Hong Kong has an excellent business environment that features a competitive tax system, high growth potential and incentives for new businesses. Hence, it is no surprise that many businesses in the United States are opening new offices and registering their existing and new businesses in Hong Kong. Additionally, Hong Kong boasts a simplified incorporation process for companies which makes it very convenient to register a business in Hong Kong and to do business there. All company documentation and subsequent processes can possibly be completed in a matter of 24 working hours – which is a record speed for most places – and one would be able to get their business up and running in no time.
Why should one register a business in Hong Kong?
There are a number of reasons why one should consider registering their company in Hong Kong, and the most popular reasons include:
1. Hong Kong has ease of setting a business
As mentioned above, Hong Kong has tremendous ease of setting up a business. Foreigners can also take complete ownership of their corporations in Hong Kong which is characterized by an extremely easy incorporation process which can be completed online in a matter of only 24 hours.
2. Hong Kong has a business-friendly tax system
The corporate tax rates in Hong Kong follow a territorial principle system and hence are very business-friendly. This tax system essentially means that companies will only be taxed for the profits they earn inside Hong Kong and any income earned outside it would be tax exempted. In addition, Hong Kong does not ask companies to pay any additional taxes such as capital gains tax, dividend taxes, VAT or sales tax, etc.
3. Hong Kong is a free economy
Hong Kong is one of the freest economies in the world and it accepts almost all legal categories of business. companies are allowed to transfer money and receive it in just about any currency. companies registered in Hong Kong can have their bank accounts in absolutely any country.
4. Hong Kong gives you access to other Asian countries
Hong Kong allows companies to access other nearby economies such as Mainland China and other Asian countries due to its unique location on the world map. companies operating in Hong Kong can very easily send their products and services to other neighbouring countries.
How to set up a company in Hong Kong?
Setting up a company in Hong Kong is a fairly easy process and involves the following steps:
1. Choosing your company type
While choosing a company type, one should keep in mind the company’s operations, its finances, its financial capabilities, etc. In Hong Kong, the companies are usually categorized in three types which include LLC’s, sole propetorhips, and partnerships. An LLC or a limited liability company could be a public company limited by shares, private company limited by shares or merely a company limited by guarantee. Other prominent types include a branch office, a liason office, or a representative office.
2. Choosing your company name
The Companies Registry in Hong Kong deals with company names in the region and this body does not allow either provisional approval or a reservation for company name. The registry can change a company’s name under any circumstances. In Hong Kong, a company name must either be in English or Chinese, and an English name must end with “Limited”. Additionally, a company name cannot feature both English and Chinese characteristics.
3. Choosing a company structure
According to Hong Kong’s law, a private company set up in the region must have at least one director, one to fifty shareholders, a company secretary which is to be separate from the company director, and a local registered address in Hong Kong. For more information on local registered addresses in Hong Kong look up resources by Get Started HK. Additionally, the minimum share capital is to be 1 HKD and bearer shares are not allowed. While designing the company structure, individuals should take all of these points under consideration.
4. Gathering important documents and registering
In order to register a company in Hong Kong, an individual would need a copy of their Articles of Association, a copy of company documents for corporate shareholders, a passport copy in case of foreign owner and a Hong Kong ID for residents, and a residential proof of address. Once an individual has all required documents, they can simply file an application with the Company Registry and submit all required documents.
5. Acquiring licenses
While most businesses can simply begin operations upon registration, some businesses may need to attain licenses and permits by a corresponding or relevant department in Hong Kong. This license or permit may be required due to the nature of their business and can be attained in minimum 2 or maximum 8 weeks from the application date. If businesses require a license or a permit, they should apply for it within one month of their business’ registration. Some of the businesses that require licenses or permits include employment agencies, travel agencies, restaurants, financial services, insurance providers, foreign exchange companies, cosmetics companies, pawn shops, medicine companies etc.
6. Opening a bank account
In order to run your business in Hong Kong, you need to have a corporate bank account. While this account may be opened in any country in the world, it is recommended that a company has its corporate bank account in the same territory as Hong Kong in order to avail reputed payment gateway services and to gain public trust in their products and services. However, irrespective of the country one may choose, opening a bank account entails corporate registration documents, bank statements from members and proof of business in the form of contracts or agreements. Banks may ask companies for any other documentation as well as required.
Not only is Hong Kong attractive in terms of its tax system and financial markets, the ease of doing business in the region makes it a coveted destination for companies and businesses from all over the world. Business owners from all over the world can benefit by opening a company in Hong Kong and benefitting from its world class business environment.