Steps to Company Registration in Hong Kong

Top reasons on why starting a business in Hong Kong.

The economy in Hong Kong is highly dependent on international trade and finance that attracts many people to start a company there. Here are some top reasons to start a business in Hong Kong:  

- Easy Business Setup  

Foreign business owners are allowed to develop their businesses in Hong Kong. The country provides tools to reduce complexity during company registration, and it is not a common thread found in other countries.  

- Solid Infrastructure Facility  

Hong Kong is in the heart of Asia Pacific. The sea and air transport facilities provide top-notch service in shipping, logistics, and freight forwarding areas. The country uses advanced telecommunication infrastructure that is has a cost-effective price for travelers.   

- Simple Tax System  

Hong Kong charges have one of the lowest tax rates worldwide. Thus, allowing maximum earnings at minimal costs.  

- Fair and Transparent Legal System  

The legal system in Hong Kong favors a business environment that provides a fair business surrounding.  

- Free Economy  

Hong Kong has a free trade policy that provides no trade barriers and no limit for foreign investments. There are also no tariff quotas and fees for general import and export trade activities.  

Which is your Business Entity?

It is essential to identify a preferred business entity before registering the company. Here are the types of business entities available in Hong Kong:

- Limited Liability  

Limited liability entities protect personal assets from business risks as it is a separate entity from the business owners. Private limited liability companies, limited by shares, are the most common type of company registration in Hong Kong.  

- Sole Proprietorship  

Sole Proprietorship business entities are easy to start and are suitable for small-scale and low-risk businesses. However, this business entity is not a separate legal entity. Therefore, it will not protect the personal assets of the business owners from business liabilities.  

- Partnership  

The partnership allows two or more partners to share the ownership and responsibilities of the company. It increases the company's ability to raise funds. A limited partnership is the most common type of partnership.  

- Foreign Company Office  

Foreign business refers to registering the business entity as a branch office, subsidiary, or representative office in Hong Kong.  

How to Consider Your Business Structure?

Here is an overview of the factors to consider which business entity is suitable for your business: 

- The nature and purpose of the business  

To establish a low-risk and small-scale business while the sole owner has financial capability, it is recommended to register a Sole Proprietorship entity. Do note that the sole owner of the business is affiliated with the entity. Thus, there is unlimited liability for the sole owner and their assets are not protected.   

For business owners who want to share business responsibilities or are lacking in financial resources, Partnership would be an ideal business type. However, business owners in Partnership entities are personally liable for debts and liabilities of the business and they will be liable for each other’s actions.   

Whereas for Limited Partnership (at least one partner is a general partner), the limited partner will not be personally liable for business liabilities of other partners. He/She is not able to participate in the daily operations of the company and will remain as a passive investor. The downside of a partnership is the difficulty to maintain because of suitability and the possibility of conflict between partners.  

There is also limited liability or unlimited business entities in Hong Kong. Unlimited business entities are not a preferred choice for an investor as they imposed risk towards personal liabilities.   

The most common and preferred business entity to choose from will be a Private Limited. Despite the complexity of the company setup and compliance requirement, the benefits outweigh the disadvantages. 

Basic Requirements of for company registration in Hong Kong

- Company Name 

The authorities

- Companies Registry

It is important to note that Hong Kong company registration and Hong Kong business registration are not the same. To get a limited company status, a company will need to be registered with the Companies Registry. A Company Registration Number (CRN) is akin to a company’s social security number and can be found in the Certificate of Incorporation. 

In order to be able to do business in Hong Kong, registration is done with the Business Registration Office. A Business Registration Number (BRN) is issued by the Inland Revenue Department and can be found as an 8-digit sequence at the front of a Business Registration Certificate Number and is in actuality, a Tax Identification Number (TIN). 

Documents needed for company registration in Hong Kong

To set up a Hong Kong limited liability company, the following documents are required with officially certified translated versions for any non-English documents provided: 

- Company’s Article of Association 

The Company Incorporation Process

With the simplified company incorporation and registration in Hong Kong, foreign investors and entrepreneurs one can easily manage the application online without having to visit the office physically. The incorporation process at the Hong Kong Companies Registry (CR) is made fast and easy through three available methods of application: 

- Online application: 24-hour portal e-registry 

Conclusion

The press release highlighted the benefits of starting a Hong Kong business and the difference between the business entities. Including factors to consider before selecting the right business entity will help business owners make the right decision. With this general view on Incorporating a Hong Kong Company, setting up a company in Hong Kong has never been easier!