A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.

You do not have to take any formal action to form a sole proprietorship. As long as you are the only owner, this status automatically comes from your business activities. In fact, you may already own one without knowing it. If you are a freelance writer, for example, you are a sole proprietor. But like all businesses, you need to obtain the necessary licenses and permits. Regulations vary by industry, state, and locality.

In Hawaii, a sole proprietorship is indeed the simplest business form and does not require formal registration to establish. The owner of a sole proprietorship is personally liable for all debts and obligations of the business. This means that there is no legal distinction between the owner's personal assets and the assets of the business. Profits from the business flow directly to the owner's personal tax return. However, even though no formal action is required to form a sole proprietorship, the owner must comply with all relevant licensing and permitting requirements, which vary depending on the type of business, location, and industry. These may include a general excise tax license, professional or occupational licenses, and health or safety permits. It is important for sole proprietors in Hawaii to check with state and local government agencies to ensure they have all the necessary documentation to legally operate their business.