Title & Escrow Companies Bookkeeping in Hawaii

Escrow and trust account requirements in Hawaii are set by state law and by the underwriters you are appointed with, and they typically cover how funds are held, how frequently the account is reconciled, and what records must exist for each file. The reconciliation that satisfies all of them is the three-way: escrow bank balance, escrow book balance, and the sum of the individual file ledgers, agreeing at one point in time. Two of the three will frequently agree while the third does not, which is precisely why the third exists. The entity is registered with the Hawaii Department of Commerce and Consumer Affairs and, where the company sells anything taxable alongside closings, with the Hawaii Department of Taxation as well — the General Excise Tax applies to nearly all business activity including most services and wholesaling — far broader than a typical sales tax. We keep that reconciliation current and documented; whether it meets your specific Hawaii obligation is a determination for you, your counsel, and your underwriter.

Hawaii levies a real estate transfer or deed tax at closing, which means every file passes tax collected from the parties through your escrow account to a recording authority. It is pass-through in the purest sense — never income, never expense, simply money moving across your ledger — and files that run it through revenue can overstate a title company's income by a multiple. Recording fees and any state or county surcharge behave the same way, and the settlement statement is the source document that has to reconcile to what actually left the account.

Registering to do business in Hawaii runs through the Hawaii Department of Commerce and Consumer Affairs, with tax accounts through the Hawaii Department of Taxation and employer accounts through the Hawaii Department of Labor and Industrial Relations. Hawaii treats these as wholly independent, so being in good standing with one says nothing about the others — and the sales tax account is the one that accrues a real balance while you are not looking.

Beyond sales tax, Hawaii levies the General Excise Tax (GET) on gross income from nearly all business activity, payable by the business, though it is commonly visibly passed on to customers. far broader than a sales tax. Services, commissions, rent, and wholesaling are all within scope, with wholesaling taxed at a lower rate than retail. County surcharges apply on top on some islands. The consequence for your books is direct: GET is calculated on gross income, so netting a platform fee or a subcontractor payment out of revenue understates the tax base. Recording revenue gross is not optional here. It is registered and filed separately from anything the Hawaii Department of Commerce and Consumer Affairs handles, and it accrues on revenue rather than on profit — so it is recorded as it builds, not discovered at year end.