The Hong Kong Environment
With the open business environment in Hong Kong, many diverse businesses can be started here.
A former British Colony and now a part of the Republic of China, Hong Kong has been ranked as the third-easiest and best place in the world to open and do business. Located on the south-east coast of China, it is also considered a major international center for business where the Hong Kong environment is stable and very business-friendly.
Hong Kong is listed as a Special Administrative Region, which is the SAR within the Republic of China, but it has maintained its own legal system. The judicial system in Hong Kong is based on the old British system, where the official languages in Hong Kong are still Chinese and English. Thus there shouldn’t be any communication problems when a person starts a business here.
Moreover, there are a large number of Hong Kong companies advantages where after the incorporation of a company in Hong Kong, the business would not have to pay any taxes if the income is derived from sources out of Hong Kong. Furthermore, an excellent infrastructure and robust regulatory framework contribute to the success of Hong Kong as one of the major destinations for business.
With the open business environment in Hong Kong, many diverse businesses can be started here, with a wide range of business opportunities at one’s disposal. As mentioned above, there are numerous Hong Kong companies advantages where you are offered simple company tax framework, easy multi-currencies dealing, genuine accounting rates, and no corporation tax on offshore gains.
Hong Kong is one of the world’s most stable and reliable financial centers and due to its free economy, as measured by the Index of Economic Freedom, it is an excellent jurisdiction to incorporate a company. To start up a Hong Kong company, the process is very easy, simple and can be finished quickly. Other than this, there is no need for you to be physically present in Hong Kong for setting up the business and everything can be done online with the help of a genuine and honest agency like Startupr.
Find out the reasons why the environment of Hong Kong is said to be the best for those who want to start a business in Asia.
Advantages of opening a company in Hong Kong
There are a lot of advantages of owning a company in Hong Kong which have been explained in details below:
- Along with Singapore, Hong Kong is the most liberal economy in the world which is why starting a limited company is straightforward, cheap and fast. The best part about this is that you don’t even need to live there to own a company, but you would need to hire a local company secretary and even get a registered office address in Hong Kong. Both the services are offered by various reputable agencies at a reasonable and affordable rate to make it easier for you to open a company in Hong Kong. Our advice is to choose the Hong Kong agency that provides both the services at a fair rate.
- The required registered capital in a Hong Kong company is a lot less as compared to many other countries. You are free to choose the total value of the registered share capital, and are not legally required to deposit this amount into the company. This is one of the best Hong Kong companies advantages since it permits those who have a low budget to own a company in Hong Kong without spending too much.
- You can operate and run the business in Hong Kong while sitting in any part of the world. But as mentioned above, you would need to check an agency that provides a company secretary and a registered office address in Hong Kong for you. So, if you find an agency who offers you fair and affordable services, choose that Hong Kong agency and they would help you adjust easily with the stable environment in Hong Kong.
- Since Hong Kong is one of the major banking centers in the world, after you have incorporated your company here, you would be able to open a multi-currency business bank account that would have online e-Banking features. These banks are recognized worldwide, such as the Hang Seng Bank or the HSBC, and essential for your company if you are planning to do business worldwide.
- You can even choose to open a bank account outside Hong Kong as well in countries like Switzerland or Singapore. The agency helping you would have an open number of options for you that you can choose accordingly.
- Another great Hong Kong companies advantages is that if you are looking for a gateway to mainland China, Hong Kong is the best place to start from while the CEPA (Closer Economic Partnership Arrangement) between these two countries grants some additional and exclusive mainland market entrance benefits to Hong Kong. So, in case you are hoping to have a Chinese partner for your business, Hong Kong is the best place to start it.
- Moreover, if you are worried about the language in Hong Kong or because it is a province of the People’s Republic of China, don’t worry. The legal system in Hong Kong is very different as compared to the Mainland China as English common law prevails, and English dominates the business world in Hong Kong.
- Also, the business auditing and accounting in Hong Kong are very lenient in comparison to the other countries. Having a business in Hong Kong opens the doors where you are able to make deals with the fastest growing markets in the world, and it is since most of them trust Hong Kong based companies.
- The last point is that Hong Kong has a very simple taxation system where the company would have to pay just 16.5% tax on all the profits earned in Hong Kong. Also, if none of the business transactions are in Hong Kong, you can apply for the “profits exemption” status, making the environment in Hong Kong very favorable for anyone who hopes to start a business here.
The “profits exemption” status would permit your business to pay taxes that are earned in the territory of Hong Kong and no taxes are placed on the profits that are generated elsewhere. Check the agency that lets you know clearly about all these points as an honest agency is the only one that would share these details clearly with you.
For instance, let us say that you have a company in Hong Kong where you import tablets and cellphones from China to resell them in the European countries or even on an American e-commerce website. This is when you would not have to pay any taxes to the Hong Kong government as long as you have the “profits exemption” status, which is one of the greatest Hong Kong companies advantages.
But also be careful since you might have to pay the taxes for this business in the country that you are living in. As a matter of fact, to obtain your company’s profits, you would have to be paid annual dividends or a salary. And it is for this amount that you would have to pay personal tax in the country that you are living in. A note that must be kept in mind is that spending the company’s money for personal use without reporting it is a crime in most of the countries.
Another critical thing to keep in mind is that a lot of countries also have laws to find out if a foreign company is operated from the country in which one or more of the directors live in as per the Controlled foreign corporation (CFC) terms. In this situation, the nation where the directors live in may need the payment of the difference between the tax on company profits in Hong Kong and in the country in which they reside.
Hence, it is better to discuss with a professional agency before starting a company in Hong Kong. Choose a Hong Kong agency that would help you out for all the processes and that would give you a better idea about the environment in Hong Kong.
Disadvantages of Opening a company in Hong Kong
- To start a company in Hong Kong requires a lot of paperwork and if you have never done this before on your own, it would be difficult to sort everything all by yourself. Furthermore, you would have to personally visit the country if you are doing it on your own. This problem can be solved if you choose a Hong Kong agency that does everything for you, as well as help you to open a bank account for the company.
- In case you want to live in mainland China, the Hong Kong company would not be able to provide the Chinese VISA for you, and you would need to open a business in China for this. This is much more difficult since it would require a much higher registered capital to start it. Alternatively, you can go to Hong Kong every three to six months and obtain a new business VISA, but again this is not that simple due to the strict rules.
- Due to some recent affairs of the US crackdown, it has become a bit tough for people from some nations to open a corporate bank account in Hong Kong. But this has not yet been an issue for those have tried and eventually succeeded in getting their company set up. So, you can become a part of the business driven environment in Hong Kong only if you try it.
Check the agency that would be honest in letting you know about these points as well and not just let you know about the positives and compel you to open a company through them without deciding properly. But this is not where it ends, read on to know more!
Incorporating a Hong Kong company without living there
There was once a time in Hong Kong where people were allowed to open a sole proprietorship there without owning the resident permit for Hong Kong. But nowadays, you can only open a limited company unless you are planning to live in Hong Kong.
Again, as mentioned above, for a limited Hong Kong company you would also need a local registered office address and a secretary in Hong Kong. This is the main reason why it is better to choose a Hong Kong agency to provide the services for you as they help get equipped for the environment in Hong Kong.
Moreover, these agencies offer the services at fair rates, which is affordable for most business owners, where they can be hired as your company secretary and would even give their registered address to you as your company’s registered address.
Besides, you can open a Hong Kong company without even traveling to Hong Kong where e-registration and paper registration both are allowed here. The steps are:
- You would need to call up the agency that you have decided is right for you, and discuss the details. Ensure that you get a cross-checking done about the Hong Kong companies advantages, in case you are not sure at the moment.
- After that, choose the name of the company using the option available on the website of the agency.
- The next step is to send the necessary documents to them and pay them for the services through PayPal, bank transfer or through the credit card. Choose the Hong Kong agency that has a customizable package for the services so that you can choose as per your needs.
- You would need to send in your passport copy, official document as a proof of residence like the driver’s license, and a questionnaire to let the agency know about the number of directors and the other essential parts of the business you want to open in Hong Kong.
- Let them process and fill the form to obtain the required documents.
- For a simple company structure, your agency will set up your company smoothly through the E-registration, which is one of the other great Hong Kong companies advantages.
- If your proposed company has a few layers, you will get a set of pre-sign documents that includes the NNC1 Form – Incorporation Form and the Articles of Association for the shareholder and the director to sign. These papers would have to be sent back where the process would then take about five working days to be completed.
- The end documents that you get are the company’s certificate of incorporation and business registration certificate which means that you have opened a business in Hong Kong!
Final Things to Consider
Now that you are clear about the Hong Kong companies advantages and the business environment in Hong Kong, some things have to be kept in mind so that the complete process can be a hassle-free one. These points are:
- Even though you would like to initiate a business in Hong Kong due to the numerous Hong Kong companies advantages, you would still have to remove time out of your tight schedule for starting up your company.
- Despite the fact that the friendly-business environment in Hong Kong allows you to open a business online as you sit in your home country, you would still need a local company secretary and a registered address in Hong Kong as mentioned above. These can be taken care of by the agency you hire as well, only if they are a good and honest agency.
- In case you’ve decide that you can do it on your own eventually, it is still possible, however the process and handling of legal documents and other legal formalities might prove to be a bit complicated.
- In addition to the initial amount you would spend to incorporate the company as mentioned above, there are different fees needed to start a business from the company registration & incorporation fee to the bank opening & bank deposit fee.
- Hong Kong is not the only place where you can open a company due to the business-friendly environment, as many other countries are also open with similar advantages. But Hong Kong is the best choice if you want a smooth and relaxed gateway for trades in the other Asian countries as well as mainland China.
All in all, the environment in Hong Kong is for any person who wants to own a business space there in Hong Kong. It is also easy for any entrepreneur to set up their business in Hong Kong than most of the other cities in the world. If you are not living in Hong Kong don’t worry, as there are many agencies available for assisting you in setting up your business in Hong Kong at fair rates. This also means that you would not have to visit the country at all.