How to do Business in Hong Kong
Hong Kong is not just one of the most fascinating places to visit, it is also among the most ideal environments for business growth. This is why it ranks among the top 10 fast-growing business ecosystems in the world.
People opt to do business in Hong Kong for many reasons, some being lower tax burdens and better business security. Registering a business in Hong Kong is also straightforward. This article aims to elaborate on how to do business in Hong Kong so you don’t have to worry about where to begin.
How to Register a Business in Hong Kong?
Registering a business in Hong Kong can be quite easy when you are well-informed and have the right documents for submission. However, the process will depend on what business type you seek to open.
These business types include:
- A sole proprietorship
- A company’s branch office
- Limited company
- Either limited by shares
- Or limited by guarantee
Once you are clear about the legal business structures in Hong Kong, you can then decide what would be the best company name for your business.
Please note that company names may take some time before they are approved since you can’t use a name that already exists in Hong Kong’s company registry. However, you can search for your name online to ensure it has not yet been listed. Company names in Hong Kong can be English, Chinese, or a blend of both.
Of the four business structures, limited companies’ registration appears to be the most enticing. This is because such companies are considered independent entities and offer protection to personal assets. Transferring shares and capital raising are also easier with limited companies since Hong Kong is a global start-up hub.
Given that Hong Kong is quite technologically advanced, you can easily register a company using E-registry online. The service is available 24 hours, making it easy to open a company. Otherwise, submitting hard copy documents to the government Queensway office is also an option.
Some of the required forms include:
- Shareholders’ and directors’ identifications
- Signed incorporations documents
- Proof of address
You will have to apply for licenses and permits after company registration before you can start operating your business. Such permits defer, depending on the business type you wish to pursue. The good news is that Hong Kong government websites have all the needed information for these permits and one can apply for some online.
If you wish to have employees working at your company, it is paramount that you also enroll all employees for the Mandatory Provident Fund. This ensures you have proper policies per the Employee Compensation ordinance. In Hong Kong, all employees should be between 18 and 65 years old.
Additionally, you need HK$1,720 to register the company. If the application falls through, you might reapply with a HK$1,425 refund. Business registration with one-year certification costs HK$ 2000 while three years costs HK$5200.
This is everything you need to know to register a business in Hong Kong. Only ensure you are conversant with government business registration specifications in Hong Kong through the government’s website as well.
How to Open a Business in Hong Kong?
Once you have registered your business in Hong Kong, opening it is a matter of when you are ready to start. Some of the things that could directly affect your decision include
- Business requirements- What do you need to open the business? This could include the capital amount, infrastructure, office furniture, etc.
- Number of employees- How many people will you need working under you? If your business is starting from scratch, which departments are fundamental, and how many people will be required? It is wise to keep in mind that you only need people who you can afford when beginning to do the work that you have absolutely no other way of doing.
- Business size- Some businesses can do with a single office table and others need an entire office full of different skilled individuals to get it started.
- Capital investment- Do you have the capital needed to get the business off the ground as soon as possible, or will you have to seek venture funding?
Most entrepreneurs make the mistake of not planning early before opening a business in Hong Kong. A business plan will keep you from such mistakes and give you a guide while running towards your entrepreneurial goals. Some of the things your business plan should cover include:
- Your business’s vision and mission. This can also be covered in terms of short and long-term goals.
- Market analysis and plans. It’s not enough to start a business in Hong Kong because everyone else in tech is doing the same. You have to do a thorough analysis in ensuring that it is the right place to set up your start-up in terms of sales opportunities and business scaling.
- Your team. Sole proprietors might not need a team at the business premises, but they could need local and international suppliers. Limited companies and partnerships need human resources that match the company’s goals.
- Budget evaluation- Lastly but not least important, without a proper budget evaluation, you are setting yourself up for failure. You need to ensure you have the right amount to start and run your business. If the business will take a while to dominate the market, do you have the right financial resources to keep you within your plan?
Evidently, with the right business plan, opening a business in Hong Kong gets easier and comes with a clear path.
How to Open a Business Bank Account in Hong Kong?
It is impossible to run a business without a bank account. You want to have a clear channel where you can monitor how money comes into the business and flows out as well. Investors also want to trust that you have the right financial institutions backing up your business.
Personal accounts in Hong Kong take minutes to open. However, a business bank account takes a bit longer, but with the right documentation, you will have an easier time.
To register a business bank account, you will need the following:
- The company’s registered address
- The certified copy of the Business’s registration certificate
- List of all beneficial owners of the company, either actualized or nominees
- The company’s identification forms
- Proof of the company’s incorporation
- Some banks will require company minutes of the agreement for shareholders to use the bank
If all these documents are accessed in one sitting, one can have a business bank account by the end of the day. You will also have to keep in mind that some shareholders will be required as signatories, and these should be people who are easily accessible.
How to do Business in Hong Kong
Like any other business hub, Hong Kong is a place you can find a lot of growth opportunities as well as competition. This means you have to have the right expectations when doing business in Hong Kong. The best thing is that government and tax compliances are quite subsidized but there are other factors to consider.
What business licenses do you need?
Incorporating your business may not be enough to operate in Hong Kong. You will need business licenses that ensure you comply with business specifications in Hong Kong. Without proper licenses, you could risk company closure or loss of income.
What does your company structure imply?
Next, you need to understand that different company structures have different implications. For example, partnerships and limited companies could have the same number of people on the board but their ownership statements defer. Most SMEs prefer limited companies as they provide reliable security on personal assets. Venture capitalists also favor limited companies over sole proprietorships as they have more definite goals and structures.
How do you plan your financial resources?
It’s easy to overly rely on your personal savings as a start-up owner. This does not have to be the case when doing business in Hong Kong. Since the city is a financial hub, many venture capitalists look for viable companies to invest in. As a business owner, you might want to consider lifting some financial responsibilities off your back so you can concentrate on the creative side of the business.
SMEs have a sweet time in Hong Kong, thanks to different government initiatives to encourage growth. Some include the Employment Support Scheme and Distance Business Program. The latter helps businesses employ remote working as a solution to company development.
Through InvestHK by the government, foreigners seeking to establish their business in Hong Kong have numerous assistances in planning, set-up, launch, and expansions. These offer business networking opportunities allowing investors to learn more about the best way to utilize government grants and initiatives to station their businesses in Hong Kong.
What about other professional communities?
Another advantage of doing business in a business hub like Hong Kong is that you have easy access to like-minded entrepreneurs. You will find various business summits for SMEs, Tech companies, and Environment champions that will help you broaden your concepts and expand your networks.
Such events also help start-ups cement their positions in the local community thus building lasting relationships. You will want to always attend and find the best way to participate in such events, to maintain a public image, well-needed for such a competitive environment.
How to Renew Business Registration in Hong Kong?
Business registration in Hong Kong is renewed annually. You receive a renewal demand note mid-month before the terms’ expiration. In case you lose this note, you can renew in person at the registrar’s office. One can also choose to pay a 3-year permit certificate and renew after the stated period.
Failure to renew business registration means that the business will be deregistered and you’ll have to reapply. If you don’t receive the renewal demand note, you need to visit the business registration office before the expiration of the existing permit.
Why Do Business in Hong Kong?
Companies choose to station offices in Hong Kong for various reasons.
- It’s all about freedom. No one wants to build a business in an environment where the government has no friendly relationship with business owners. Economic freedom in Hong Kong is very evident, giving the city an 86.0 score, one of the highest globally.
- Entering the Hong Kong market is simple. Start-ups do not need to submit hundreds of documents to get started in Hong Kong. This is why close to 2000 startups have found a home in Hong Kong
- Favorable taxes. Companies in Hong Kong do not pay capital gains, withholding taxes, VATs, sales taxes, dividend-based taxes, and estate taxes. The only taxes you will need to pay are profit, salaries, and property taxes. This is one of the most suitable tax regimes in the world for business.
- Reliable human resources and living standards. Hong Kong is a cosmopolitan environment that has a 24hours economic system. There are enough social amenities such as hospitals and schools plus the cost of labor is relatively affordable. With many companies having regional headquarters in Hong Kong, reliable banking institutions have also found a home there thus encouraging more investors to look for opportunities in the city.
Can a Foreigner Set up a Business in Hong Kong?
Hong Kong is quite a friendly business environment, attracting entrepreneurs from all over the world. From the low coats of starting a business in Hong Kong to its free-market system, many foreigners have considered setting up business premises locally. The government also has several schemes that encourage foreigners to invest in Hong Kong. All you need is the right information and you will be good to join the Hong Kong business hub.
Summary – How to Start a Business in Hong Kong?
Starting a Business in Hong Kong has been made easy thanks to different opportunities and government policies that favor SMEs. From online registration to minimum tax requirements, you have every reason to check out the home of free trade. The culture is also very accommodating plus English is a common language allowing different communities to interact.