Hong Kong is one of the places known as business-friendly cities in the world, because it attracts many global entrepreneurs and companies. Apart from having a favorable business environment, Hong Kong also has low taxation, making it a top choice for many people who want to apply for company registration. Learn about how to set up a company in Hong Kong with us, because you will think it might be hard when you don't understand how to start. This article will explain several important steps, requirements and tips for those of you who want to know local laws and regulations for company registration in Hong Kong.
What are the benefits when set up a company in Hong Kong?
Hong Kong is a city with a high standard of living, with superb infrastructure and has a vibrant culture. For these reasons alone, Hong Kong can become the right place for international trade and investment. Some of the things below are reasons why you should learn to set up a company in Hong Kong.
- Cheap to set up and straightforward
Company registration in Hong Kong is cost-efficient and relatively fast. All you need to have is a business registration certificate from the Companies Registry which you can get within a few days. Don't worry about future costs, because government fees for incorporation are transparent and reasonable. Hong Kong does not require minimum registered capital or a local director, there are no restrictions on foreign investment, and has a business-friendly environment.
- Business-friendly taxes
Hong Kong has one of the lowest tax systems in the world with a two-tiered profit tax rate for corporations with 8.25% tax on earnings up to 2 million Hong Kong Dollars, and 16.5% on earnings over 2 million Hong Kong Dollars, and with an exemption for the first 6,000 Hong Kong Dollar profit. The country has a territorial tax regime, which means there is no additional corporate tax for companies conducting business outside Hong Kong.
- Vibrant business environment
Hong Kong has become a dynamic hub for SMEs because it offers adaptability and an innovative environment. There are already more than 360,000 SMEs in Hong Kong, and Hong Kong has become the world's top ten countries with a competitive economy.
Many entrepreneurs want to expand their business in Hong Kong, because the Hong Kong Government supports innovation and technology development, by allocating 500 million Hong Kong Dollars to launch a Digital Transformation Support Pilot Program as digital solutions for SMEs.
Things to know before registering a company in Hong Kong
Before setting up a company in Hong Kong, you must know several things first. Because many people want to open a company in Hong Kong, you have to understand how institutions and local organizations work in Hong Kong. When you want to set up a company in Hong Kong, you have to deal with three main interlocutors, such as The Companies Registry, The Inland Revenue Department, and the company secretary.
Limited Company and Unlimited Company in Hong Kong
The company secretary must be the primary contact person during company establishment and maintenance. On the other hand, the IRD and Hong Kong Companies Registry will collaborate to ensure that your business complies with the laws of Hong Kong, upholds accurate statutory records, and is monitored for timely filing of the annual return.
How to set up a company in Hong Kong?
There are nine steps to setting up a company in Hong Kong, once you are familiar with local organizations and institutions.
- Choose a company name
- Choose the legal entity for your company
- Select a company secretary
- Appoint legal representatives
- Set the amount of the share capital
- Prepare the incorporation documents
- Obtain a business registration and incorporation certificate
- Set up a company bank account
- Keep up the taxies and financial reporting
We will explain several important steps to make it easier for you when setting up a company.
- Choose the right legal entity
This is crucial, because it can affect factors such as filing your taxes and how your business is done in general. The list of main possible legal entities for your business are: Private limited company, company limited by guarantee, sole proprietorship, partnerships, and branch office. Familiarize yourself with what features each legal structure has, and adapt it to the nature of your business.
- Select a company secretary
Having a local company secretary will make it easier for you to establish your company. This is your main contact person when Hong Kong authorities want important information about your business. This role is crucial for your company, because they must be able to comply with the authorities without fail. Don't forget to include the company address, so that it is easy for government departments to reach you and send you correspondence.
- Prepare the incorporation documents
The documents are subject to approval before you can start your business. You need to prepare the NNC1 Incorporation Form provided by the Companies Registry of Hong Kong, A copy of HK ID card or passport of a director and shareholder, and Article of Association of the Company. Submit all of them to the Companies Registry, by using e-Registry's online portal platform, mailing your documents, or going to the Company Registry and submitting the documents in person.
After submitting these documents, you need to pay the applicable government fee, which can be paid on a yearly basis.
If you feel overwhelmed with establishing a company in Hong Kong, and need an agency to take care of everything, SMEBrother is your solution. SMEBrother has been providing business services for SME companies since 2012, and will help with all your business needs like a brother. We know that SME business is difficult, but with our knowledge, years of network, and reasonable pricing, we can support our clients and become your business brothers.
All business services starting from auditing services, opening a Hong Kong company, accounting, auditing, opening a Hong Kong bank account, tax issues, and anything you need to run your business smoothly from the start until your business grows.
