Updated: Sep 28, 2020
How easy it is to become a business entrepreneur in Hong Kong? Let’s hear what our business partner Michael Lam from Chesford Business Consulting (CBC) Limited says.
1. Easy to start your business Are you in a hurry to issue an invoice or debit note? Not to worry. You can start a business by becoming a sole proprietor and receiving a Business Registration Certificate within 30 minutes. Send your bills to your debtors straightaway and get yourself paid the next day. Sole proprietor is not your cup of tea because of its inability of protecting your personal assets and its limitation of expanding your business. Not to worry. You can set up a limited liability company in 5 to 7 working days. Requirement is simple, be both the director and shareholder yourself. All you need is to appoint a local Hong Kong person to be the company secretary as well as to provide a local address as registered office.
2. Easy to maintain your business It is so simple to fulfill the compliance and statutory requirements of Hong Kong businesses. If you are running your business as a sole proprietor, renew the Business Registration before the expiry date each year. When the Inland Revenue Department mails you a tax return, just complete it with your business result figures and lodge it before the due date. If you are using a limited liability company, send your management accounts to an auditor. He will issue an auditor report to accompany your company tax return for filing. Like sole proprietorships, renew the company’s Business Registration and in addition file an Annual Return with the Companies Registry each year.
3. Easy to run your business What happens if you are always outside Hong Kong? Thanks to the simple regulations in Hong Kong, you can leave all business matters to local professionals as an absentee owner. Let he or she takes care of all the compliance formalities or even to act on your behalf in managing your financial affairs. What if you want to stay in Hong Kong and manage the business yourself? You can simply apply for Entry for Investment as Entrepreneurs which will allow you to stay of up to two years in Hong Kong. This period may vary and you can seek extension prior to its expiry date. As long as you have prior experience in the business you are running and it is a sound investment, the Immigration of Hong Kong welcomes you. There is one catch though. It is money. You need to show that you have sufficient source of funds to support yourself living in Hong Kong for a year in an unlikely event that your business is unsuccessful.
4. Easy to minimise tax from your business Politician says: There are two things certain in life - death and taxes. But as a Chartered Accountant I'd like to add a third certainty: reducing taxes. Hong Kong adopts a territorial source principle of taxation. Only profits that have a source in Hong Kong are taxable here. Profits sourced elsewhere are not subject to Hong Kong Profits Tax. This principle has remained unchanged since Hong Kong was under the British rule. This is great for those business owners who want to pay lower tax. Yes it needs planning but it applies to every business.
Other than the offshore principle, a limited company and its directors can enjoy many other tax perks that sole proprietors do not have.
5. Easy to end your business Hong Kong is not only easy to start a business but also easy to end your business. The day you decide to leave Hong Kong or to end a business, simply file an application to deregister the company from the register of Companies Registry or notify the Business Registration Department in case you are a sole proprietor. Make sure you have before hand clear your tax bills and pay off all your debtors. The tax office will give your company a notice that they have no objection to your closing of the company and you are free to leave.
Following the five E’s will award you a big grand E
“Easy to maximise your WEALTH“.
If you have any questions regarding starting or maintaining company in Hong Kong, you can reach Michael Lam from Chesford Business Consulting (CBC) Limited at www.cbc-ltd.com. To get a special discount quote " CBC888 ".
We wish you a fulfilling and successful entrepreneur's journey!