How to Register a Sole Proprietorship in Hong Kong

A sole proprietorship is simple and fast to start, but you must weigh the risk of unlimited liability and plan for taxes and Mandatory Provident Fund (MPF) from day one.

Understanding Sole Proprietorship

A sole proprietorship is a business owned by one individual. There is no separate legal personality from the owner, so you make all decisions and bear all risks. 

Despite the lack of limited liability, you can still build, hire, and later sell the business by transferring assets and goodwill (it is not a share sale).

Advantages

• Quick setup and low upfront government fees.
• Full control over operations and decisions.
• Lighter formalities than a private limited company.

Disadvantages

• Unlimited liability for debts and claims.
• Harder to raise outside capital.
• Business continuity depends on the owner’s availability and health.

Legal Framework in Hong Kong

Hong Kong has a relatively straightforward framework for operating as a sole proprietorship. 

The main legal and tax points are:

Where You Register

IRD Business Registration Office under the Business Registration Ordinance (Cap. 310).

Deadline

Register within 1 month after the business commences (pre-commencement applications are not accepted).

Certificate and Number

You receive a Business Registration Certificate (BRC). 

The Business Registration Number (BRN) printed on it functions as the Unique Business Identifier (UBI) and the TIN-equivalent for entities (first 8 digits used widely for tax and government processes).

Business Name

English, Chinese, or both. Do not use wording implying limited liability (for example, “Limited”/「有限公司」) or any government affiliation. 

For checks, run a trademark search with the Intellectual Property Department (IPD) and, if useful, use BRN Enquiry to spot similarly named registered businesses.

Tax

Unincorporated businesses (including sole proprietors) are subject to two-tier profits tax: 7.5% on the first HK$2,000,000 of assessable profits and 15% on the excess.

Fees (2025/26)

• 1-year BRC HK$2,200 (levy waived until 31 March 2026)
• 3-year BRC HK$5,720 + levy HK$300 (total HK$6,020).

Licences and Permits

Sector-specific approvals may be required. For example:

• Food and Environmental Hygiene Department (FEHD), 
• Education Bureau (EDB),
• Securities and Futures Commission (SFC). 

Operating without a required licence can trigger penalties or closure.

MPF

Most self-employed persons must join MPF and contribute (typically 5% within statutory minimum and maximum). If you hire staff, register as an employer and enroll eligible employees.

Display Rule

Display a valid BRC conspicuously at each place of business.

Online Filing

You may apply or handle obligations through eTAX where available.

Who Can Be a Sole Proprietor in Hong Kong?

Anyone can become a sole proprietor in Hong Kong. 

There is no restriction on nationality or residency for business registration. This structure is commonly used by entrepreneurs, freelancers, and small business owners because the rules are simple and setup is quick.

You must register the business with the Business Registration Office of the Inland Revenue Department. 

In law, the owner and the business are one person: there is no separate legal personality and the profits are assessed on the owner for profits tax. This also means the owner has unlimited liability for business debts.

Can a Foreigner Register as a Sole Proprietor in Hong Kong?

Non-residents can register a business with the IRD as a sole proprietor. 

Many non-residents appoint a local agent (for example, via Form IRBR177) to handle filings, receive notices, and manage correspondence.

If you plan to relocate to Hong Kong and work in the business, you will need appropriate immigration permission. 

Many entrepreneurs apply under the Investment as Entrepreneurs in the General Employment Policy (GEP). 

Approval depends on a credible business plan, local hiring, and overall economic contribution to Hong Kong.

Setting Up a Sole Proprietorship in Hong Kong

1. Choose a Business Name

• Pick an English, Chinese, or combined name
• Avoid wording that implies limited liability or government status
• Run a trademark search (IPD) and, if useful, a BRN Enquiry check

2. Prepare Details

• HKID or passport
• Hong Kong business address
• Nature of business
• Date of commencement of business

3. Register for Business Registration

• File with the IRD Business Registration Office under Cap. 310 (in person, by post, or online via eTAX)
• Complete the application and pay the BRC fee (1-year or 3-year)
• Deadline: within 1 month after commencement
• Receive your BRC showing your BRN

4. Check Sector Licences (If Applicable)

• Confirm whether your activities need approvals from FEHD, EDB, SFC, or other regulators
• Operating without a required licence can lead to penalties or closure

5) Set Up MPF (If Applicable)

• If you are self-employed, enroll in an MPF scheme and set contributions (usually 5% of relevant income within statutory limits).
• If you hire staff, register as an MPF employer and enroll eligible employees.

6) Open a Business Bank Account (recommended)

• Keep business and personal funds separate for cleaner records and easier tax reporting.
• Expect strict KYC checks; some banks require an in-person meeting and detailed business information.

7) Renew your Business Registration Certificate

• Renew your BRC according to the chosen term (annually or every 3 years), and make sure fees are paid on time to avoid penalties.

Managing Finances and Taxation

Recordkeeping

Keep proper books, invoices, vouchers, and bank statements so you can support your income and deductions if the IRD asks questions.

Bank Account

Use a separate business bank account where possible to keep business and personal funds distinct and simplify bookkeeping.

Tax Filing

Report business profits in your annual individual tax return using the business/profits schedule. The two-tier profits tax rates for unincorporated businesses apply.

Tax Payments

Set aside cash for provisional tax and final tax so you can pay on time and avoid penalties.

Professional Help

Consider engaging a tax adviser to review deductions, prepare filings, and deal with IRD queries if your affairs are more complex.

Post-Registration Formalities for a Sole Proprietorship in Hong Kong

Licences and permits

Confirm and obtain any required licences/permits before you start trading. Note renewal dates in your calendar to avoid penalties or forced closure.

Ongoing compliance

• Business Registration Certificate (BRC): renew every 1 year or 3 years, depending on the option you chose at registration.
• MPF: make timely MPF contributions (if self-employed or hiring staff) and keep contribution records.
• Tax: file your profits tax return with the IRD on time and retain invoices, vouchers, and bank statements in case the IRD requests supporting documents.

Selling or Exiting a Sole Proprietorship in Hong Kong

A sole proprietorship is exited by transferring business assets and goodwill, not shares. 

Where applicable, comply with the Transfer of Business (Protection of Creditors) Ordinance (Cap. 49) and notify the IRD of any changes or cessation of business. 

Seek advice on the tax treatment of sale proceeds, goodwill, and stock/inventories before completing the deal.

Conclusion

A Hong Kong sole proprietorship is quick and affordable to start, with clear IRD rules, simple BRC requirements, and predictable profits tax. Balance the benefits against unlimited liability, plan for MPF, and keep strong records.

Need help? Air Corporate can register your sole proprietorship, act as your local agent, and guide MPF, licensing, and tax setup so you start compliant.