I run wholesale and retail activity through the same business. How does GET treat that?
Hawaii’s General Excise Tax applies at different rates depending on how each transaction is classified, not what kind of business you are overall. If you sell to both retailers and end consumers, the tax treatment follows each individual sale. Your books need to track and categorize both types properly so your filings reflect the correct breakdown.
The rate difference is meaningful. Wholesale transactions to licensed resellers qualify for the lower rate of 0.5 percent. Retail sales and services to end consumers carry the standard rate of 4 percent, plus any applicable county surcharge. On Maui, Oahu, and the Big Island, the surcharge brings the effective retail rate even higher. When you’re moving volume through both channels, that spread adds up quickly.
What qualifies a transaction as wholesale? The sale has to be made to a buyer who holds a valid GET license and intends to resell the product. You need a resale certificate from the buyer on file to support the wholesale classification. Without that documentation, the transaction defaults to the retail rate, and an auditor will treat it accordingly.
The two most expensive mistakes happen on opposite ends. The first is applying the 0.5 percent wholesale rate to sales that don’t actually qualify. Selling directly to a consumer or to a business that uses the product internally rather than reselling it is not wholesale, regardless of volume or relationship. Accounting and advisory services that understand GET classification help prevent this kind of costly error. The second mistake is the opposite: paying the full 4 percent on true wholesale sales because the business didn’t have its documentation organized and the sale got misclassified.
Both mistakes are preventable with clean records and proper categorization. Your accounting system should track wholesale and retail revenue separately, and your GET filings should reflect that breakdown accurately. This is where structured bookkeeping and proper Hawaii GET compliance work together. When the books are organized by income type throughout the year, filing becomes straightforward and defensible.
If you’re running both activities through one entity and want to make sure your classifications are correct, we would be glad to review your situation. Schedule a consultation to discuss how Kai Crest can help keep your GET filings clean and your rates where they should be.
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