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USA - Hawaii

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Hawaii is the 50th state of the USA located in the Pacific Ocean on the Hawaiian Islands. Hawaii is a place that currently offers many business opportunities. Suitable activities could be providing services to tourists or the corporate sector, food production, fishing or art. The tourism sector in particular has been booming recently and many new hotels and tourist resorts are being built here.

Company Formation

There are two basic types of corporations in the United States, which differ in the way they are taxed. The first is the Corporation (C-Corp), which pays corporate income tax at both the federal and state levels. If a company wants to pay dividends, it still has to pay withholding tax on dividends, which is also federal and state. So the taxation of this type of company is very high. This kind of company can be optimized by asking the IRS to allow us to pay taxes only at the personal level (this creates an S-Corp). So if the company earns a hundred thousand, it means as if we earned this hundred thousand and we pay personal taxes.

The second basic type is the Limited Liability Company (LLC), where the profits are taxed directly by the partners in proportion to their share of ownership of the company. A corporation pays similar taxes to an S-Corp, but offers more flexibility.

Tax system

The tax system in the United States is quite complicated and extensive. In the system, there are federal taxes intended to finance federal projects, and in addition there are state taxes, the amount of which is determined separately by each state. Since the range of state taxes varies from state to state (often significantly), some US states are more suitable for business, some less so. Federal corporate income taxes range between 15 % and 35 %, depending on the amount of taxable income. The lowest rate applies to income of $50,000.

Hawaii state income tax is an additional 4.4 % or 5.4 % or 6.4 % depending on the amount of taxable income. The basic „sales tax“ rate, which is added to physically sold products, is 4 %, to which the sales tax of individual cities are added.

In general, the tax system in the USA is very comprehensive, and for effective structure setting and company selection, it is always advisable to consult your situation individually with professionals. By doing business in the Hawaiian Islands, it is also possible to obtain a green card and thus the possibility of legal long-term residence in the United States. The Hawaiian government requires little red tape and most forms can be completed online, making all business activities easier.

Before doing business in the US, it is important to review the following information. There are two basic types of corporations in the United States with different taxation.

The first type is the Corporation (C-Corp), which pays corporate income tax at both the federal and state levels. If a company wants to pay dividends, it is required to pay dividend withholding tax, which is also paid at the federal and state levels. These taxes can be quite high. However, an optimization can be done by asking the IRS to allow you to pay tax only on a personal basis (this creates an S-Corp). This means that if the company reports a profit of one hundred thousand dollars, taxes are paid as if you made the profit yourself.

The second basic type of company is the Limited Liability Company (LLC), whose profits are taxed directly in proportion to the partners' share of ownership. Compared to an S-Corp, this type of company offers greater tax flexibility.

Basic information

  • Type of Legal Entity: Limited Liability Company (LLC)
  • Establishment time: 5 working days
  • Number of shareholders: in LLC named „members“ minimum 1, maximum not stated
  • Shareholders: members can be FO or business entities
  • Share capital: not defined
  • Shares on bearer: not allowed
  • A registered address in Hawaii is required
  • Local registered agent required
  • Directors: on an LLC named „managers“ they can be appointed, but the LLC can operate without a manager, so the minimum is 0
  • Resident function of the director: he does not have to be a resident

Taxation

  • Corporate income tax 4.4–6.4 %.
  • The state VAT rate is 4 % for state supplies, local municipalities set a VAT of up to 4.5 %. Every business entity doing business in the state of Hawaii must register for VAT. Not used for companies without local stores.
  • Double taxation agreements with various countries were applied, determining tax rates on dividends, interest and royalties.
  • Bookkeeping and annual return preparation is required, tax return filing is not required for non-US residents.
  • The audit is not mandatory.
  • Anonymity and privacy. Information about directors should be published in the companies register.

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