Form your new Hong Kong company
Hong Kong is one of the best cities in the world to establish and run a company. It scores high on factors that make a difference to businesses. As a record-holder for the world’s freest economy in the last two decades, and with a minimum level of restrictions and bureaucracy, Hong Kong is an excellent choice for setting up a company for many entrepreneurs across the globe.
Read on to learn more about the steps to form your new Hong Kong company.
Hong Kong Business Environment
Hong Kong has the perfect combination of factors for a successful launch of a company, such as a strategic location, free-flow of information, free movement of goods, easily accessible license and permits for businesses, unrestricted capital flows, and developed communications. This has led Hong Kong to be a leading international market and financial center for many entrepreneurs.
Hong Kong’s business infrastructure is dynamic and has promoted economic development to international standards and ensures enterprises run their business efficiently. Some of the major factors that continue to contribute to its success are mentioned below:
- World-class telecommunications and connectivity
- Seamless transportation networks
- World-leading air cargo system
- Economical and convenient local and regional transport
- Productive workforce
- Attractive tax regime
- Pro-business environment
Hong Kong is known for being a comfortable and secure place to set up a business. You can set up your company in Hong Kong in around 3 to 5 working days. Hong Kong is also well known for its excellent infrastructure facilities as business premises are readily available. Intellectual property rights are also taken very seriously, with strict regulations in place.
Above all, the primary concern for any entrepreneur who plans to set up a business in a given jurisdiction is tax and policies. Hong Kong has a reputation of being one of the lowest tax jurisdictions in the world. Salary tax or personal income tax starts at just 2% with a cap of 17% . Corporate tax is set at 16.5% of assessable profits for companies (8.25% for assessable profits under HKD 2 million) and 15% for unincorporated businesses. Moreover, there is no sales tax, inheritance tax nor capital gains tax. These factors lead many entrepreneurs to choose Hong Kong as their destination to form a new company.
Forming a new company in Hong Kong
When incorporating a company in Hong Kong, you need to pay attention to various aspects which will play a crucial role in the growth of the company. The first and foremost factor an entrepreneur will consider is the location of the company. The formation of a company in Hong Kong is perhaps more favorable than many other cities around the globe.
So, are you ready to make your mark as an entrepreneur in the Hong Kong startup market? The first step is setting up your company. Below are the steps to establish a new company in Hong Kong
#1 Choose the type and name of the company
First the company has to select a name. The company name could be Chinese, English, or both. Choosing a unique company name is key to the identity of a company. The company check on Startupr’s website allows you to see if your chosen name will be available before you start your Hong Kong company incorporation.
There are also different types of companies that you can incorporate in Hong Kong. Below are the most common kinds of business entities:
- Limited Liability Company: The most common and protected business entity is the Limited Liability Company, also known as Private / Public Limited Company in Hong Kong. All members will have shares of this company along with limited liability, which provides protection of personal assets from the liabilities and the risks of the business.
- Limited by Guarantee: Another type of company that you can incorporate in Hong Kong is the Limited by Guarantee company. Companies limited by guarantee are typically used for associations, charity and non-profit organizations that require legal personality. In this kind of company, there are no shares, and the company’s members share an amount to the business that grows in case of a wind up. This type of business comes with some remarkable benefits such as the members can enjoy limited liability and preserve the democratic control on all matters.
- Sole Proprietorship: Sole proprietorship is easy to set up as it is a small scale and low-risk business. The drawback of this type of business entity is that it does not protect the personal assets of the owner from the liabilities of the business and does not have a separate legal entity. This is one reason this business structure is not something that is recommended for new entrepreneurs.
- Partnership: As the name suggests, in this type two or more people share the ownership of a single company. This kind of business structure enables shared responsibility and helps in raising more funds needed by the business. For any deed of the company, both partners are liable.
- Foreign Company Office: It is straightforward for a foreign company to register in Hong Kong. A non-Hong kong company needs to be registered within one month of establishing that place of business. In order to register a non-Hong Kong company, an application must be sent to the Companies Registry along with the company’s constitution or charter, and certificate of incorporation in the jurisdiction where the company was registered. Thereafter, once approved by the Registrar, you will have a Registered Non-Hong Kong Company in order to run your business in Hong Kong.
#2 Register your company
If you are starting a new venture or looking to grow your business by opening multiple companies, you will need to register it. Registration of a company is essential as it will give you many benefits, protect your business, and secure your rights against third parties.
Registering your company provides you with benefits and legal protection so you can work to grow your business. It is also vital for opening up a bank account, securing a loan or other investment from third parties.
For registering a company in Hong Kong, one of the leading requirements and facts for Hong Kong Companies is that you would need to provide a local Hong Kong address as the registered address of your company. Bear in mind that the registered address cannot be a PO box and has to be a physical address.
#3 Documents required for company registration
To start your business in Hong Kong, you need to register your company with specific documents. The following documents are required for registering a company efficiently:
- An adequately finished incorporation form which includes the following:
- Registered address
- Company name
- The number of shares taken up by founder members.
- Share capital on the company’s formation.
- Particulars of shareholders, directors, and company secretaries.
- Details of Business Nature and related information
- For all shareholders, directors, and UBO (ultimate beneficial owner) you must provide:
- Copy of International Passport
- Copy of residential address proof
- Copy of national identity card/driver license
- Corporate shareholders and directors must provide a copy of the company documents such as the Certificate of Incorporation, Certificate of Incumbency, the related documents for showing the directors, shareholders, and UBO (ultimate beneficial owner) along with the personal documents mentioned above.
#4 Open a business bank account
A business bank account provides a professional image and gives confidence to your customers, which may help to run and develop your business. After you have started your business, you can also work towards opening a corporate bank account to fund your venture.
The process of opening a bank account is straightforward. You will need to provide the required documents to the bank in order to proceed with a bank account application. Below are some of the documents you need to prepare before heading down to a bank to open a corporate bank account.
- The incorporation documents of the company.
- A certified true copy of the company’s Business Registration Certificate.
- A business operation address, as most Hong Kong banks require a business operation address as well as the contact information.
- All documents required and specified in the bank’s application form including certification by either a certified public accountant, banker or lawyer – notary public.
- Detailed business supporting documents such as audited financial statements, business plans, contracts/agreements, invoices, etc.
#5 Get a specific license and permits
The next step in setting up your business in Hong Kong is to obtain any permits and licenses your specific business entity may require. New companies are legally required to obtain licenses in many countries for different business activities.
Some entrepreneurs may be tempted to skip the license application or put it off until they are making enough money to justify the cost. While it is unlikely that an entrepreneur will be caught operating without a license before their business takes off, it is essential to meet licensing requirements.
Business licenses boost credibility and allow an entrepreneur to apply for funding. There are various types of permits and licenses that might apply to your business, depending upon the nature of your services and products. You can check out the government websites and online license services at https://www.gov.hk/en/business/registration/license/index.htm to determine which permits and licenses best suits your business entity.
#6 Plan your tax strategies
Taxation can be tricky, and you need to make sure that you understand all the ins and outs. Tax planning is vital for both small and large business organizations in Hong Kong. It is a way to find out how much money you are paying on tax and also a way to help minimize the tax liability through the use of allowances, deductions, exclusions, and exemptions. The Hong Kong tax system is different and independent of the taxation of mainland China.
Hong Kong has a territorial tax regime. Put simply, you may apply for tax exemptions for your company if it conducts business outside of Hong Kong. You are also still required to conduct accounting and auditing even if the company is operating outside of Hong Kong.
Hong Kong has some of the lowest taxes around the globe. There are numerous deductions from which your business will be able to benefit from if you start your business in Hong Kong. To get detailed information regarding the rules and regulations for Hong Kong tax, check out the IRD’s website for more information at https://www.ird.gov.hk/eng/welcome.htm
Are you looking to form a new Hong Kong company? Startupr will help you!
Setting up and managing a company in a new environment can be quite challenging. Not only do you need to do all the necessary company filings, but you need to make sure the information is correct and filed on time. However, company formation in Hong Kong can be simple across all of the available types of companies. All you need to do is understand the company’s characteristics and differences before deciding to start.
Startupr has years of experience in setting up companies in Hong Kong. We have clients from all over the world from industries of various sizes and backgrounds, including the service industry, consulting services, IT sectors, and many more.
With our Back Office, you can easily enjoy round-the-clock access and fast company services through Startupr. We strive to prepare and assist each business solution to suit the needs of our clients. Contact us today!