If you wish to start a company in Hong Kong, we can assure you that it is a great hub for service and premium trading. Not only do you get a free trade policy that is independent, but also offers you a handy approach to the Mainland China markets. So, because of these reasons, all the international businesses and foreign businessmen seek Hong Kong company registration.
In this article, we will help you in understanding what is Hong Kong company registration, the process, its benefits, documents needed, and also the tax system of Hong Kong. To explain it to you in brief, the important steps comprise of finalizing the business entity, its name, abiding by the procedure of establishment, and lastly registering the business with the official business authorities of Hong Kong.
Company Registration in Hong Kong
Let’s start with understanding what is Hong Kong company registration, and what is its importance.
Hong Kong is not only a powerful nation but also a great destination for foreign entrepreneurs to invest in the market of Mainland China. The government of Hong Kong welcomes foreign investors with open arms, and the authorities also provide attractive and low tax structures for foreign entrepreneurs. Another perk of Hong Kong company registration is that they also provide advantageous immigration schemes for skilled professionals.
When you go for Hong Kong company registration, you should know that apart from some exceptions, there are no mandatory custom duties put on imported products. The idea of choosing Hong Kong as a location to get into the market of China is amazing. The Chinese market has the 2nd biggest economy, which is supported by rapid growth. All in all, Hong Kong, as a nation, has the impact of a powerful international and offshore finance hub.
Common Business Entities In Hong Kong
Several business entities can be established in Hong Kong. Let’s dive into their details, and understand each one of them:
1. Company limited by guarantee
The next type of business structure is Company limited by guarantee and it is perfect for NGOs. That is because the firm’s articles of association limit the allocation of surplus to its associates. The interesting fact to learn about a company limited by guarantee is that the members’ liability is only restricted to their contribution amount, and there is no concept of share capital. The firm directors have to stand up to their responsibilities and legal duties.
2. Private limited company
This business structure is known as the most known corporate entity established in Hong Kong. A firm is said to be private when there are few restrictions present in its articles of association.
- Only 50 members are allowed to be incorporated
- The members can’t transfer their firm’s shares
- One cannot invite anyone to subscribe to shares of the firm
The Private limited company will have to hire a firm secretary and a board of directors. But there isn’t any limitation on the director’s nationality or residence.
3. Public limited company
According to a simple concept, if a firm is not private, then it is a public firm. This means that there will be no limitations on them in their articles of association. It can either be a listed firm or a non-listed firm. As its important characteristic, this business structure is more prone to limitations put by the Companies Ordinance and disclosure needs than any private firm. A private company will only get listed if it is first transformed into a public company.
4. Limited partnership
This type of business entity comprises both, the limited as well as the general partners. You do not need to hire any local manager until all your general partners live in a nation other than Hong Kong. The limited partner only has to take the liability of the amount he has submitted in the establishment of the firm, whereas the general partner takes up the unrestricted liability of the company’s debts.
Another point to note is that the general partners are included in the decisions taken in the will of the company, and also have a strong upper hand over the firm. The limited partners on the other hand do not have a strong say in the matters of the business and do not hold the power to make official decisions.
5. General partnership
This type of business structure is best for partners who seek the same corporate target and wish to grow together in the business field. This entity comprises 2 or more partners and is comparatively easy to form.
In a General partnership, every individual partner will be responsible for the firm’s debts and will also be liable for the business decisions taken by his/her co-partner. You do not need to follow any statutory requirements or compliances for a general partnership, that’s why it is easy to develop this entity in Hong Kong.
6. Sole proprietorship
If we were to explain in one line about sole proprietorship, it would be by saying that it is a firm that is operated by a single individual. No doubt that sole proprietorship is the simplest and the easiest form of business, but it is also quite risky.
Why risky? Well because it does not offer to protect your personal properties, neither does it offer responsibility restrictions to the entrepreneur. In this type of business structure, it also might be tough to gain revenue and spread the business. The reason is the doubts in the minds of investors regarding non-established firms.
Documents Required for Company Incorporation in Hong Kong
These are the important documents that you need to keep handy when going for Hong Kong company registration:
- Photo ID evidence of each shareholder
- Shareholder’s passport copies
- Specimen signs of all shareholders
- All the utility bills; electricity, water, gas, etc, up till 3 months.
- Your firm’s official name
Process Of Company Incorporation in Hong Kong
The steps for Hong Kong company registration are as follows:
Step 1: Pick a suitable name for your firm and get the permit from the respective authority
Step 2: Submit the KYC data of all the directors and shareholders
Step 3: Complete the forms and submit all the mandatory papers
Step 4: Submit the online application
Step 5: Get the establishment certificate
Step 6: Open a separate business bank account
Step 7: Fulfil all the remaining tax registrations
Benefits of Company Registration in Hong Kong
Till now you have read about Hong Kong company registration, tax systems in Hong Kong, and all the forms of entities that can be formed in Hong Kong. Now it is time for you to get familiar with the advantages of Hong Kong company registration.
- Market focusing export
- Pocket and tech-friendly procedure
- Hands-on access to the widespread Chinese market
- Easy access to good labor
- Peaceful working experience
- The rapid growth of the economy
- Simple business strategies
Tax System Hong Kong
Hong Kong offers the biggest global, straightforward, and affordable tax payment services. There are no value-added taxes, sales taxes, estate taxes, withholding taxes, sales taxes, dividend taxes, interest taxes, capital gains taxes, or inheritance taxes, making SAR; (Special Administrative Region), a perfect retail hub and economic foundation for businesses and employees alike.
As the Basic Law was established in 1990, two provisions were added to defend Hong Kong’s limited tax structure, allowing the SAR to exist independently from China’s tax regime. This implies that, as a self-governing territory, Hong Kong is exempt from paying taxes to Beijing’s centralized administration.
Types of Taxes under IRO:
IRO is the Inland Revenue Ordinance, and 3 main taxes fall under it:
- Profits Tax
- Salaries Tax
- Property Tax.
Conclusion
So, are you someone willing to take this life-changing decision of registering a company in Hong Kong? If yes, don’t worry, we are here to guide you through your journey.
We at ODINT Consulting take it as our moral duty to treat and assist our clients as our own. Our skilled professionals know exactly what you need for successful company registration in Hong Kong. So, join us for unlimited support and guidance from our experienced team.
FAQ’s
When picking a firm name, keep in mind that it is important to remember that the title assists in leaving a good impact on your co-partners. When selecting a firm name, ensure it isn’t identical or nearly similar to any other issued trademarks or brands, as you would face legal issues with the proprietors of any labels or trademarks.
Yes, you may have perks of owning a business in your homeland but having a company in a foreign land will open many exciting doors for your business. Some advantages of Hong Kong company registration are:
- Hands-on access to the widespread Chinese market
- Pocket and tech-friendly procedure
- Peaceful working experience
- Easy access to good labor