Hawaii Employer Guide

Honolulu Small Business
Payroll Checklist

Everything you need to set up and run payroll in Hawaii — organized by when you need to do it. From your first hire through year-end W-2s.

Running payroll in Hawaii isn't hard once you know what's required — but there are more moving parts here than in most states. You've got federal obligations and Hawaii-specific ones, and they don't always run on the same schedule. Miss a registration or a filing deadline and you're looking at penalties from two different agencies.

This checklist is organized by timing: what you do before your first paycheck, what happens every pay period, and what falls monthly, quarterly, and annually. Bookmark it. The key dates page has the full calendar if you want specific due dates by month.

Before Your First Payroll

These are the registrations and setups that have to happen before any money moves. Don't skip ahead — if you haven't registered as a Hawaii withholding agent before you start withholding, you're already behind.

  • Get your federal EIN from the IRS (apply at IRS.gov, takes minutes online). Every payroll registration that follows will ask for it.
  • File Form BB-1 (Basic Business Application) with the Hawaii Department of Taxation. One application registers you for your general excise tax license and your employer withholding account. You can file it online at hitax.hawaii.gov.
  • Know your Hawaii withholding schedule. HW-14 returns are filed quarterly. Payments are quarterly, monthly, or semi-weekly depending on your annual Hawaii withholding ($5,000 or less, more than $5,000 up to $40,000, or more than $40,000).
  • File Form UC-1 (Report to Determine Liability) with the Hawaii DLIR. This establishes your unemployment insurance (SUI) account. Register within 20 days after employment begins. New employers pay 2.4% on the first $64,500 of each employee's wages in 2026 until they have enough history to be experience-rated.
  • Collect Form W-4 (federal) and Form HW-4 (Hawaii Employee's Withholding Allowance Certificate) from every new employee before the first paycheck. Both are required. Federal withholding is based on the W-4; Hawaii withholding uses the HW-4, which has its own allowance structure.
  • Verify employee classification. Misclassifying an employee as an independent contractor is one of the more expensive mistakes a small business can make. Hawaii follows the ABC test for UI purposes, and the IRS has its own multi-factor test. When in doubt, treat the person as an employee.
  • Set up your payroll method — whether you're handling it yourself, using software, or outsourcing to a local payroll service. Set up direct deposit authorization forms for employees who want it.
  • Confirm TDI and PHC coverage. Hawaii requires Temporary Disability Insurance and Prepaid Health Care coverage for eligible employees. You'll need both plans in place before eligible employees reach their coverage thresholds.

When You Hire Someone New

Each new hire triggers a separate set of actions beyond just adding them to payroll.

  • Report the new hire to the Child Support Enforcement Agency within 20 days of hire. Hawaii requires the employee's name, address, Social Security number, and first day of work, plus your business name, address, and federal EIN. This feeds the state's child support enforcement system. Missing the deadline can bring a $25 civil penalty.
  • Complete Form I-9 (federal employment eligibility verification). You must complete Section 1 on or before day one and Section 2 within 3 business days. Keep these on file — you don't file them with anyone, but they must be available for inspection.
  • Track hours from day one for PHC eligibility. Prepaid Health Care coverage is required once an employee works 20 or more hours per week for 4 consecutive weeks and earns at least $1,387 a month (86.67 times the 2026 minimum wage). That clock starts on the first day. If you're not tracking it, you may not notice when coverage becomes mandatory.
  • Make sure TDI covers every new hire. Employees qualify for TDI benefits after 14 weeks in the preceding 52 weeks with 20 or more paid hours each week and at least $400 in wages; that history can come from other Hawaii employers. You may withhold up to half the cost from eligible employees, capped at 0.5% of weekly wages ($7.50 a week in 2026); you can cover more if you choose.

Every Pay Period

This is the core cycle — what has to happen each time you pay employees.

  • Calculate gross pay for each employee: regular hours, overtime (time-and-a-half for hours over 40 in a workweek), commissions, bonuses, or any other compensation.
  • Withhold federal income tax using the employee's Form W-4 and the IRS withholding tables in Publication 15-T.
  • Withhold Social Security (6.2%) and Medicare (1.45%) from each employee's wages. Remember the additional 0.9% Medicare surtax applies to wages above $200,000 in a calendar year for a single employee.
  • Withhold Hawaii state income tax using the employee's HW-4 and the current Hawaii withholding tax tables. Hawaii's tables change from time to time — the current tables took effect for wages paid on or after January 1, 2026.
  • Apply any other deductions in the correct order: pre-tax deductions (401(k), health insurance premiums, FSA contributions), then mandatory deductions (garnishments, child support orders), then post-tax deductions.
  • Make federal tax deposits on schedule. Monthly depositors send one payment per month; semi-weekly depositors must deposit by the following Wednesday (for paydays on Wednesday–Friday) or by the following Friday (for paydays on Saturday–Tuesday). Your deposit schedule is set each year by your lookback period: the total tax you reported for the 12 months ending June 30 of the prior year.
  • Process direct deposits or cut checks and maintain a payroll register for each pay period. Keep these records for at least four years (Hawaii requires pay records to be kept for six years).

Monthly

  • Pay Hawaii withholding for the prior month by the 15th with Form VP-1 or online, if your annual Hawaii withholding is more than $5,000 but not more than $40,000. If the 15th falls on a weekend or holiday, the deadline moves to the next business day.
  • Semi-weekly payers (more than $40,000 a year) pay Hawaii withholding on the same Wednesday/Friday schedule as federal semi-weekly deposits.
  • Review your payroll register for accuracy — catch transposition errors, missed deductions, or classification issues before they compound. A 10-minute review each month is worth hours of cleanup later.

Quarterly (Jan 31 / Apr 30 / Jul 31 / Oct 31)

  • File Hawaii Form HW-14 (Withholding Tax Return) by the 15th of the month after each quarter: April 15, July 15, October 15, and January 15. Quarterly payers ($5,000 or less a year) send their payment by the same date.
  • File IRS Form 941 (Employer's Quarterly Federal Tax Return) by the last day of the month following each quarter. If you've deposited all taxes on time and in full, you get an extra 10 days. Form 941 reports total wages, federal income tax withheld, Social Security, and Medicare.
  • File Hawaii Form UC-B6 (Quarterly Wage, Contribution and Employment and Training Assessment Report) with the DLIR. This covers all employees including corporate officers — Hawaii specifically requires corporate officers to be included. The due date matches the federal 941 deadline.
  • Reconcile your quarterly payroll totals. Match what you reported on 941 and UC-B6 against your payroll register. Discrepancies are much easier to find and fix quarterly than at year-end.
  • Check your SUI rate if you're approaching a rate change period. Hawaii recalculates experience-rated SUI annually, but knowing what's coming helps you budget.

Annual

Year-end is the busiest payroll period. These all stack up in January, so plan ahead.

  • File IRS Form 940 (Federal Unemployment Tax Return) by January 31. FUTA is 6% on the first $7,000 of wages per employee, but you get a credit of up to 5.4% if you've paid your state unemployment taxes on time — making the effective federal rate 0.6% for most employers.
  • Prepare and distribute W-2s to all employees by January 31. Employees need their W-2 to file their own taxes. File Copy A with the Social Security Administration (along with Form W-3) by January 31 as well.
  • File W-2 copies with Hawaii DoTax by January 31 — electronically through Hawaii Tax Online, or on paper with Form HW-30 (Employer's Annual Transmittal). Effective January 1, 2026, employers filing 10 or more W-2s must file electronically. Hawaii no longer uses the HW-3 reconciliation; corrections go on an amended HW-14.
  • Issue 1099-NEC forms to independent contractors paid $600 or more in 2025, or $2,000 or more in 2026 and later. Due January 31 to the contractor and to the IRS.
  • Verify minimum wage compliance. Hawaii's minimum wage is $16.00/hour as of January 1, 2026, rising to $18.00/hour on January 1, 2028. Review all hourly rates each January.
  • Pull the new Hawaii tax withholding tables. Hawaii DoTax publishes new withholding tables in Booklet A when they change, as it did for 2026. Switch to the new tables on their effective date — using outdated tables leads to wrong withholding and unhappy employees at tax time.
  • Ask employees to update their HW-4 and W-4 if their personal or financial situation has changed. Neither form expires (except a claim of exemption from federal withholding, which must be renewed each year), but life events like marriage, divorce, or a second job can make old elections wrong.

Keeping It Manageable

Hawaii has more payroll-specific requirements than most states — the Prepaid Health Care Act, TDI, the HW-14 and withholding payment cycle, the UC-B6 with corporate officers included. None of it is complicated, but all of it requires attention. The employers who get in trouble aren't the ones who don't know the rules — they're the ones who know the rules but rely on memory instead of a system.

If you're setting up payroll for the first time or taking it back in-house, our services page covers what we handle and how the handoff works. We've been doing this in Honolulu since 1969. Get a free quote if you'd like to talk through your situation.

Frequently Asked Questions

Do I need to file both federal and Hawaii state payroll registrations separately?

Yes. Federal registration (EIN from the IRS) and Hawaii state registration are completely separate. With the state, one Form BB-1 (Basic Business Application) with the Department of Taxation registers you for both your general excise tax license and your withholding account, and a UC-1 with the DLIR establishes your unemployment insurance account. Register for withholding before your first payroll; DLIR requires UI registration within 20 days after employment begins.

When do I have to report new hires in Hawaii?

Hawaii employers must report new hires to the Child Support Enforcement Agency (CSEA) within 20 days of hire. You'll report the employee's name, address, Social Security number, and first day of work, plus your business name, address, and federal EIN. This feeds the state's child support enforcement database.

How often do I file the Hawaii withholding return (HW-14)?

Every employer files the HW-14 quarterly, by the 15th of the month after each quarter (April 15, July 15, October 15, January 15). How often you pay is separate: quarterly if your annual Hawaii withholding is $5,000 or less, monthly by the 15th of the following month if it is more than $5,000 but not more than $40,000, and semi-weekly if it is more than $40,000.

What is the Hawaii minimum wage in 2026?

Hawaii's minimum wage is $16.00 per hour as of January 1, 2026. It rises to $18.00 per hour on January 1, 2028. Employers may pay tipped employees up to $1.25 an hour less ($14.75) only if the employee customarily receives more than $20 a month in tips and their wages plus tips total at least $7.00 above the minimum wage ($23.00 an hour). Otherwise the full $16.00 is owed.

Honolulu Payroll Specialists

Need Help With Hawaii Payroll?

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