What is the purpose of a Limited Liability Company
The main aim of an LLC is to distribute their income to the partners, as well as permit the shareholders and directors of the company. This to protect business owners from personal liabilities in the event that the business makes a loss.
If the business operates in a loss, the business owners establish a separate independent corporation that assumes the entire liability of the incurred loss or debts of the company.
According to the rules of LLC, an individual is never responsible for the firm’s debts as long as he/she did not invest a personal property or secure them personally, like in a case with a second mortgage.
What are the Advantages of a Limited Liability Company?
The limited liability company has significant tax benefits over the sole proprietorship and partnerships. This includes compensation in the form of the distribution of profits that are in turn taxed at an individual level. Corporations are also taxed at very favorable rate. There are also various incentives and schemes that reduce the final amount due. Thus, the taxation rate of Limited Liability Company is relatively lower than that of the sole proprietor.
LLCs can be wholly foreign owned, and the process of incorporation can be done online. This process is made easy by Inland Revenue Department, and a technologically savvy nation.
This will provide a separate entity from the owners of the business. This means that the owner is not personally liable for the finances of the business, and that banks and financial institutions will be more likely to loan money to the private limited company. The owners’’ personal property is also not at stake over a company’s debt.
At Paul Hype Page, we are well versed in corporate tax planning and can help ensure you make full use of the various rebates for businesses, to ensure you do not overpay for your taxes. This includes knowledge on existing Double Tax Avoidance agreements in the region and around the world, for wherever you decide to expand your business.
What are the Disadvantages of a Limited Liability Company?
The disadvantage of running an LLC in Hong Kong is due to a lack of working capital to run the business. Following the number of shareholders, the process of making decisions might be relatively complicated and take much time as compared to sole proprietors.
There is also significantly more administrative matters in an LLC. This includes AGMs, filing of corporate taxes, and maintaining updated records with the Company Registry. Fortunately, you do not have to handle all of this work alone. Engage Paul Hype Page, and we will ensure your corporate responsibilities are handled promptly and clearly.
It is essential to hire a professional firm to do the LLC incorporation in Hong Kong to prevent any issues faced if doing it yourself. They can assist in preparing necessary incorporation and identification documents on your behalf. You will get assistance such as the opening of a bank account, having a common seal and stamp, applying for a business license, including filing annual returns for your company.
Should you be interested in starting your business in Hong Kong, deciding the right business entity can be difficult, and the options available may be confusing. Paul Hype Page is here to help. With over 10 years of experience in the region, we have helped many businesses find the right way to launch a successful business.
What is a Limited Liability Company in Hong Kong? FAQs
Yes, LLCs can be wholly foreign owned in Hong Kong.
- Your capital requirements
- The nature, scope, and purpose of your business
- The vision and mission of your business
- The extent of your personal liability
- The extent of control you wish to have
- The ability of your business to attract investors
- Whether you can meet the incorporation requirements in terms of timeline, costs, and procedures involved.
Recognized business owners are entitled to all relevant legal and judicial services in Hong Kong. This ensures they are safe, and their businesses are secured. They are also entitled to any tax benefits, tax reductions, employment schemes, and training funds that apply to their businesses.
There are no limits as to the number of companies an investor can set up in Hong Kong as long as you are following regulations and compliance requirements put in place. However, some jurisdictions are not allowed to set up companies in Hong Kong. Talk to a Page Hype Page consultant to find out whether your jurisdiction can set up a company in Hong Kong.