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. It 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.
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:
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.
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.
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.
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.
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.
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.
- 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.
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
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!