Hawaii Small Business Statistics

Today, the Aloha state is an alluring vacation spot. It’s no wonder that tourism and hospitality businesses are at the core of the state economy. However, before 1959, the islands were heavily dependent on sugarcane, sandalwood, and pineapple export.

Though Hawaii lingers at the bottom of the CNBC “Top States for Business Rating” due to high business running costs, the state still attracts many small entrepreneurs (SMEs) who seek to combine entrepreneurial activity and relaxed living.

Our list of interesting facts on Hawaii small businesses will help you get a more detailed overview of the state's economic environment.

Key Hawaii Small Business Stats

• Standing at the $79.18 billion mark in 2019, the real GDP of the state dramatically dropped to $70.63 billion in 2020 following the plunge into the pandemic crisis;
• A recent Statista report verifies the confident recovery of the Hawaiian economy, with a 5% GDP growth to $73.88 billion in 2021;
• Industries contributing the most to the state GDP are real estate, healthcare services, and retail trade sectors ensuring 42.8% of the total GDP according to an IBISWorld survey;
• In 2020, small firms generated $160 million by exporting goods, thus, accounting for 61.5% of the entire $265 million state export;  
• In 2022, 141.460 small enterprises operating in the state represent 99.3% of the total business landscape;
• The highest SME count is observed in the professional, scientific, and technical service sector (19.522 entities) followed by the real estate and leasing industry, with 15.020 companies in it; 
• Mining, quarrying, and oil and gas sectors have the lowest number of SMEs, with only 22 companies currently operating in the industry;
• For the period from March 2020 to March 2021, 4.584 new small establishments have opened in the state, and 4.464 companies have closed showing a net gain of 110 SMEs;
• The SME employment market has decreased by 45.448 jobs for the same period;
• SMEs most hit by the COVID-19 impact are accommodation and food services and retail trade;
• In 2021, Hawaii ranks 49th in CNBC rating as the most expensive state for doing business after New York;
• Hawaiian SMEs employ 272.459 workers supporting nearly 50% of the entire employment market in the state;
• While most SMEs are non-employer companies, about 15% of firms employ from 1 to 19 workers, and 2% of SMEs have from 20 to 499 employees;
• The most active SME employers are in the accommodation and food service sector employing 55.528 Hawaiians and in the healthcare and social services sector, with 35.212 workers;
• The minimum wage in HI is $10.10 per hour, which is nearly $3 above the federal minimum;
• The average hourly pay rate in HI is $24.98 resulting in an annual income of $51.952;
• Self-employed Hawaiians running registered entities have an average annual income of $48.000 while non-registered businesses bring $22.000 per annum to their owners;
• Bureau of Labor Statistics reports that in 2022, the unemployment rate across the state is 3.5% showing a significant decrease from 5.7% in 2021.

Top 10 Industries for Small Businesses in HI

HI Small Business Demographics

• Female-owned small firms account for 54.861 entities and make up 48.2% of all SMEs;
• Around 10% of women-controlled SMEs are employer companies with up to 500 workers in them;
• 69.953 SMEs are possessed by men, with nearly 20% being employer businesses;
• Women ensure nearly 47% of the labor force in the state;
• Veterans control 7.6% of private entities and represent 7.2% of private sector employees;
• While other states are mostly populated by white/Caucasian Americans, Hawaii is a more ethnically diverse area, with only 25.5% of the white population based on the Census Bureau data;
• Around 38% of HI residents are Asians, 11% are Hispanics, and only 10% are native Hawaiians. Notably, over 24% of the island residents are mixed races;
• Hispanics maintain 6.2% of SMEs in the state and represent 9.4% of the workforce;
• Other racial minorities own 51% of all small companies and ensure over 58% of the total manpower across the state;
• The SME count is shared by ethnic groups in the following way:
  • Asians: 56.883;
  • Native Hawaiians and islanders: 8.305;
  • Hispanics: 6.800;
  • Black Americans: 1.500;
  • American Indians: 549.

HI Small Business Formation

• Statutory requirements call for a Hawaii LLC to submit the Articles of Organization to be registered and pay a $50 filing fee;
• To maintain a registered entity in the state, the law requires business owners to appoint and maintain a Hawaii registered agent that will stand on guard of your company’s compliance status by handling its legal mail and service of process;
• The state has no general licensing requirements in place while some local permits might still be needed;
• When it comes to income taxes for enterprises, the state has a graduated taxation system:
  • Personal tax brackets range from 1.4% to 11% depending on the profit amount;
  • Corporate tax rates are within 4.4% to 6.4%;
• While the state has no sales tax in place, all businesses are exposed to a general excise tax (GET) that varies and requires a General Excise Tax License (issued at a $20 fee);
• The current GET rate is 4%, yet, the total rate might appear higher depending on the county and valid local levies.

References

1. 2022 Hawaii Small Business Economic Profile
2. How Many Small Businesses Are There in Hawaii?
3. Hawaii Small Business Statistics (2022)