Why Hong Kong is the perfect place to set up your business?

For entrepreneurs looking to start a business, there are plenty of places across the globe to choose from. Hong Kong, however, should be at the top of that list. It has a plethora of things going for it as a business hub, including competitive tax rates, an easy business environment, liberal and accessible government support, and a long history of successful business enterprises. In fact, the Gross Domestic Product (GDP) of Hong Kong has grown over the past few years; and as of 2020, it reached USD46,323.86. Then why not set up your new business in Hong Kong and take advantage of these great benefits? This article will look at some of the key things Hong Kong has to offer as a business destination, and we hope you enjoy the read.

Business in Hong Kong

Well, Hong Kong has the highest economic freedom globally, and it is one of the most open economies in today’s world. The financial sector is particularly strong with a highly developed domestic capital market and operating environment. This makes it an excellent starting point for company formation in Hong Kong and dealing with local, international, and cross-border trade. The strong presence of multinational corporations such as Morgan Stanley, Richemont, and LVMH makes this city a great choice for your business.

The business environment in Hong Kong

There has been a lot of change in the business environment in Hong Kong since the 1990s; it has attractive tax rates, a well-developed financial infrastructure and a strong government support system. As per the World Bank’s Doing Business 2019 Report, Hong Kong is the fourth easiest place in the world to do business. It ranked fifth out of 190 economies in terms of ease of starting a business. This is because the process for company incorporation in Hong Kong is reasonably quick, easy, and cheap.

What you need to know before starting a business in Hong Kong?

In order to start your own business in Hong Kong, you probably need to get familiar with the local business environment, including the laws and regulations, business practices, and culture. The company formation in Hong Kong is similar to other countries in terms of the overall structure; however, there are some things to consider before you get started. You will also need to undergo a number of procedures and preparations before you start your business in Hong Kong. Let’s take it step by step.

Setting up a company in Hong Kong

Once you decide on company incorporation in Hong Kong, there are steps to follow. This will help you set up your business smoothly and hassle-free.

1. Select a Company Name — Before you start your business in Hong Kong, it is important that you check the availability of your company name with the Integrated Companies Registry Information System (ICRIS). If you want the company name as a trademark, you should register it with the Hong Kong Intellectual Property Department.
2. Choose the structure of your business — The legal form of your company can be either a sole proprietorship, partnership, or a limited company. Gather all the information you need and compare these options with what is required to set up your business in Hong Kong. As a result, you can choose the best option to fit your business needs and requirements.
3. Hire a Company Secretary — You need to appoint a company secretary before you register your company. The person or company will ensure that all legal requirements are met, including following up with the government regulations and adhering to all of the necessary legal formalities.
4. Set up a registered address for your business — The registered address is needed for all official communications, announcements, and for any other legal needs associated with your business in Hong Kong. It can either be rented office space or a temporary address during the business set-up stage.
5. Prepare your incorporation documents — You will need to prepare all the necessary formal documents before you submit your application for setting up a company in Hong Kong. This includes the NNC1 incorporation form, identification documents of directors and shareholders, and Articles of Association.
6. Submit your application to the Companies Registry — Once you have all your incorporation documents, you can either submit them to the company registry only at e-Registry, by post or at an authorized companies registry office.
7. Pay relevant government fees — There is a registration fee payable to the government when you register your company. You can check out the government fees for different types of business structures, and hence which one you are required to pay depending on the entity you want to set up.
8. Licenses and permits — Depending on the type of your business, you might be required to obtain licenses and permits from government offices.
9. Keep up with your taxes — Once you have set up your business in Hong Kong, it is important that you keep up with all the tax obligations as a director or shareholder of a company. You need to be aware of the different types of taxes that you may have to pay depending on your business structure and income level.

Why Hong Kong is a good place to set up your business?

Now that you have a fair idea of how you can set up your business in Hong Kong, it is important that you check out the various reasons why this is a good place to do it. Whether it is for making your business global, spreading your reach to other parts of the world, or finding the best talent, Hong Kong is a great choice. Below are some of the key advantages of company formation in Hong Kong to consider.

8 key advantages of setting up your business in Hong Kong

Here are the top eight reasons why you should consider Hong Kong as the perfect place to start up your business:

1. Easy to set up a business — While you can get the incorporation and registration documents done through different channels, another advantage of setting up a company in Hong Kong is that it is quite easy to follow all the necessary procedures. Whether you are starting a business as a sole proprietorship, partnership or limited company, you can easily get these prepared. The process will only take a few days before you can start your business in Hong Kong.
2. Tax benefits — One of the advantages of starting a company in Hong Kong is that it offers a number of tax benefits. A company based in Hong Kong benefits from the territorial source concept, which enables them to avoid paying taxes on any revenues earned outside of Hong Kong and can save thousands of dollars. Furthermore, dividends are exempt from sales tax, VAT, and withholding tax.
3. Strategic location for businesses — Hong Kong is the heart of Asia; strategically located between China and the rest of the world, with major ports, international airports and well-established transportation infrastructure. Hence, you can tap into the huge market that it opens up, making it the perfect place to set up your business.
4. Economic freedom — Hong Kong is renowned for its economic freedom and has built a strong reputation as the freest economy in the world. This is enhanced by its legal system and a fair regulatory environment. What’s more? Free trade, open markets, and no restrictions on investments, foreign exchange controls or foreign ownership. This is an opportunity for you to start up your business in an open and free environment.
5. Access to Mainland China — The Hong Kong Special Administrative Region and Central People’s Government have signed the Closer Economic Partnership Arrangement (CEPA). This means that Hong Kong has a free trade agreement with mainland China. Hence, your HK business could easily benefit from this, tapping into the huge market of China.
6. Legal regulations — Set up your business in Hong Kong, and you will benefit from its strong legal system. There is a high level of transparency, with the laws and regulations being well-defined, consistent and clear. The laws are further supplemented by Intellectual Property Rights, which protect the interests of both businesses and individuals against unfair competition.
7. Immigration policy is liberal — The government provides a number of work visa schemes for people, and is typically visa-free for almost 170 countries. With the exception of its foreign and defence affairs, Hong Kong has a considerable degree of autonomy. Starting a business here has benefits such as political stability and pro-business governance.
8. Full ownership — With a Hong Kong company, you can enjoy full ownership and do not need to work with a local sponsor. As a foreigner, you will be eligible for a 100% shareholding in a Hong Kong company, and thereby no restrictions apply on foreign ownership.

Who can help you?

If you are thinking of starting up a business in Hong Kong and want to take the above benefits of company formation in Hong Kong, then there are many third-party companies that can definitely come in handy. Company secretaries are very popular in Hong Kong and can help in setting up a business here, whether it is e-Company documents, legal documents, compliance guidelines, or tax matters.

If you are ready for the next step and are looking to start your Hong Kong business, you’ll need fast and reliable company registration services. Check out which company can best suit your needs.