As an increasing number of companies look towards business formation within major commercial districts in Hong Kong, let us take a brief look at the various steps involved in business formation in Hong Kong. Implementing business operations in Hong Kong need not be a cumbersome process as long as organizations stay well informed and act proactively.
Determining the type of business
Naturally, the first step in the process involves making a decision regarding the type of business you are looking to set up. Investors wish to start business in Hong Kong can choose to incorporate a limited company, register a sole proprietorships or set up a representatives office or branch offices for their overseas headquarter.
The most common form of incorporated businesses in Hong Kong is that of a limited company. Hong Kong limited company is also known as limited liability company, LLC. A limited company offers particular advantages in the form of concessions and benefits, pertaining especially to business and income tax.
Sole proprietorship, also known as unlimited company is the fastest, simple and the most cost effective way to start your business in Hong Kong. The owner alone contributes his financial resources and efforts to the business and carry little formalities. However, the owners are subject to unlimited personal liability for the debts, losses and liabilities of the business.
Representative office or branch offices
If you already have an existing business outside Hong Kong, you may choose to opt for the branch offices or representative office option.
In order to register a branch office, companies will have to register with the Companies Registry under the ‘Registered Non Hong Kong Company’ category. This type of business structure is not recognized as independent from its parent enterprise.
A more restricted type of business is also available in the form of a representative office. These businesses are not allowed to make any kind of transactions, and as such, are usually set up in order to conduct important market research and analysis, prior to the implementation of business operations.
Incorporating a business
Once you have decided upon the type of company structure to be set up, you can begin the incorporation process. Hong Kong regulations stipulate that any company looking to register within the city, will need to send a range of documentation, preferably virtually, through the Companies Registry. The documents required include an incorporation form, a company’s articles of association, and a notice of business registration office and a certified identification documents. All documents must be sent along with the relevant fees. Processing times for incorporation applications is around 5-7 working days.
Opening a bank account
Once you have received a Certificate of Incorporation from the Companies Registry, it is time to set up your company bank account. Banks will require a set of certified company certificates, relevant business documents, and may even require a base deposit. Companies will also have to provide crucial documentation regarding proof of residence and identity, in compliance with Hong Kong’s anti-money laundering programs. The processing time for a bank account is around 3-4 weeks. Once a bank account has been opened, companies are free to begin searching for office spaces across the city.