Want to Register a Business in Hong Kong? Here is a Step-by-Step Guide
5 minute read
It’s not surprising that Hong Kong has a large number of budding entrepreneurs and self-employed professionals who want to turn their small business dreams into reality.
According to statistics released by the Hong Kong Companies Registry, as many as 104,120 local companies were registered in 2022. This is a healthy growth compared to last year.
A World Bank report in 2019 placed Hong Kong among the top five places in the world to do business, for both locals and foreigners.
What’s more, the latest World Competitiveness Yearbook ranks Hong Kong as among the top ten competitive economies in the world. It highlights factors such as government efficiency and technological infrastructure.
Hong Kong has a strategic location, world-class infrastructure, a skilled workforce, and a pro-business environment. These are the reasons why it is perfect for people like you who want to pursue their passions and make a mark.
Overview:
- Registering A Business in Hong Kong Vs Registering a Business Elsewhere
- Registration Depends on the Type of Company You Set Up
- Which Corporate Entity Is Best for You?
- A Basic Checklist for Registering a Company in Hong Kong
- A Checklist for Registering Foreign Entities
- Getting an Expert to Do the Job
- In a Nutshell
- FAQs
Registering A Business in Hong Kong Vs Registering a Business Elsewhere
Before we take you through the steps on how to start a business in Hong Kong, it would be helpful to understand how the procedure compares to anywhere else.
For a start, Hong Kong has also been ranked in the top five when it comes to the ease of starting a business. Some reasons for this are:
- The process is quick.
- The paperwork is simple.
- The set-up costs are low.
In addition, there are other unique advantages. Some of them are:
- A strong, stable banking system.
- Transparent legal systems.
- Trade agreements with countries across Asia.
A Global Competitiveness Report rated Hong Kong as having the world’s top financial system. This was even ahead of the United States. Hong Kong is also a free port, with no import or export duties.
This means that if you want to take the first step in setting up a company of your own, Hong Kong remains the go-to option.
Registration Depends on the Type of Company You Set Up
You could be a creative expert like an artist or a chef. Or you could be a professional specializing in software, finance, or anything else. Either way, you have a choice of the type of company that you can register to start a business in Hong Kong.
The most common types are:
Limited Liability Company. The main advantage of this type is that it protects personal assets from business risks.
Sole Proietorship. This is common in cases of individuals with talent who are looking to incorporate their services.
Partnership. This business structure lets two or more people share ownership of a single business.
Foreign Office. For foreigners who want to set up a company in Hong Kong, they will need a local address for business registration.
While the general principles of registration remain the same for all types, there are differences.
For example, a limited company will need more paperwork and compliance relating to shareholding and directors. It will also need regular audits. Foreigners will need additional documentation such as a passport and Hong Kong identity card.
Which Corporate Entity Is Best for You?
How do you choose between setting up a limited liability company, sole proprietorship, professional, or partnership? That depends on the nature of your company, the funds you need, the number of people involved, and your plans for the future.
Here is a table of the main differences to help you make up your mind.
Limited Company | Unlimited Company |
Separate legal entity | Not a separate legal entity |
Limited liability | Unlimited liability |
Easy to raise capital | Difficult to raise capital |
8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000 | 7.5% on assessable profits up to HKD$2,000,000, and 15% on any part of assessable profits over HKD$2,000,000 |
Easy to transfer ownership | Difficult to transfer ownership |
A Basic Checklist for Registering a Company in Hong Kong
Here are the general steps to register a company in Hong Kong. Do keep in mind that there can be variations depending on the type of company that you are registering.
Name of company
How to register a company name? Well, it can be in English or Chinese. The name should not have already been registered. Of course, it should reflect the nature of your activity, and should not be offensive in any way.
Nature of business
You will need to specify the nature of your business. This description should be brief: there is no need to go into details. For example, you can choose “trading gemstones”, “content creation” or “bookselling”.
Registered address
You must state a local address for your business. This is where all communication, especially from the company registrar, will be sent. It must be an actual physical location and not a PO Box.
Shares and shareholders
For a limited company, you will need to specify the types of shares, the value of shares, and the people to whom they are allocated. The number of shareholders can be a minimum of one and a maximum of 50. They can be of any nationality.
Company directors and company secretary
Limited companies will have to state the individuals on the board of directors. There should be at least one individual director at any given time. You must also appoint a company secretary. This individual maintains the account books and complies with statutory requirements.
Significant controllers
Private companies incorporated in Hong Kong must also provide details of “significant controllers”. These are persons or entities that have significant control over the company. The control can be in terms of shareholding or factors such as family influence.
You’re almost done!
Now, put together the documents needed. Some of the main documents are the company articles of association, company bank account details, ID cards, residential proof, incorporation forms, and any others arising from the unique nature of your business.
A Checklist for Registering Foreign Entities
Foreign entities can be classified into a branch, a subsidiary, or a representative office.
Branch
A branch office is considered an extension of the foreign company, not a separate legal entity. A branch office must be registered with Hong Kong’s Companies Registry.
The general requirements are a company name, a local representative, and a place of business in Hong Kong. Branch offices have to follow compliance requirements like filing tax returns.
Subsidiary
Setting up a subsidiary is a preferred option. It is considered to be a separate legal entity from its foreign parent company.
The requirements for registering a subsidiary are largely the same as the steps outlined above. There should be a local company secretary and an auditor. A subsidiary is treated as a Hong Kong resident company, which means it is eligible for local tax exemptions and incentives.
Representative office
This is suitable for overseas enterprises that may need initial exposure to the Hong Kong business scenario. Such an office cannot engage in earning profits. It cannot enter into contracts or sign deals. Its main activities are promotion and liaison, market research and coordination.
There are no specific requirements for representative offices. They have to register for a Business Registration Certificate.
Talk to our friendly experts today about how Sleek can simplify your business
Getting an Expert to Do the Job
Registering a company in Hong Kong can be pain-free. But you may want to spend all your free time on getting the nitty-gritty of your business just right.
After all, when you’re sorting out details of work and processes, the last thing you need is to be bogged down with registration forms and other details.
That’s why it makes sense to leave business registration to an expert. At Sleek, we’ve got your back! You choose your company name, fill out a short form, and leave the rest to us.
Sleek will take care of all the little details. Registration will be quick, and we will be there to answer any questions you may have. You focus on your business while we do the rest.
In a Nutshell
- Hong Kong is a great place to do business, for locals and foreigners.
- You can take advantage of a strategic location, great infrastructure, and a skilled workforce. You also have access to Chinese and regional markets.
- Before you start business operations, you need to register your company. The business entity can be a limited liability company, partnership, or self-employment.
- Foreign companies can set up a branch, subsidiary, or representative office.
- Registration is a simple process. You need to decide the name and nature of your business first. You will also need to decide on other details such as shares and shareholders.
- For registration, you need a physical Hong Kong address.
To save time and make sure you get it just right, it makes sense to let an expert handle the registration process.
FAQs
According to a proposal in the 2023 budget, the business registration fee is HK$2,150.
Yes, they can. Hong Kong allows complete foreign ownership of companies. Companies can set up a branch, a subsidiary, or a representative office. All of them will need to follow the relevant procedures and statutes.
Limited Company: 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000
Unlimited Company: 7.5% on assessable profits up to HKD$2,000,000, and 15% on any part of assessable profits over HKD$2,000,000
The most convenient method is to pay online. The fees need to be paid to the Companies Registry in Hong Kong. It is a government department under the Financial Services and the Treasury Bureau.
