By the end of June 2018, Hong Kong has a total of 1,407,743 registered businesses. They are among the most competitive economies in the Asia-Pacific region, ranking sixth in the World Economic Forum’s Competitiveness Index. The Hong Kong government contributed approximately $5 billion to the Technology and Innovation Fund to foster startup venture capital investment.
With all this support, establishing a business in Hong Kong is easier than in any other place. Are you prepared to create a name for yourself as an entrepreneur in Hong Kong’s startup scene? If yes, continue reading to learn how to start a business in Hong Kong.
Why Start a Business in Hong Kong?
Several businesses, like McDonald’s and Starbucks, have expanded their franchise in Hong Kong. Are you curious as to why these successful businesses are investing in this place? Here are the reasons why:
Economic Development
Hong Kong’s dynamic economy is the primary reason you should establish a company there. This country’s economic independence is unmatched both locally and globally. This liberty is facilitated by the following:
- Fiscal policies
- Transparent legal systems
- Hong Kong’s free market
- Efficient regulatory regimes
- Protection of property rights
Investing in a Diverse Range of Sectors
In comparison to other nations, Hong Kong makes it easier to establish a company. The business registration procedure is straightforward and affordable. As a result, many startups have emerged in Hong Kong, adding to the region’s economy.
Hong Kong’s fastest rising industries include the following:
- Information and communication technologies
- Ecommerce
- Hardware
- Financial Technology
- Expert services
- Medical care
- Data analysis
- Education
Reduced Tax Burden
In comparison to other nations, Hong Kong’s corporation tax rate is very low. There is no value-added tax or dividend sales tax in this country. Their current taxes are 16.5% on profits, 15% on properties, and 15% on salaried income.
Choosing the Appropriate Business Structure
Once you are ready to hop on the journey to starting a business, it’s time to explore the appropriate business structures, like:
Limited Liability Company
Usually, small and medium-sized businesses form this kind of organization. To develop this type of business, you must employ at least one director and one shareholder. There is no minimum capital required for the establishment of this company.
Affiliation With a Subsidiary Office
As a branch office, the subsidiary office is self-sufficient in terms of debt and responsibility.
Representation
A representative office is a great way to learn about the Hong Kong market before establishing a presence here. An RO is not permitted to engage in any revenue-generating activity at this location.
Sole Proprietorship
This business structure is suitable for small businesses because it operates under a single owner. The business proprietor is personally accountable for any obligations and is entitled to profits after paying income tax.
Collaboration
When two individuals agree to conduct business together, a partnership company is formed. Partnership companies are classified into two types.
A general partnership is one in which the investor is solely responsible for the company’s actions, including those of the partners. A limited partnership is the ideal investment vehicle since you are accountable for your contribution but have no influence over the business’s operations.
How to Start a Business in Hong Kong
The process of starting a business in Hong Kong is very straightforward. The stages involved in business registration are as follows:
Decide on a business name
Before registering a business in Hong Kong, it’s vital to choose a unique name. Make sure the name you have chosen does not belong to another business in Hong Kong.
Incorporate the Business
To acquire a business registration certificate, submit an application for it. Make sure your application form is complete and accurate to prevent rejection.
Open a Bank Account in Your Home Country
After registering your company with the Inland Revenue Department, you must get a certificate of incumbency. This certificate is required to open up a bank account or make any updates there.
Establish a Physical Location for Your Business
You must have a local business address to get the newsletter and serve as your company’s postal address.
Hire Experts
Depending on the nature of your Hong Kong company, you must recruit local workers. Since the traffic is horrendous, it’s convenient for people who live nearby. However, if your business is remote, you have an excellent chance of finding higher talent.
Submit Tax Returns
Once your Hong Kong business has started operations, you must pay taxes to the government and file an annual financial report. You may engage an auditor to assist you with submitting returns and optimizing your business’s overall operations, thus reducing needless expenses.
Application for a Business Visa in Hong Kong
You must apply for a visa in order to create a business in Hong Kong. The first step is to complete a visa application form and satisfy specific educational and professional requirements. You should not have a criminal record or a blemish on your police record.
The application form is accessible online and may be obtained from the Immigration Department’s website. Here is the following paperwork to get a visa:
- Copies of passport photographs
- A duplicate of your passport
- Evidence of your educational and professional credentials
- Your two-year business strategy
- Background information about your business
Have a Complete Business Plan in Place
A business plan is critical to help bring startup ideas to life. Regardless of how creative your concept is, without a well-defined action plan, your business will fail.
A business plan must contain comprehensive information about the enterprise, including the following:
- Primary and secondary business objectives
- Marketing strategies
- Budget projections
- Compelling reasons why your company will succeed in Hong Kong
- Details about the team that can assist you
Company plans are not extensive explanations of establishing a business in Hong Kong, but rather a concise overview of the process.
The Best Business Advice for Starting Your Entrepreneur Journey in Hong Kong
The best advice on how to start a business in Hong Kong is this simple phrase, “just do it.” The longer you wait, the more apprehension and resistance you get. As long as you follow the guidelines and information above, you will reap the benefits of having a business there.
There are a lot of forms and applications to complete. If you need help registering your business and completing a certificate of incumbency, contact us today.
