Starting your business in Hong Kong

Starting a business in Hong Kong is one of the best choices a person can make for their business.

With Hong Kong being a record-holder for the past two decades for the world’s freest economy, starting a business in Hong Kong is one of the best choices a person can make for their business. Hong Kong is the global leader in the banking and business and even ranks above the UK, USA, and even Japan as the least corrupt country in the World.

Most importantly, starting a business in Hong Kong is comparatively more cost-effective and an easier than other countries. As a foreigner in Hong Kong, you can own 100% of the company, where you can be both the sole shareholder and director. Additionally, with a business in Hong Kong, a person can easily get a path for establishing the business with countries in the Asian continent like China, etc.

Here are all the things related to starting a business in Hong Kong and even opening a Hong Kong bank account.

Why start a business in Hong Kong?

Setting up a business in Hong Kong comes with several benefits:

Ideal location: Because of its convenient time zone and nearness to China and the Asia-Pacific’s profitable markets, it acts as a gateway.
Conducive business environment: The tax system in Hong Kong is simple and has low tax rates with no VAT. Also, it boasts of transparency in the legal systems and strong intellectual property rights protection.
Efficient infrastructure: With good financial, communication, transportation infrastructures, etc., the city provides an enabling environment for conducting business activities.
Availability of skilled workforce: Due to its cosmopolitan nature, which attracts talents worldwide, finding skilled employees is easier in Hong Kong than elsewhere.
Global recognition: Hong Kong is recognized worldwide as a financial center so your credibility would improve when you set up any company there, thus fostering international trade relations.
Easy company registration procedures: It takes a relatively short period of time, mostly a few days, to register your company in this city since most steps are simple or self-explanatory. In addition, Hong Kong doesn’t require much paperwork.
Political stability: The rule of law is well established under a stable political environment, providing secure grounds for business operations in Hong Kong.

How to Start Your Business in Hong Kong?

Starting a business in Hong Kong is more than just a creative process. It involves complying with rules, planning for expenses, and understanding tax obligations too.

In this extensive guide, we will take you through important information that will enable you navigate registration charges, among other things, so that you are able to set up your enterprise in Hong Kong confidently within its vibrant market.

Choosing a Hong Kong Company Name

Although it may seem small, choosing a name for your company is crucial. You cannot use a name already taken or registered, which you can verify through the search box. These are some of the most important guidelines when naming a company in Hong Kong. Here are some things to consider.

General requirements and limitations

Here are some requirements that you should keep in mind:

You can choose between English or Chinese for an organization name to be registered in Hong Kong.
The organization name cannot be a mixture of Chinese characters and English words/letters.
“Limited” should end with an English company name.
“有限公司” should end a Chinese organization name.
The Chinese organization name ought to contain customary Chinese characters (繁體字) that can be found in the accompanying word references.
Kang Xi Dictionary (康熙字典) or Ci Hai Dictionary (辞海), as well as ISO 10646 international coding standard
The Chinese organization name with improved Chinese characters won’t be acknowledged.

To know if a Hong Kong company name is available or not, use the Startupr’s company name check tool. The availability of the Hong Kong name search option on the Startupr website has made it easier to determine if a company name is suitable. Find out whether the desired corporate name has already been adopted or is going to be registered soon. If your preferred name has been taken up then you cannot pick any other closely resembling names or those that another entity will quickly adopt. In such cases, you are required to select an alternative name for your enterprise.

Tips for Selecting a Company Name

Here are some tips for selecting a right company name:

Originality: Ensure your selected name has not been taken by any other company or is already registered with the government. You can conduct a Hong Kong name search on the Startupr website, to avoid conflict when registering it later.
Don’t Use Government Names: Do not choose names that imply government support or connection because this makes registration complex; also, don’t be offensive or raise legal concerns.
Limited vs Ltd: As mentioned above, this means that all names should finish with ‘limited’ or its Chinese equivalent; however, abbreviations like Ltd are not considered official business titles in Hong Kong.
Precision: The Registrar of Companies in Hong Kong has stated that if the name is vulgar or using it constitutes a criminal offense or is against the public interest, then it cannot be used. Moreover, there are certain words that are prohibited to use when naming a company in Hong Kong.

Costs for starting a Business in Hong Kong

There are different fees involved in establishing a Hong Kong company, and these fees may vary depending on the type of business, complexity, and specific needs. Here are the basic components:

Incorporation Fee: This fee is paid to the Companies Registry, a government entity. It is a one-time payment required for both electronic and hard copy applications, totaling HKD 1,540 for electronic delivery and approximately HKD 1,720 for hard copy delivery.
Business Registration Fee: An annual payment to the Inland Revenue Department for a Business Registration Certificate worth around HKD 2,200, renewable every year before it expires.
Company Secretary: Every Hong Kong company should have a local company secretary. Some providers of company formation services offer this service at different prices depending on how much support you need.
Registered Address: A registered address is required for every Hong Kong Company. For those who don’t have a residential address in Hong Kong, this can be provided through company formation service packages at different costs depending on what level of service you choose.

How long does it take for a business to be registered in Hong Kong?

A company typically takes 5-7 working days to be fully registered in Hong Kong. Nevertheless, the time required to process a Business Registration Certificate can vary due to several factors.

Below is a timeline of the application process:

For electronic submissions: Electronic Certificates will be issued within one day for private companies limited by shares. A notification email with download instructions will be sent to the registered user’s message box and email address.
For hard copy submissions: Generally, it takes 5-7 working days to issue hard copy Business Registration Certificates for companies limited by shares. The presenter will receive an email notification when the certificate is ready for collection. The certificate must be collected by the presenter in person at the Registry. They should bring a Notification of Collection of Certificate(s) and identification document/company chop as mentioned. If it is collected by a representative, written authorization and the presenter’s identification document should also be provided.

Regulations for Foreign Businesses

Here’s a quick breakdown of key regulations and considerations for foreign businesses operating in Hong Kong:

Offshore Claim: Foreign investors can legally enjoy tax benefits in Hong Kong by claiming offshore tax exemption.
Business Account Opening: In order to operate a business in Hong Kong, it is necessary that you open a bank account, which can be made easier with fintech products.
Trademark Registration: While it is not mandatory, registering trademarks for brand protection is highly recommended within the jurisdiction of HK.
Business Licenses and Permits: Government departments may require some enterprises to apply for licenses or permits based on their business nature in this city-state.
Annual Compliance Requirements: Companies incorporated and registered under the Companies Ordinance must meet many annual compliance requirements, including renewals, filings, audits, and maintenance of internal records.
Significant Controller Register: Starting in March 2018, businesses registered under the laws of Hong Kong are required to keep a significant controller register.
Transfer Pricing Documentation: Companies conducting transactions between themselves that have a relationship referred to as associated entities should ensure they comply with transfer pricing regulations.
Dormant Status: Businesses can choose ‘dormant’ status when they become temporarily inactive, thereby securing assets while minimizing costs incurred during such periods.
Company Dissolution: When faced with dissolution, businesses have two options, which include deregistration and winding up, whereby deregistration is simpler.

Types of Companies in Hong Kong

The most famous kind of business that is opened in Hong Kong is “Limited Company”, but there are other options as well. These options are open only if you already have another business. Here are the types of companies that you can open in Hong Kong:

Limited Company

A limited company is the easiest and the most common business that is opened in Hong Kong. After the incorporation of this type of company in Hong Kong, the person would be able to enjoy the same tax benefits that the resident entrepreneurs do. This also includes the free trade arrangement with China.

Branch Office

In case you already have a company that is registered outside of Hong Kong, you can open its branch office in Hong Kong. This office has a distinct set of limitations and is not independent from its parent company.

Representative Office

This type of office is the most restricted way to build a presence in Hong Kong as these offices are not permitted to engage themselves in any profit-making activities in the country. This means that you would not be able to sell or even make goods or services in Hong Kong.

In case you want to open an office that is a non-sales branch of your company, this is the right option for you, like the marketing department or a support office.

The focus will be on limited companies, as they are the easiest to incorporate and most common type in Hong Kong. Before you can begin the process, make sure you have a name for the business. Check if the name is available in Hong Kong by using the option available on the Startupr website.

Business Registration

This is the next step after you have decided the name for the company. The business registration would be done in the Inland Revenue Department of Hong Kong about one month before the initiation of the business. Startupr assists in this services due to the direct portal to the government agencies like CR.

To make the process of starting a business in Hong Kong easy, the company incorporation application includes the business registration application as well. As the prices keep changing, please refer to the rates from the Startupr’s main page. You would also find the break down of the costs on the page where the service packages are mentioned.

Moreover, after the business has been registered, you would need to place the business certificate in the office premises at all times where it is visible to everyone.

Processing Times

If the Business registration certificate is applied with the company incorporation, it will come together from the Companies Registry normally in 3-5 business days. However, with expedited service, we can make your company legally active in as little as 24 hours.

Bank account opening

After the company has been incorporated, you would need a bank account for the business transactions that takes places for the services provided. The process is a slightly tough process but with the help of Startupr, you can be guided the right way for opening a bank account in Hong Kong.

The process includes the following steps:

After the incorporation, research about the banks and choose the bank that meets your needs.
Gather all the necessary documents submitting to the bank. Startupr can help with this process if hired for it.
Ensure all the requirements have been fulfilled so that the bank appointment could be arranged.
Meet the bank in person and submit the documents and application to the bank.
After the bank’s approval, the business bank account is opened and you may use the online banking freely and easily.

Notification of business commencement

Any new incorporated local company that is registered with the one-stop company and business registration service need to notify the Commissioner about the business particulars. This has to be done in writing and within a month from the date of commencement of their business. The details needed are the date of the launch of the business, business address, nature of the company, business description and the name of the business.

Various Forms for the Notification of the Change

The notification can be made by filling out the necessary form. Along with this, every company has to notify the commissioner in writing of any change in the above business particulars within a month of the changes. For the help with the notification, a company can use the relevant forms which can be downloaded from the IRD’s website or obtained from Startupr. Moreover, for the change in any credentials of the business, each particular has a specific form that has to be filled accordingly.

Also, the Business Registration Office has to be notified of any admission or retirement of partners within one month of the change. The form IRBR 64 would have to be signed along with the signatures of the other leaving or incoming partners. Along with the form, it is important to send the business documents and the person’s IDs for the change.

In case the change in the partners would either make the business a sole-proprietorship to a partnership or vice-versa, a revised business registration certificate will be issued as soon as the changes have been recorded. For the change in the nature of the business, the form IRBR 193 has to be submitted with all the business’ credentials stated in it.

In case you fail to submit the amount, you would be subjected to a fine of $5,000 and a possible imprisonment since it can be taken as a serious offense in Hong Kong.

Employers’ Obligations

There are many employers’ obligations that must be followed once you have completed the process of Starting a business in Hong Kong and opening the Hong Kong bank account.

Keeping payroll records

The tax obligations initiate when you hire the very first employee.
As soon the employee is hired, all the records have to be maintained for the person that include:
– personal details like the passport number with the place of issue or identity card, marital status, address, and obviously name.
– Nature of employment (part-time or full time)
– Service they are offering in the company (designation)
– Amount of cash compensation, regardless of classification in foreign or domestic currency and compensation paid outside Hong Kong.
– Period of employment
– Employment contract and the improvements to terms of employment.
– Employer’s and employee’s offerings to the MPF also called the Mandatory Provident Fund or its equivalent.
– Non-cash and fringe privileges, like the quarters, holiday journey benefits, share award, share option, etc.
The IRD has to be informed about the following after the process of starting a business in Hong Kong:
– Any alterations in the employee’s details like the residential and postal address, marital status changes, etc.
– Any alterations in the employee’s employment terms like the part-time or full-time employment.
– The employee’s Hong Kong Identity Card No.
The Business accounting records including payrolls of even the last 7 years have to be maintained and kept.

Employer’s returns

When an Employer’s Return (BIR56A) is received, it must be completed and lodged with the IRD within one month even if:
– No employee has been hired, where a Nil return has to be made.
– The business has ceased.
– The business has not been initiated.
If an employee meets the conditions declared in item 1(a) of Notes and Instructions for Forms IR56B and BIR56A, and don’t get the return of the year, the return has to be issued.
For the employee to facilitate the completion of their return, the IR56B/56E/56F/56G copy has to be given to them.

The employee’s Hong Kong Identity Card No.

If the employee’s return has been completed and the employee doesn’t have a Hong Kong Identity Card (employed from overseas or a corporation overseas), fill the passport number and the place of issue. After this follow up the employee and at the soonest let the IRD know about the employee’s Hong Kong Identity Card No. when it comes.

Continuous Employment

Report the employee on the BIR56A and IR 56B forms which is the employer’s return forms, if the employee is:

a director (regardless of amount)
a part-time staff (regardless of amount)
married (regardless of amount)
single and paid an annual income of $132,000 or more

New employment

Within three months of employing a person after starting a business in Hong Kong, you need to file the copy of IR56E or the Electronic Filing of Employer’s Return, if you feel that they would be charged for the salary taxes.

On termination of his service (or death)

File a copy of the necessary form or get the Electronic Filing of Employer’s Return done one month prior to their date of termination of the employment.

On the employee leaving Hong Kong for good or a substantial period

Find out the employee’s expected date of departure.
File two copies of necessary form or get the Electronic Filing of Employer’s Return done one month prior to the scheduled date of departure.
From the date of filing the form, until the time where the employee has cleared all the taxes and has given you the “letter of release” issued by the IRD, all the due payments have to be held like the salaries, commissions, bonus, etc.

With the assistance of Startupr, you can have the complete process completed on time and even receive the certificates on time due to the direct portal with the Companies Registry. If you wish to get this service, request for the quote!

FAQ’s on Starting a Business in Hong Kong

Starting a business in Hong Kong is exciting because of its strong economy, strategic location, and supportive environment. Ready to get started? Find quick answers to common questions here in our FAQs!

How long does a company registration take in Hong Kong?

Normally, it will take three to five working days for incorporation of the company if all documents are received. However, if you are overseas, it may require a longer period due to signing and sending document arrangements by hand submission.

Do I need to be physically present in Hong Kong throughout the process of registering my company?

No, you do not have to book a flight to Hong Kong to register your business if you engage an agent. Just send all necessary documents to your preferred agency. However, you may be required to show up when opening a bank account.

Can I employ foreign staff after incorporating my firm?

Certainly! However, there is a right procedure that you should follow, which includes filing an employment visa for such staff; authorities from Hong Kong must approve this visa.

Can I move to Hong Kong to manage my registered company?

You must obtain an investment visa if you want to move to Hong Kong as an entrepreneur from abroad. The General Employment Policy governs this type of visa, which is similar to the Employment Visa. However, it should be noted that the Investment Visa can only be applied for once your company has been registered.

What languages are acceptable when choosing a name for company registration in Hong Kong?

You can register a company either in Chinese or English, or both. But you cannot use a mix of Chinese and English letters. In addition, an English-named company must have the word “Limited” at the end. If it’s in Chinese, the last name should be equivalent to “Limited”.