With attractive business policies and a simplified registration process, the city of Hong Kong is a hotspot for startups, entrepreneurs and international companies in the Asia Pacific region. If you're an entrepreneur that is searching for business opportunities and has the intention of opening a consulting business to become the next Big Four, Hong Kong is one of the best places to register a company, especially if your business plans include Mainland China. Additionally, the simple tax regime of Hong Kong can benefit small and medium businesses in their first years of operations.
In this article, we'll be discussing some of the options for you to register a consulting business in Hong Kong, as well as we’ll be giving some of our considerations for the registration process and thoughts on what comes after the registration. More details will be shown in the next sections.
Company Registration in Hong Kong - What Are the Options?
It comes without saying that the business regulations in Hong Kong allow a wide variety of business entities to be registered. The Hong Kong Companies Ordinance (Cap 622) is the key legislation that oversees, both the conduct of companies and, their registration process through the Companies Registry (CR), which is the government's body in charge of this task. The local authorities require that all the profit-making activities conducted inside Hong Kong must be registered.
In the next subsection, we’ll be discussing some of the forms that your business activities can take to comply with local regulations.
Types of Business Entities in Hong Kong
There are a few options for people to register a business in Hong Kong. Here will enlist and give an overview of some of the most common vehicles used by people that want to start a business in consulting:
- Sole proprietorship: the sole proprietorship is one of the most basic ways to conduct business in Hong Kong. However, this business entity does not have a separate legal entity from the owner, in other words, the individual and the business are the same and therefore his or her assets are at risk in the case that the business doesn't work. This business entity works best for a consultant dedicated to a single industry, for example, quality control or even general advice on logistics.
- Partnership: Going up a little bit on the complexity level of business entities, we’ve the partnership, which is formed between two individuals to generate profit. There are two forms of partnership in Hong Kong: the General Partnership and the Limited Partnership. Just as with the Sole proprietorship, a partnership doesn't have a separate legal entity and therefore the partners which are the owners of the business are exposed. Nevertheless, it's important to make the distinction between limited partners and general partners, in which the latter has limited liability while a general partner has unlimited liability. Partnerships work great for any startup, for example, if you and another coworker decide to start your own business, it will allow you to have bigger operations than a Sole proprietorship since you can receive investment from the other partners if you chose to go the way of a Limited Partnership, while not involving them in the day-to-day operations of your business.
- Private Limited Company: it’s one of the most used ways of registering a business in Hong Kong. It’s very few requirements for its registration, and it gives the advantage to protect its owners because it’s a company limited by shares. As it has a separate legal entity, the liability is limited. The owner(s) of this company will be only responsible for their amount of shares. Also, it can be registered very quickly. In just 4 four working days! But, it doesn’t end there, you can have a wide business scope! You can do trading or provide services at the same time. This business entity sounds as good as it is! Don’t forget that you can also hire several employees and build your own team of experts.
Key Points to Remember
It’s possible to get into the consulting industry with all the options that we’ve mentioned. But, don’t forget that your scale of operations and future growth needs to be considered. Some of the entities work best for smaller operations and teams. For this reason, the (Private) Limited Company is the most used entity. Most investors wouldn’t even consider registering a Partnership or a Sole-Proprietorship. Not if you consider all the advantages of the Limited Company. Also, the protection it will offer you is not comparable to the other options.
Start your consultancy firm with the right structure, so you can focus on your business! Moving on to the next section, we’ll be discussing the steps to register a business.
The Registration - What’s Needed?
There are a few elements that registered businesses in Hong Kong must’ve. Here we’ll mention some of them for your consideration. It also applies to all the options that we’ve described.
- Choosing a Name: All business entities registered in Hong Kong must have a name. Depending on their nature or structure, they must follow certain rules. For example, when choosing a name, you mustn't use a name already taken by another entity. Also, it’s not allowed to use offensive words or words that can confuse you. Similar names to other businesses should be avoided.
- Internal Structure: you’ve found which kind of entity you’ll use for your business. Then it's important to fill in the required roles for its internal structure. For example, Partnerships require at least two partners. A Private Limited Company requires at least one director and one shareholder, which can be the same person.
- Register Office Address: It’s a requirement, by law, for businesses and companies to have an official address. This address will help the government authorities to communicate and notify you about your company's compliance. If you run your company from overseas it’s possible to hire the service of a registered office address to a service provider, in this sense, you can comply with the government requirement and still be informed about any important notifications from them, while also enjoying a prestigious location with a view to the Victoria Harbor.
- Other Roles and Positions: the law of Hong Kong also requires your company to have a Company Secretary, which needs to be a Hong Kong resident, and this person will help you to comply with the local regulations and will inform you about any changes happening in the Hong Kong regulations.
- Licenses and Permits: some activities within the consulting scope of certain industries may require that a person holds the qualification or he or she is registered with a specific institution in Hong Kong. For example, if legal advice is intended to be given as a service by your business, a person should be registered and hold the qualifications to be part of the Hong Kong Bar Association (HKBA). Another example would be if you have the intention of giving financial advice, an individual in your company or your company itself must hold a financial service incense, depending on the intended activity. It’s important to consult the regulations to know which government body requires a specific license for an activity.
With the points mentioned in this section, they should help you prepare beforehand. You’ll be ready for the registration process of your company in no time. Furthermore, we advise that you also do your research about the process. See if you met the requirements needed for your plans.
After Registration - What Comes Next?
Once a business entity has been registered in Hong Kong, the government authorities will be issuing the official corporate documents. The Business Registration Certificate and the Certificate of Incorporation will mention details of your company. For example, the full company name, registration number, and registered address. But this is not all, here we’ll share with you some key points. In our experience, they’ll help your business operations after the registration:
- Hiring Employees and their contributions: If you intend to hire other employees as consultants, you’ll need to also consider the registration of their social contributions. No matter if they’re local or foreign. This contribution is the MPF (Mandatory Provident Fund (MPF). For the case of foreign employees, you’ll also need to arrange their visas and paperwork.
- Business Account: having a business account will prove to be vital to manage the operations of your company. In Hong Kong, there are several options such as the classic one that is opening up corporate bank accounts with a local or International banking Hong Kong. An alternative that has become more popular because there are few requirements, and it's faster to obtain is through a digital business account. Due to the current business environment in Hong Kong, multiple options and companies offer such services. If you’d like to know more about how to obtain your digital business account, contact us! Feel free to reach out to the team of Statrys. And we’ll help to solve your questions!
- Compliance: As a newly registered entity, you’ll not receive any government notifications to do your tax declarations. After one year has passed, you’ll receive your first notification. However, keep all the records from the beginning! Don't get stranded and avoid any delay in your accounting. The notifications will come to your registered address eventually! It’s required by law to do your accounting and audit your financial statements. Also, you need to submit them to make your profit declarations. The declaration is made every fiscal year!
We’ve explained in this article several options for you to start your consulting business. Hong Kong companies have flexibility to offer a variety of services. Also, it allows providing other activities simultaneously. But, it’s important to reflect about how you will carry your business. There are several structures that will fit your business plans! However, it’s not bad to seek the opinion of the professionals. A Company Secretary can assist you during the registration process. Even give you some tips afterwards!
Statrys can help you find a Company Secretary. Contact us and our team will help you to solve your questions!
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