Setting up a company in Hong Kong is relatively simple and hassle-free. The tax-friendly environment, stable political environment, productive legal system, and pro-business setup, are the main attraction for foreigners keen on starting a business in Hong Kong.
Benefits of setting up a company in Hong Kong
- Tax system: the majority of foreign investors are attracted to the favorable tax system in Hong Kong.
- Strategic location: situated at the heart of Asia, Hong Kong is well-connected with the world. Also categorized as one of the primary destinations for business in the world, Hong Kong enjoys easy access to the world’s leading markets.
- Productive workforce: there is a huge workforce that is highly trained, flexible, and energetic in Hong Kong. Hong Kong residents have a proficiency to adapt to global business as English is their second official language alongside Chinese.
- Quality of life: though Hong Kong is among the most expensive countries to live in, entrepreneurs and immigrants are intrigued by its benefits from life qualities.
- Free economy: an advantage of setting up a business in Hong Kong is that the local economy is steered by the principles of free trade, open market, and free enterprise.
- Full ownership: a foreigner is eligible for 100% ownership rights of a company incorporated and based in Hong Kong and the law does not exact local residency requirements.
Steps for company formation in Hong Kong
Outlined below are the necessary procedures for investors and entrepreneurs who want to open a company in Hong Kong:
- Choose a type of company: this is the most crucial step as it impacts everything from business operations to tax filing. There are three major types of company vehicles in Hong Kong:
- Limited liability companies: these can either be public or private and they are separate legal entities.
- Sole trader: this is the simplest business form and also the one with the highest degree of liability.
- Partnership: this is a business structure established between two or more partners in which at least one of them has full liability.
Besides those three business structures in hong Kong, foreign investors can also open branches or representative offices.
- Choose a company name: the name chosen for the company must be an original one. It can be in traditional Chinese, English, or both. Name checkups can be performed on the Hong Kong Company Registry’s website. The company name must be approved by the right authorities before the incorporation of a Hong Kong company.
- Appoint a company secretary: when setting up a company in Hong Kong, appointing a company secretary is mandatory. The secretary, if an individual, must reside in Hong Kong, but if is a body corporate, must have its registered office or a place of business in Hong Kong. The company secretary is responsible for maintaining the statutory books and records of the company and must also ensure the company’s compliance with all statutory requirements.
- Select the registered address of the company: the registered address of the company is the address at which governmental departments will send correspondence. It is common to use the company secretary’s address as the registered address for the company.
- Draw up the company documents: the Articles of Association and any other company Resolutions must be drafted.
- File for registration: the documents and a filled-in application form are submitted to the Companies Registry. Among the mandatory documents, the company founders will also need to include copies of their identification documents.
And if the documents are in the right order, the Business Certificate will be issued sooner than later.
- Register with the Inland Revenue Department(IRD): the company in Hong Kong needs to be registered with the IRD for tax purposes.
- Open a corporate bank account: this is compulsory for all companies that generate income from Hong Kong.
- Obtain any other permits and licenses: Chances are high that the company will not need any permits or licenses to carry out its business in Hong Kong. So this step will depend on the chosen business field. Also, special arrangements for hiring employees must be made.
- Post-incorporation steps: once the company is registered, the post-incorporation steps includes finding an office space, hiring staff, taking out insurance, getting financing, and handling accounting.
Are you ready to incorporate or register your company in Hong Kong? – Let’s go ahead and contact your Damalion expert now.
