When you operate a business in Hawaii, you are required to pay general excise taxes on any items you purchase from your vendors and suppliers. You must still pay this tax even when buying inventory items you intend to resell to your customers.
The current general excise tax rate is 4%. However, there can be up to an additional 0.5% in certain counties or cities. Most businesses pass along the general excise tax expenses they pay to their customers to recover the money they paid to their vendors and suppliers.
However, the state does allow business owners in Hawaii to obtain a Hawaii resale certificate to offset the amount of tax they pay on inventory items.
What Is a Resale Certificate in Hawaii?
A Hawaii resale certificate is a special certificate issued by the state that reduces the amount of general excise taxes paid to vendors and suppliers to 0.5%.
For example, you operate a book store in Lahaina. Instead of paying the 4% state tax and any county or city tax to your vendors and supplies, you are only charged 0.5% in general excise taxes for the books you intend to resell to your customers. Any books or other items purchased that you do not intend to resell are still charged at the normal general excise tax rate.
Other Names for a Hawaii Resale Certificate
- Hawaii Wholesale Permit
- Hawaii Reseller’s Permit
- Hawaii Wholesale License
- Hawaii Resale License
- Hawaii Vendor Permit
Who Needs a Resale Certificate in Hawaii?
All business owners in Hawaii who resell goods at retail need a resale certificate. The primary benefit is, of course, you only have to pay 0.5% in general excise taxes on your inventory items.
How Do I Use a Hawaii Resale Certificate?
Once you obtain your resale certificate, you will need to make multiple copies of the certificate to present to your vendors and supplies. Every vendor and supplier will keep a copy of the certificate. You only need to do this once, and any future sales from your vendors and suppliers will receive the reduced general excise tax rate on your resale items.
Can I Use My Hawaii Wholesale License Out of State?
Most states will honor your existing wholesale license. However, Hawaii is one of ten states that do not recognize out-of-state resale certificates. For example, if you want to purchase goods and not pay sales taxes on them in Washington or California, you must file and obtain a resale certificate in each of those states.
Do Resale Certificates in Hawaii Expire?
Once you obtain your resale certificate in Hawaii, it never expires. However, there are a few exceptions you need to know about. For starters, if you change your business name or the location of your business, you do need to update your certificate with the state and provide your vendors and suppliers with a new copy reflecting the changes.
Second, if you decide to sell the business, the new owner needs to update the ownership change with the state. Then they would need to present new copies of the resale certificate to vendors and suppliers.
Last, the resale certificate is considered “expired” if you go out of business.
How Much Tax Do I Charge My Customers?
Business owners in Hawaii charge their customers the 4% state general excise tax rate plus any county or city rate. In addition, they are allowed to charge up to 0.166% more to help recover the taxes they paid to their vendors and supplies.
If one of your customers has a resale certificate in Hawaii, then you would only charge them 0.5% in general excise taxes on the items they are purchasing from you that they intend to resell to their customers.
Is a General Excise Tax License the Same as a Resale Certificate?
In Hawaii, a general excise tax license, also known as a sales and use tax certificate or seller’s permit, is not the same thing as your resale certificate. All business owners in Hawaii must obtain a general excise tax license. However, only businesses that sell goods at retail need a resale certificate.
How to Easily Get a Hawaii Resale Certificate Using FastFilings
The easiest way business owners in Hawaii can obtain a resale certificate in Hawaii is to use FastFilings. We have simplified the Hawaii resale certificate instructions to make it easier to get your certificate online:
- Fill out our secure online form.
- Upload any required documents.
- Provide payment information.
- We review your application for completeness and accuracy.
- We transfer the information you provided to an official Hawaii resale certificate form and file it electronically with the state.
- Receive your resale certificate electronically within a few business days.
Nothing could be faster or easier. To get your resale certificate for your Hawaii business, apply online today! We can also help you obtain your Hawaii general excise tax license and wholesale permits for other states.
Do not hesitate to use our online contact form if you have any questions or require further assistance.