For two decades, Hong Kong has had the reputation of having the most flexible economy in the world. Thanks to the minimal restrictions on setting up a company and a straightforward governance system.
It offers a gateway to great opportunities for entrepreneurs. As per the government statistics, the number of registered companies in Hong Kong reached 1,407,743 by the second quarter of 2018.
As you enter the unique international business landscape of this city-state, you get to enjoy multifaceted benefits. A tax-friendly jurisdiction, an efficient legal system, state-of-the-art infrastructure, and a thriving economy contribute to the success of businesses. A low-rate tax system and simple financial management system make it very easy to set up a company in Hong Kong as it’s evident that taxes are the main concern for anyone planning to establish a business.
KPMG subject matter experts foresee a rapidly evolving economic scene in Hong Kong. Hence, the context given ahead is for those endeavoring to set their first foot in the city-state’s business environment. We have a quick guide to how you can launch your business while staying away from loopholes. So, let’s get to it!
Decide on A Name Before You Set Up A Company in Hong Kong
The old Shakespearean adage ‘What’s in a name?’ does not work in real life. When setting up a company, the entity name is arguably the most important part. In the end, that is what you are going to be known for years and possibly decades to come.
Before you go on to set up a company in Hong Kong, you need to get the company name approved. This requires the company name to be unique, and in Chinese or English or both the languages.
Choose Your Company Structure
Primary company structures offered in Hong Kong include limited liability company (LLC), private limited company, sole trader, and partnership. Your choice depends on your vision for your company. How large is it going to be?
How much share capital can you deposit upon incorporation? Depending on your choice of structure, your tax filing process, compliance requirements, and business permits would all be different. So, make an informed choice.
Register the Company
Now that you have a unique name and a valid company structure, you must register your company with the Hong Kong Companies Registry. Here, you will also be asked about the company structure you selected in the previous step. The registry then proceeds with the incorporation of the company for you.
Incorporate the Company
To promote business in the region, Hong Kong has made its company incorporation process fairly easy. Firstly, make sure that you have the identification documents of all directors and subscribers ready. You will need proof of address of the directors, as well as the proposed office location of the company.
Authorized directors must also sign the incorporation form, after which all these documents can be submitted online. If you want to deposit hard copies of the documents, you can go to the Queensway Government Office Building in Admiralty.
Open Your Company Bank Account
Your job to set up a company in Hong Kong does not end with incorporation. Within a set period after the incorporation is complete, you must open a business bank account in your company’s name. You can choose any bank for this purpose. All banks have a set list of documents they require to open a business account for your company.
You will need your business registration certificate, notarized copies of your identification documents, and notarized copies of your company’s identification documents. Once the account is opened, you will need to deposit the share capital that you specified in your incorporation documents.
Procure All the Licenses and Permits for Your Business
Many business operations require specific permits or licenses from the government. For example, if you are going to be involved in the import-export business, restaurants, healthcare, etc., you need to apply for permits. More details can be obtained on the Hong Kong government’s company registration website.
Manage All Compliance Requirements
Lastly, once you have incorporated your company, you need to start abiding by the government’s business entity compliance requirements. This means that you need to file your tax returns on time with the Inland Revenue Department. You will also need to file an annual report depending on your company structure. Follow these requirements closely as you do not want to be on the wrong side of the law.
Now, you have scratched the surface on how to set up a company in Hong Kong. But at this stage, ensure not to overestimate your knowledge on establishing a business because this is one of the biggest blunders made by new start-ups.