: use a template · Multi-member: hire an attorneyConnect your business bank account to bookkeeping software and categorize every transaction from the start — not retroactively. Wave is free and excellent for solo founders. QuickBooks if you need more features.
Wave is free · wave.comOnce your business is registered, these are the next priorities.
A SEP-IRA lets you contribute up to 25% of your net self-employment income — and deduct every dollar. At Hawaii's 11% state tax rate, a $20,000 contribution saves $2,200 in state tax alone, plus federal savings.
Most commercial leases and client contracts require proof of general liability insurance before you can start work. Get a certificate of insurance (COI) from your insurer — it's a one-page document proving your coverage.
The IRS requires self-employed founders to pay estimated taxes quarterly. Missing payments results in underpayment penalties. EFTPS is the free IRS system for making these payments.
If your LLC is generating $50,000+ in annual net profit, electing S-Corp tax treatment can significantly reduce your self-employment tax bill. You pay yourself a reasonable salary and take the rest as distributions — only the salary gets hit with SE tax.
The four most common business structures — what they protect, how they're taxed, and who they're right for.
An LLC protects your personal assets from business debts and lawsuits — but only if you treat it like a separate entity. Here's what protects you and what breaks the shield.
Forming an LLC with two or more members adds important legal and tax considerations. Here's everything that changes when there's more than one owner.
How multi-member LLCs differAn Operating Agreement for a multi-member LLC is not optional — it's the document that prevents disputes, defines what happens when a partner wants to leave, and protects everyone involved. Don't form a multi-member LLC without one.
A multi-member LLC is taxed as a partnership by default. This means the LLC itself doesn't pay income tax — instead it "passes through" income and losses to each member based on their ownership percentage.
A multi-member LLC can also elect S-Corp tax treatment (file Form 2553) to reduce self-employment taxes. The same rules apply — generally worth it when total business profit exceeds $50,000/year across all members.
A 50/50 LLC ownership split is the most common — and most dangerous — structure for a two-person partnership. Without a clear dispute resolution mechanism, any major disagreement can paralyze the business since neither partner can outvote the other.
Founders disagree on whether to take a loan, hire a key employee, or pivot the business. Both own 50%. Neither can move forward without the other's consent. The business is effectively frozen until the dispute is resolved — which can take months or destroy the partnership entirely.
Your EIN (Employer Identification Number) is your business's federal tax ID. It's free, instant, and you can't open a business bank account without one.
The IRS EIN application is 100% free and available online. Don't use any third-party service that charges for this — they're just using the same free IRS form and adding a fee.
Select the entity type that matches your state registration — Sole Proprietor, LLC, Corporation, etc. For a single-member LLC, choose "LLC" and enter "1" for the number of members.
You'll need: your legal business name (exactly as registered with your state), your business address, and your personal Social Security Number (as the responsible party). This is normal — it links your EIN to your personal tax records.
After submitting the online form, your EIN is issued immediately on screen. Print or save the confirmation page — this is your official EIN assignment letter. Your EIN is permanent and doesn't expire.
Takes 15 minutes · Free · irs.gov/einOnce you have your EIN, here's exactly what to use it for.
| Purpose | What to do | Timing |
|---|---|---|
| Business bank account | Bring your EIN + state registration docs to any bank | Within 1 week of getting EIN |
| State tax registration | Use EIN on all state tax registration forms (BB-1 in Hawaii) | Before first sale |
| Vendor and contractor forms | Provide EIN on W-9 forms instead of your Social Security Number | Whenever requested |
| Business credit card | Apply using your EIN to start building business credit | After bank account opened |
| Hiring employees | Required for all payroll tax filings and W-2s | Before first hire |
| Business licenses | Many local business licenses require your EIN | When applying for licenses |
A DBA (also called a "trade name" or "fictitious business name") lets you operate under a name different from your legal business name. It does NOT create a new legal entity — your LLC still provides the liability protection.
Key formation details for each of the 8 states in our deep dive collection. Formation guides apply to all 50 states — these are just the most commonly asked about.
The most common questions founders ask when starting their business.
A sole proprietorship is fine for testing an idea with minimal risk. But once you're earning real money or working with clients, an LLC provides critical protection. If someone sues your sole prop, they can come after your personal bank account, car, and home. An LLC creates a legal wall between your personal and business assets.
The cost to form an LLC is $50–$300 depending on your state — that's a small price for the protection it provides.
Yes, but it's usually not worth it for small businesses. Many founders hear about forming in Delaware or Nevada for tax benefits — but if you're operating in Hawaii, you'll still need to register as a "foreign entity" in Hawaii and pay Hawaii taxes anyway. You'd be paying fees in two states for no real benefit.
Form in the state where you actually do business. For most Hawaii-based founders, that means Hawaii.
A registered agent is a person or service that receives official legal and government documents on behalf of your LLC — lawsuits, tax notices, state correspondence. Most states require you to have one with a physical address in the state.
For a Hawaii LLC, you can serve as your own registered agent (using your business address), or hire a registered agent service for $50–$150/year. Using a service keeps your home address off public records if you work from home.
In Hawaii, online filing through the DCCA is typically processed in 1–5 business days. Your EIN from the IRS is issued instantly online. So realistically, your LLC can be fully registered with a federal tax ID in about a week.
States vary: Florida processes in 1–2 days, California in 3–5 days, New York can take 7–10 days. Expedited processing is available in most states for an additional fee.
Yes — your LLC registration and a business license are separate things. Most counties and cities require a general business license (sometimes called a business permit) to operate legally within their jurisdiction. In Hawaii, check with your county's licensing department.
Some industries require additional professional licenses — contractors, healthcare providers, food service, real estate, and others. Always check your industry's specific licensing requirements.
Generally when your net profit consistently exceeds $50,000/year. Below that threshold, the accounting costs of running an S-Corp (payroll, separate tax return, bookkeeping complexity) typically outweigh the SE tax savings. Above it, the math usually flips significantly in your favor.
At $80,000 in profit, an S-Corp election can save $4,000–$7,000/year in SE taxes alone. At $150,000, the savings can be $10,000+. Use the LLC vs S-Corp calculator on your dashboard to run your specific numbers.
This is one of the most misunderstood areas for online business owners. The answer is: it depends on your sales volume and whether you have "nexus" in that state.
Nexus means a significant connection to a state that triggers a tax obligation. There are two types:
Since this Supreme Court decision, states can require out-of-state online sellers to collect and remit sales tax even without a physical presence. Most states now have economic nexus laws — meaning if you sell enough into their state, you owe their sales tax.
| State | Sales threshold | Transaction threshold |
|---|---|---|
| Hawaii | $100,000 | 200 transactions |
| California | $500,000 | No transaction threshold |
| New York | $500,000 | 100 transactions |
| Texas | $500,000 | No transaction threshold |
| Washington | $100,000 | No transaction threshold |
| Florida | $100,000 | No transaction threshold |
| Oregon | No sales tax — no nexus concern | |
| Nevada | $100,000 | 200 transactions |
Hawaii's General Excise Tax applies to ALL gross income from Hawaii customers — including online sales to Hawaii residents from an out-of-state business that has nexus in Hawaii. If you're a Hawaii business selling online, GET applies to all your Hawaii sales regardless of where the customer is located.
Not necessarily — only if you have nexus there. There are two separate registration requirements to be aware of:
Required when you exceed the state's economic nexus threshold (usually $100k in sales or 200 transactions). Register for a sales tax permit in that state and start collecting/remitting their sales tax.
Required if you're "doing business" in another state — meaning you have employees there, a physical office, regularly meet clients there, or have inventory stored there. This is a separate registration from sales tax and involves registering your LLC or Corp as a foreign entity with that state's Secretary of State.