The taxes you pay will depend on the type and form of business you have. Here are a few basics:
FEDERAL INCOME TAX
Business income after expenses is subject to federal income tax, much like wages and interest income are. The amount you pay will depend on what tax bracket your overall income falls within.
SELF=EMPLOYMENT TAX
Self-employment tax of 15.3% of 92.35% of net business income is also charged on your individual income tax return. This tax covers your social and medicare taxes normally withheld from and paid by an employer when you are a wage earner. If you form your business as a corporation, you would be paying yourself a wage, thus this tax would be withheld from your wages rather than charged on your tax return.
STATE INCOME TAX
Business income after expenses is subject to Hawaii income tax, much like wages and interest income are. The amount you pay will depend on what tax bracket your overall income falls within.
GET
All businesses pay general excise tax (GET) in the State of Hawaii. GET is 4% of gross retail sales/services and 1/2% of gross wholesale sales and services to/for an intermediary plus an GET passed on to your customers. GET is a tax for the privilege of doing business in the State of Hawaii.
TAT
If your business involves vacation or short-term rentals, you will also be subject to transient accommodations tax (TAT) in the State of Hawaii. TAT is 9.25% of the room rate charged your guests.
FEDERAL INCOME TAX
Business income after expenses is subject to federal income tax, much like wages and interest income are. The amount you pay will depend on what tax bracket your overall income falls within.
SELF=EMPLOYMENT TAX
Self-employment tax of 15.3% of 92.35% of net business income is also charged on your individual income tax return. This tax covers your social and medicare taxes normally withheld from and paid by an employer when you are a wage earner. If you form your business as a corporation, you would be paying yourself a wage, thus this tax would be withheld from your wages rather than charged on your tax return.
STATE INCOME TAX
Business income after expenses is subject to Hawaii income tax, much like wages and interest income are. The amount you pay will depend on what tax bracket your overall income falls within.
GET
All businesses pay general excise tax (GET) in the State of Hawaii. GET is 4% of gross retail sales/services and 1/2% of gross wholesale sales and services to/for an intermediary plus an GET passed on to your customers. GET is a tax for the privilege of doing business in the State of Hawaii.
TAT
If your business involves vacation or short-term rentals, you will also be subject to transient accommodations tax (TAT) in the State of Hawaii. TAT is 9.25% of the room rate charged your guests.