Registering your company in Hong Kong is a wise choice as Hong Kong is a great place for business. Entrepreneurs and investors are attracted to Hong Kong for the business-friendly environment and relatively better tax regime. These factors are big bonuses for foreign businesses keen to start a business in Hong Kong as well as for those established businesses in other jurisdictions looking to expand their business and tap the global potential.
A stable economy, highly productive and efficient legal infrastructure, pro-business framework, business- friendly tax regime, large pool of skilled human resources are some of the major factors that offer plenty of new opportunities for all types of entrepreneurs. All these factors help the businesses registered in the Hong Kong in multiple ways and it saves a lot of efforts of the entrepreneur entity and their management during the incorporation stage and in the administration and compliance aspects afterwards. Entrepreneurs can invest their time and productive resources on their core activities and focus on achieving their business goals while spending comparatively less time on administrative matters.
Precise information regarding the type of business your company wants to do is required during the stration process of your desired business structure.
Several factors are considered before you choose a business structure – the nature of your business operations, size, requirement for human resources, support services, supply chain etc. are important considerations. In addition to these factors, it is important to asses the extent of your personal liability and tax implications before choosing a business structure.
Your choice of the business structure (entity type) depends on several factors:
Here are the steps you need to follow:
The popular type of business entities in Hong Kong are –
A limited liability company is a separate legal entity – it can be a private or public company limited by shares. In Hong Kong, a limited liability company must be registered with the Companies Registry governed by the Companies Ordinance.
Personal assets of the shareholders (investors) in Hong Kong limited company are immune from the liabilities or losses of the company. A limited liability company has separate legal identity and is distinct from the shareholders (investors) – it can acquire assets and enter into contracts / agreements on its own. The liability of its shareholders is limited to their shareholding in the business.
Most SME companies in Hong Kong are private companies limited by shares. The major reasons that make by shares a prime choice among the investors are –
Perpetual existence: The existence of the company is not affected by a change in the shareholding due to transfer, sale etc. by one or more shareholders, or in the case of death of a shareholder or when a shareholder is declared insolvent.
Access to capital: A limited company can raise capital for expansion with more ease as compared to other types of business structures.
Transfer of ownership: The procedures for transfer of ownership – complete or partial transfer – is relatively much easier compared to other types business structures.
Tax Advantages: A private limited company enjoys many tax benefits in Hong Kong based on the territorial principle. Only those profits sourced from Hong Kong are subject to Profits Tax, whereas the profits sourced from other locations are not subject to Profits Tax in Hong Kong.
Though a ‘sole proprietorship’ is the simplest of all the business structures and has the lowest set-up costs, it is often considered risky in terms of exposure of the entrepreneur to the liabilities of the sole proprietorship. The ‘sole proprietorship’ business structure does not offer distinct legal status, and hence it is not considered as a separate legal entity. And, it doesn’t protect personal assets from business liabilities.
A sole proprietorship is relatively easier to register in Hong Kong – you can make an application to the Business Registration Office. Contact UBCS Customer Service Desk for registering your Sole Proprietorship in Hong Kong.
A partnership is governed by the Partnership Ordinance in Hong Kong. You may enter into a ‘Partnership’ with two or more people for owning your business. The main drawback of this business structure is that the personal assets of the partners are not immune from the liabilities of the partnership entity. In other words, the partners have unlimited liability when it comes to settling the contractual obligations of the partnership entity.
You may also opt for registering a limited partnership in Hong Kong. This business structure has two type of partners - general partners and limited partners. The former has unlimited liability towards the contractual obligations & unpaid liabilities of the partnership firm and is responsible for the management of the business of the partnership, whereas the latter has limited liability (limited to their unpaid share capital) and has no active role in managing the business.
Contact UBCS Customer Service Desk for registering your Partnership in Hong Kong.
Qualified and experienced members of our professional network can assist our clients with statutory compliance, governance and administrative tasks of their company.
UBCS offers assistance to our client in all regulatory matters – including timely filing of statutory returns maintenance of statutory registers etc. and general compliance with other statutory requirements.
Your company documents are stored digitally for ease of access and efficient record keeping at all times.
Experts at UBCS support our clients for ensuring sound corporate governance practices. We keep our clients informed about the changes in the laws that may affect its operations and we provide guidance to the clients on legal and regulatory matters.
Contact UBCS today to discuss how to proceed with your company formation in Hong Kong – LET’s TALK.
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