LLC or S corp for a general contractor in Hawaii (2026)

A general contractor in Hawaii with $130,000 of profit pays $59,023 a year in tax and fees as a sole proprietor and $65,197 as an LLC taxed as an S corp, with a $91,000 salary. On these figures the S corp does not pay at any profit up to $500,000.

+$6,174 a year

more for an LLC taxed as an S corp than a sole proprietorship in Hawaii, at these numbers.

With these settings the switch does not pay at any profit from $10,000 to $500,000. Setting up costs $50 once in state filing fees.

Hawaii, 2026: $130,000 profit, single filer

Item	Sole prop	LLC as S corp	Change
Hawaii general excise tax (GET)tax.hawaii.gov, checked Oct 20, 2026	$32,240	$32,240	$0
Self-employment taxirs.gov, 2026 rates	$13,813	$0	−$13,813
Federal income taxirs.gov, 2026 rates	$7,869	$10,395	+$2,526
State income taxfiles.hawaii.gov, checked Oct 20, 2026	$5,101	$4,838	−$263
Annual Reportcca.hawaii.gov, checked Oct 20, 2026	$0	$15	+$15
Payroll tax on your salaryirs.gov, 2026 rates	$0	$15,519	+$15,519
State disability and paid leavelabor.hawaii.gov, checked Oct 20, 2026	$0	$390	+$390
Payroll service and tax return (estimate)	$0	$1,800	+$1,800
Yearly cost	$59,023	$65,197	+$6,174

What these figures count

State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
The 20% qualified business income deduction with its income limits and the professional-service rule.
Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

At three profit levels

Profit	Salary used	Sole prop	LLC	LLC as S corp	C corp
$90,000	$63,000	$39,105	$39,114	$43,324	$44,213
$130,000	$91,000	$59,023	$59,032	$65,197	$66,466
$180,000	$115,000	$85,542	$85,551	$91,367	$92,946

Salary is the BLS median for the job ($114,990), capped at 70% of profit. Revenue 6.2 times profit. Single filer.

What matters for general contractors

This work is not a specified service trade or business, so the 20% QBI deduction stays available above the income limit, subject to the wage limit. Construction is not a listed field in Treas. Reg. 1.199A-5(b)(2). law.cornell.edu
Pay figure is for construction managers, the closest SOC. Subcontractor and material costs make revenue several times profit, and liability from job sites is a main reason to form an LLC.

What the switch takes in Hawaii

File the Articles of Organization (Form LLC-1) with the state: $50 (fee).
Get an EIN from the IRS (free, online) and open a business bank account in the new name.
Check the business can elect: no more than 100 shareholders, all of them US citizens or residents (no nonresident alien owners), and one class of stock. IRS
File IRS Form 2553 to elect S corp tax treatment, within 2 months and 15 days of the start of the tax year it should apply to. See how the S corp election works.
Register with Hawaii as an employer and run payroll for your own salary: federal Forms 941 each quarter, Form 940 and a W-2 each year. New employers pay Hawaii unemployment tax at 2.4% on the first $64,500 of wages. labor.hawaii.gov See what payroll costs.
Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
State upkeep each year: Annual Report, $15 a year, due End of the calendar quarter in which the company was registered.

Questions

Should a general contractor in Hawaii form an S corp?

At $130,000 of profit, not on these figures: the S corp costs $6,174 a year more than staying a sole proprietor.

Is an LLC worth it for a general contractor in Hawaii?

For tax, a single-member LLC changes nothing: $59,032 a year against $59,023, the difference being Hawaii's LLC fees. It separates business liability and is the base for an S corp election.

Other professions in Hawaii

Other states