Sole Proprietorship and Partnerships
Both sole proprietorship and partnerships are required by the Hong Kong authorities to obtain their certificate from the Inland Revenue Department. Besides, there are certain formalities that these business entities should comply. Though they are not expected to disclose their business to the public, sole proprietorship and partnerships should keep their books of accounts for taxation purposes. The Partnership Ordinance (Cap. 38) governs partnership business while both the partnership and sole proprietorship have unlimited liability to their debtors. Partnerships, on the other hand, maybe formed under the Limited Partnership Ordinance (Cap. 37); the ordinance, however, is not often used.
The incorporation of a limited company in Hong Kong requires certain documents that must be filed with the Registrar of companies, and the company should obtain a registration certificate from the Inland Revenue Department. If a company submits all its requirements, then it can collect both its business registration certificate (given by the Inland Revenue Department) and certificate of incorporation (issued by Company Registry) from the Companies Registry once the application has been approved.
Upon successful registration, the limited companies are expected to submit various documents to the office of Companies registry. Such documents include annual returns, notices of change of directors, and any alteration of a company’s share.
The following obligations are expected of Hong Kong companies:
- A Hong Kong Company is expected to maintain its registers that include the registers for its members, charges, directors, and its secretaries.
- All Hong Kong companies should maintain and keep their books of accounts’ records up to date.
- Holding annual general meetings at least once in every year unless otherwise dispensed under certain circumstances. That can include if everything that was to be discussed during the AGM is discussed in prior or via a written resolution.
- The limited companies of Hong Kong should prepare the company’s financial statements and directors’ report by the company’s directors.
- Delivery of particulars of specific changes or the security created to the Registrar of companies.
- A Hong Kong company should write a notification to the Registrar of companies when a company makes or initiates certain changes.
Note that all documents that are filed with the Registrar of Companies are open to public inspection.
To most, these requirements can seem overwhelming, here at Paul Hype Page, however, we are well versed in these regulations, and can help ensure your business is compliant.
Foreign Companies registered as non-Hong Kong Companies
It is possible for overseas companies that intend to set up their business in Hong Kong to do so by setting an office in the country without necessarily creating Hong Kong incorporated subsidiaries as spelled out in the Companies Ordinance Part 16. Within the first month after setting up a space for the overseas company; in Hong Kong, the company will be required to obtain a business registration certificate that is obtained from the Inland Revenue Department as stipulated by Companies Ordinance Part 16.
A non-Hong Kong company that is registered under Part 16 of the Companies Ordinance is expected to report to the Registrar of companies if the company makes any changes to its name, directors, secretaries, memorandum and articles of association, change in the office address among other major changes within the company. Every non-Hong Kong company is expected to submit its annual return and a copy of its annual accounts to the Registrar of companies.
Another option for overseas company to incorporate a subsidiary company in Hong Kong. By employing Paul Hype Page services, you can incorporate from anywhere in the world, at your convenience. This means you can start operating in Hong Kong, before you have even touched down in the airport.
The Rights of Shareholders
The Hong Kong Company Ordinance reserves specific decisions to the shareholders.
The shareholders of a company are expected to accomplish the following tasks:
- The shareholders are expected to appoint the auditors at the annual general meeting.
- It is the responsibility of the shareholders to alter the company’s articles of association.
- Name change of a company is s responsibility of the shareholders.
- Removing the director of a company from the office.
- Reducing the amount of capital of a company
- Purchasing the shares of a company
These are some of the basic roles that the shareholders have in a Hong Kong company.
Several laws govern the general operation of Hong Kong companies and other businesses. Thus, it is advisable that all investors, whether a local or foreign investment, seek professional consultation before setting up a company and if they face difficulties with the requirements or procedure of obtaining relevant legal documents to enable them to work smoothly. Besides, these will allow the business owners to be aligned with the Hong Kong authorities and business regulations.
Are you starting a business in Hong Kong? The potential choices available are varied and it can be difficult to know which option is best for your specific needs. Paul Hype Page is a trusted advisor, and we can help you in incorporating the business type that is most suitable for you. The good news is that we will sail with you through the business turbulences including obtaining business permits, hiring qualified employees, and filing your taxes as you concentrate on management
Types of Businesses in Hong Kong FAQs
As of 2020, the GDP of Hong Kong is 384.27 billion USD. It ranks 34 globally, with an annual growth rate of approximately 5.8% which is higher than that of the US which is only at 2.09%
If you need a quick answer to this, it is yes. You can follow these simple steps to start and operate a business in Hong Kong;
- Determine the name under which you wish your company to operate.
- Choose a legal structure for your business.
- You need to incorporate your company (Paul hype Page services will help you with this).
- You also need licenses and business permits before starting the business.
- Finally, you’ll have to manage your business and file your taxes on time.
There are thousands of types of businesses that you can start or operate while in Hong Kong. Some of the businesses that you can consider while in Hong Kong include:
- Consultancy business services
- Travel agency business
- App developer
- Real estate agency
- Manufacturing or remodeling of furniture
These are among the types of businesses that you can consider starting in Hong Kong.
The process of incorporating and operating a business in Hong Kong is relatively cheaper and fast. Besides, you can have 100% ownership of a company or business in Hong Kong as a foreigner and you are also permitted to be the sole director and shareholder. Foreigners are advised to start any private limited companies or even Foreign Companies registered as Non-Hong Kong Companies.
The types of businesses that are recognized by the IRS in Hong Kong include:
- Sole proprietorship
- Limited Liability Company, also known as LLC
- Foreign Companies registered as Non-Hong Kong Companies
All these businesses must be incorporated for them to fully operate in Hong Kong.