Before you start a business in a country, especially if you are a foreigner who wants to try to take advantage of opportunities in another country, you need to learn about the challenges and benefits in that country. Especially for those of you who are doing business in Hong Kong, we have prepared several things you need to know. Business owners must understand why Hong Kong is considered as one of the best places to run a business. Apart from friendly policies, Hong Kong also offers free trade, easy market access, and increased access to labor. Let's learn about all this.
Benefits of doing business in Hong Kong
Why do we discuss the benefits of doing business in Hong Kong rather than the challenges? Because the benefits outweigh the challenges, and is ideal for small and medium-sized businesses. Let's see what are the benefits of opening a business in Hong Kong.
- Low operational cost
Companies in Hong Kong are proven to spend significantly less than other countries. There are many favorable laws for new businesses so that Hong Kong is a flexible place to start a business.
Limited Company and Unlimited Company in Hong Kong
For example, the company income tax rate is 8.25% for profits up to HK$2 million, and 16.5% for profits more than HK$2 million. The taxation will not erode much income because the country offers significantly lesser tax rates.
- Large and growing economy
Hong Kong is one of the largest economies in the People's Republic of China. This will outweigh the challenges of doing business in Hong Kong, because this region is energetic, and with economic development at a steady rate of 2-6% per year. The Hong Kong economy opens up freedom for different types of business with free markets and trade policies to facilitate your new business.
- Suitable business location
Hong Kong has a strategic location for other Asian markets because it is located on the Southern Coast of China. That location makes it easy for business owners to easily travel to any other major Chinese city, for example going to Beijing by high-speed train, or reach nearby countries like Japan, Thailand, Singapore, and India. The suitable location can be used as land to gain profits in terms of trade agreements with other countries. The more connections your business has, the greater the revenue you can get.
Challenges of doing business in Hong Kong
Even though Hong Kong has proven to be a suitable place for small or medium-sized businesses, you must still pay attention to what challenges you might face when having a business in Hong Kong.
- Laws and regulations
Long before you decide to open a business in Hong Kong, you should dedicate your time to learning about the laws relating to company incorporation, especially regarding hiring, paying staff, and the firm's daily operations. If you cannot follow these laws, your business could be subject to penalties and sanctions.
Due to the many differences from one jurisdiction to another, you need a legal advisor to provide advice and guide you to stay on the good side of the law and whatever information you need.
- Opening a bank account
Maybe you will be confused, why opening a bank account is more complicated than opening a business in Hong Kong. This is because Hong Kong is a country that is strict with new and existing customers regarding financial matters, to avoid money laundering and terrorism financing.
Some of these documents will be needed when you want to open a bank account for your new business: Proof of registration, identity cards, travel documents, certificate of incorporation, details of the company's control structure and ownership, partnership agreement of deed, exchange of financial account information, details of business nature and method of operation.
In fact, many Hong Kong banks charge high fees when you want to open an international bank account. Some small businesses can find it difficult to deal with these kinds of fees. There is also a lot of paperwork required for a single bank account.
- New tax laws
Tax is something that every business owner needs to continue to study because there will always be changes over time. Each company needs to pay corporate and payroll taxes, and file audited financial statements to the Inland Revenue Department. If a business fails to comply with the tax regulations, it will get penalties and have difficulty opening a new business.
There are many things you need to do for taxes, or what can be called tax treatment. You need to make tax planning, tax declaration, tax review and dispute resolution, and many others. Not many businesses can survive dealing with so many paperwork requirements for taxes and also the time to take care of it all. If you are overwhelmed by all this, you can hire a professional tax treatment to make it simpler.
Who can help us when we want to open a business in Hong Kong?
You already know the benefits and challenges when you open a business in Hong Kong. Now what you need to prepare is what the process is for starting a business, and which agency can help you so you can stay on the right side of the law.
After you choose a company name and incorporate your firm, register the company, open a bank account, and register a business address, you can contact SMEBrother for all your legalization needs, processing documents, or if you want help with getting permission to open a business from scratch.
SME Bro has been providing business services for small and medium-sized businesses for more than a decade, starting from auditing services, accounting, opening a Hong Kong bank account, tax issues handling, to opening a Hong Kong company from scratch.
Whatever your needs are for successfully opening a business, up to any permits to thrive your business, you can do it with SMEBrother as your truly SME brother. You just focus on expanding your business and let us take care of the rest.
