Hong Kong is currently rated as one of the most comfortable places to do business within the world. Setting up a Hong Kong business is easy and straightforward, devoid of any unnecessary red-tape or bureaucracy. Apart, from this, Hong Kong adopted a more open, free trade policy by permitting the ownership of a business by any person who has not become a permanent resident of the country. There are many other benefits to company formation in Hong Kong. These include:
It is a well-developed city with good infrastructure. The rapid development of the town is evidenced by the fact that it is a leading economic centre of China. Furthermore, the Hong Kong company incorporation enjoys a high degree of financial freedom concerning the right of taxation. Taxation structures allow both income and expenditure to be controlled by individuals. Therefore, there are no restrictions on spending, and there is no need to submit accounts to the government.
Companies in Hong Kong enjoy a low starting cost for establishing a business. Besides, Hong Kong companies have a wide range of options for financial support, such as low or no tax payments, as well as a shallow requirement for directors’ and shareholders’ meetings. Moreover, since business owners can manage their affairs, there is no need to pay employees or take on other supplementary costs. Overall, it can be said that Hong Kong provides excellent prospects for starting a business.
There are two basic company formation models in Hong Kong: sole proprietorship and limited liability company (or LLC). However, slight differences between these two models may be noticeable in terms of service and regulation compliance. Both models provide business entities with the freedom to manage their affairs independently from their investors and allow them to increase their cash flow and market value with time.
Limited liability company (or LLC) formation in Hong Kong provides the advantages of flexibility and the least number of requirements than the other model. For instance, all paperwork, even mere administrative tasks such as paying annual fees and registering the company’s shares, are handled by the lawyers. Furthermore, all corporate costs, such as board, annual general meeting, quorum expenses, stamp duty, property rent, advertising, and professional indemnity insurance, are borne by the company. There is no need for an accountant and corporate bank accounts, nor any requirement to ensure that all directors meet minimum qualifications.
Limited liability company formation in Hong Kong offers several benefits to domestic business owners. One is that it reduces costs significantly since only a single director will have to handle the business and its finances. It effectively lowers the cost of doing business and assures clients of high levels of professionalism. Second, the legal system in Hong Kong is highly efficient, offering quick decisions and prompt pay-outs. Third, there are no additional requirements for a business to register with the Consumer Protection Agency or the Hong Kong Insurance Agency.
On the other hand, the Limited Liability Company formation process in Hong Kong features several disadvantages. One is that the company set up requires the appointment of a chairperson and two directors. The chairperson must sign the documents for the company set up and can only be a non-executive director.
Besides, both directors and shareholders cannot be directly appointed by the company, except in certain limited circumstances. Finally, there are additional fees payable to the lawyers handling the company setup. These fees are calculated based on the business’s size and are typically significantly higher than fees payable to incorporate a new company in any other country. The best way to include a new company in Hong Kong is to follow the procedures detailed in a company formation guide.