“Akamai Money” seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to business@staradvertiser.com and put “Akamai Money” in the subject line.
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QUESTION: If I just started a business last year to supplement my employment income, how do I proceed with filing tax returns?
ANSWER: For purposes of reporting your general excise tax (GET), you must report your entire gross income or gross receipts. In other words, business expenses may not be deducted from gross income or gross receipts. However, when reporting the business income you earned on your individual income tax return, certain business-related expenses may be deducted.
Q: For those in business for themselves, either as their sole income or to supplement their employment income, how do they commonly get “in trouble” with regard to the state/federal tax departments?
A: One common mistake small businesses make is to not obtain a General Excise Tax license before starting their business.
Another common mistake is not understanding that they must file both an individual income tax return and their GET tax return to report their business income. The GET and income tax are two separate taxes: GET is a tax on your business activity, while income tax is a tax on your individual income.
GET tax returns are due on the 20th of the month, on a monthly, quarterly or semiannual basis. The reporting frequency depends on the amount of tax owed by the taxpayer — larger businesses tend to file tax returns on a monthly basis.
Q: If someone in this position cannot afford a tax professional and prepares their own state and federal tax returns, what are the key issues on which they must focus?
A: The Department of Taxation has a lot of useful information on its website that is free and available to the public. Also, our Taxpayer Services staff is more than happy to answer questions from taxpayers, including questions about how to file a tax return, when to file and where to send tax returns. Additional information about how to start a business is also available through the State’s Business Action Center at 1130 Nimitz Highway.
Q: Can any Hawaii taxpayer call the state Department of Taxation for help and advice?
A: Yes. Any taxpayer can call the Department of Taxation. Our Taxpayer Services phone number is 587-4242. Or, we can be contacted via email at Taxpayer.Services@hawaii.gov.
Taxpayers can also visit our four District Tax Offices (Oahu, Hawaii, Kauai, Maui) to speak to someone in person.
All of our offices and telephone lines are open Monday through Friday from 7:45 a.m. to 4:30 p.m. (except holidays).
Addresses of our District Offices are posted on our website or can be obtained by calling our office.
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Interviewed by Erika Engle.
