This article covers the bare essentials needed to get your therapy practice up and running in Hawaii.
1. Local Zoning Laws and Regulations in Hawaii
Hawaii boasts four counties: the City and County of Honolulu, the County of Maui, the County of Hawaiʻi and the County of Kauaʻi (and one quasi county, Kalawao). Before you settle on a location for your therapy practice—even if that location is your own home—you must make sure the local zoning allows you to operate there.
To check local zoning regulations in Hawaii, you can refer to the following resources:
- The Hawaii County Code Chapter 25, also known as the “Zoning Code,” which defines permitted land uses within the State Land Use “Urban” and “Agricultural” classifications, and spells out required building setbacks, height limits, and other constraints for each zoning district
- The Land Use Ordinance (LUO), which defines the different zoning districts in Hawaii and their respective restrictions on land usage, building, setbacks, and height limits
- The Hawaii State Planning Act and Engineering Hawaii’s Future, which are broad policy documents that set the table for all activities, programs, and decisions made by local and state agencies
- The HOLIS open geospatial data site, which provides the latest copy of the Oahu Zoning layer
2. Business Name Search in Hawaii
To register a business name in Hawaii, you can use the Hawaiʻi Business Express online service provided by the State of Hawaii Department of Commerce and Consumer Affairs, Business Registration Division. This service allows you to register a trade name, trademark, or service mark online, as well as manage ongoing requirements such as filing your annual report and submitting any changes for your business. You can also find your business file number and details on the Hawaiʻi Business Express website.
The cost of registering a business name in Hawaii depends on the type of entity and the type of registration. According to the Business Registration Division’s Form Fee Schedule, corporations, partnerships, limited liability companies, and limited liability partnerships are subject to different fees.
For trade name, trademark, and service mark registrations, the fees are $50 per registration. It is recommended to check the fee schedule for the most up-to-date information on fees by entity. You can register a business name online using the Hawaiʻi Business Express service provided by the State of Hawaii Department of Commerce and Consumer Affairs, Business Registration Division.
To get a DBA for your therapy practice in Hawaii, you can follow these steps:
- Check the state’s business name database to ensure that the name you want to register for your DBA is available.
- Fill out the Application for Registration of Trade Name document.
- File your Hawaii DBA with the Department of Commerce and Consumer Affairs.
- It is important to note that filing a DBA is voluntary in Hawaii, but it can be helpful in many regards.
3. Business Structure in Hawaii
The most common legal structures for a small business are:
- sole proprietorship: To establish a sole proprietorship in Hawaii, you don’t need to file any organizational documents with the state.
- Partnership: To create a general partnership in Hawaii, you need to file Form GP-1, Registration Statement of Partnership, with BREG. In addition, although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners.
- limited liability company (LLC): To create an LLC in Hawaii, you must file Articles of Organization with BREG. You will also need to appoint a registered agent in Hawaii for service of process. In addition, while not required by law, you also should prepare an operating agreement to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state.
- Corporation: To create a corporation in Hawaii, you must file Articles of Incorporation with BREG. You will also need to appoint a registered agent in Hawaii for service of process. Although not legally required, you also should prepare bylaws to establish your corporation’s internal operating rules. Bylaws are not filed with the state. S Corporations must also file IRS Form 2553, Election by a Small Business Corporation, with the IRS.
4. Register Your Business in Hawaii
Filing fees: $51 to incorporate, plus the annually franchise tax in Hawaii is 7.92% and is measured by the entire net income from all sources of the income year.
- Choose a business name.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Draft and file your Articles of Incorporation.
5. Business Licenses & Permits in Hawaii
The process to apply for the necessary licenses and permits for a therapy practice in Hawaii varies depending on the type of therapy practice. For example, mental health counselors need to apply for a license through the Professional and Vocational Licensing Division (PVL) of the Department of Commerce and Consumer Affairs.
Occupational therapists need to obtain a license from the Department of Consumer and Customer Affairs office. The application process may involve submitting forms and proper documentation online, by mail, or in person. The cost of obtaining these licenses and permits varies depending on the type of license or permit.
6. Business Insurance in Hawaii
The types of insurance required for a therapy practice in Hawaii may vary depending on the type of therapy practice and the specific risks involved. Here are some common types of insurance coverage that may be required or recommended for a therapy practice in Hawaii:
- Professional Liability Insurance: Also known as malpractice insurance, this coverage protects you and your therapy practice in the event of alleged negligence, errors, or omissions in providing professional services.
- General Liability Insurance: This coverage protects your therapy practice from claims of bodily injury, property damage, or personal injury that may occur on your premises or as a result of your business operations.
- Business Owner’s Policy (BOP): A BOP typically combines general liability insurance and property insurance, providing coverage for both property damage and liability claims. It may also include coverage for business interruption, equipment breakdown, and other specific risks.
- Workers’ Compensation Insurance: If you have employees in your therapy practice, Hawaii law may require you to carry workers’ compensation insurance. It provides coverage for medical expenses, disability benefits, and lost wages for employees who suffer work-related injuries or illnesses.
- Employment Practices Liability Insurance (EPLI): EPLI protects your therapy practice against claims related to employment practices, such as wrongful termination, discrimination, harassment, or violation of employment laws.
- Commercial Property Insurance: This insurance covers physical assets, such as your therapy office, equipment, furniture, and supplies, against perils like fire, theft, vandalism, or natural disasters.
It is important to consult with an insurance agent who specializes in professional liability insurance for therapists to determine the specific types of insurance required for a therapy practice in Hawaii. Additionally, therapists may need to accept certain types of health insurance plans to provide coverage for their clients.
7. Business Taxes in Hawaii
A therapy practice business in Hawaii should prepare to pay taxes by registering with the Hawaii Department of Taxation and obtaining a GET License, which requires a one-time $20 fee. Hawaii LLC members pay state personal income tax at a graduated rate, ranging from 1.4% to 11%, based on income level.