Business
Simple Finance Tips Every New Hawaii Business Owner Should Know
Starting a business is exciting — but understanding the financial side is often where people get stuck. Whether you’re a service provider, contractor, or launching a small product-based business, knowing your numbers is what sets you up for success.
Here’s a breakdown of key financial tips and concepts every new business in Hawaii should know — without the fluff.
Know the Difference Between Gross and Net Income
This is where many business owners get confused. Let’s break it down:
Gross Income = Total money your business brings in before any expenses
Net Income (a.k.a. Profit) = What’s left after you subtract all your business expenses
Why it matters:
It’s easy to look at your gross and think you’re doing great — but your net is what you actually take home. If your gross is high but your net is low, something’s off in your operations or pricing.
Track Your Margins
Your profit margin shows how much of your income turns into profit. Here’s the formula:
Net Income ÷ Gross Income × 100 = Profit Margin (%)
Example:
If you make $10,000 and keep $3,000 after expenses, your profit margin is 30%.
In most service-based businesses, you’ll want a margin of 30%–50% to stay healthy.
Why it matters:
Margins tell you if your pricing is working or if your expenses are eating you alive.
Understand Overhead vs. Direct Costs
Overhead = Expenses that keep your business running (rent, software, admin, insurance)
Direct Costs = Costs tied to delivering your service/product (materials, subcontractors, supplies)
Why it matters:
Knowing this helps you price properly. If your overhead is too high, it eats into your profits even if your sales are strong.
Set Up Separate Business Bank Accounts
This is non-negotiable. Open a separate checking account and credit card for your business. It keeps your books clean, simplifies tax time, and gives you a better view of your business finances.
Start Tracking from Day One
Even if you’re small, tracking your income and expenses monthly gives you clarity and control. Use simple tools like:
QuickBooks or Xero for bookkeeping
Google Sheets if you’re just starting out
Save all receipts and invoices digitally
Pro tip: Always reconcile your bank statements — this catches errors and shows your real cash flow.
Understand Hawaii’s Unique Tax Requirements
General Excise Tax (GET): This is NOT a sales tax. It’s a tax on your gross revenue, and yes — you still have to file even if you made $0 that quarter.
Estimated Taxes: You may need to make federal and state tax payments quarterly — not just in April.
Licensing and Fees: Hawaii has specific rules depending on your industry. Don’t assume registering your business is all you need to do.
Pay Yourself — But Do It the Right Way
Many business owners either don’t pay themselves or mix personal and business funds. Bad idea.
Set up a regular transfer — even if it’s small — from your business account to your personal. Once you grow, you can structure this as an owner’s draw, guaranteed payment, or W-2 salary depending on your entity type.
Price for Profit, Not Survival
Don’t just charge what others charge. Know your costs, your time, and your desired profit margin — then price accordingly.
Good pricing = coverage of your direct costs + a slice for overhead + profit margin.
If you’re unsure, start with a job costing sheet to break it down.
Get Help Early
You don’t need to do it all alone. Working with a bookkeeper and tax pro early on saves you time, money, and stress — especially in a place like Hawaii where taxes can be tricky.
At WDS, we help new businesses set up strong financial systems, understand their numbers, and stay compliant year-round. Whether you’re just starting or trying to catch up, we’re here to guide you through the chaos.
Final Thought
Numbers can feel intimidating, but they’re also one of your most powerful business tools. When you understand how your money flows, you make smarter decisions, grow with confidence, and avoid costly surprises.
Start simple. Stay consistent. And don’t be afraid to ask for help.
