12 Steps to Starting a Company in Hong Kong

Hong Kong has long been a hub for international business, and for good reason. In this guide, we'll explore why Hong Kong is the ideal location to set up your business in Asia and walk you through the 12 simple steps to get you started.

Why Businesses Start a Company in Hong Kong

If you want to do business in Asia or with Asia, Hong Kong is simply the best place.

Fast and Inexpensive

Setting up a company in Hong Kong is easy and inexpensive.

There is very limited bureaucracy and no foreign exchange control system.

It takes only a few hours to set up a new company.

Business owners enjoy maximum freedom (no minimum share capital, no mandatory local director, no restrictions for foreigners, and no need to visit Hong Kong).

Attractive Tax System

Hong Kong has a very competitive tax regime, with no VAT or consumption tax.

There is a 0% profit tax for offshore companies registered in Hong Kong and a maximum of 16.5% profit tax for local companies.

Competitive Business Environment

Almost 1,400,000 companies are set up in Hong Kong (which is almost three times more than Singapore).

Hong Kong is also home to 340,000 local startups and SMEs.

The government is also doing a lot to support entrepreneurs and startups.

It is, therefore, no surprise that Hong Kong is the 7th most competitive economy according to IMD World Competitiveness Center.

How to Start a Business in Hong Kong

In this guide, we take you through the main steps of setting up a company in Hong Kong, along with the business registration process.

Step 1: Your Main Contacts

When you set up your company, and after it is set up, your main contacts will be:

• Company Secretary: This will be your main contact for all issues regarding setting up a Hong Kong company, its maintenance, and its closure. Your secretary is the point of contact and your representative when dealing with the authorities in Hong Kong.
• The Hong Kong Companies Registry: The (CR) is the government department in charge of setting up your company and annual filings in Hong Kong.
• The Hong Kong Inland Revenue Department: The Inland Revenue Department (IRD) is the government department in charge of taxes and duties in Hong Kong. To put it simply, every year, you must file your company tax return with IRD in order to determine how much tax your company needs to pay.
• Business Registration Office: While you won't directly interact with them for company incorporation, they may be relevant for certain business license applications or other registration needs after your company is set up.

Step 2: Choosing a Company Secretary

What is a Company Secretary?

It is mandatory for any company in Hong Kong to appoint a company secretary.

The main roles are:

• Acting as the contact point between your company and the Hong Kong authorities
• Taking care of administrative formalities to ensure that your company remains in good standing with the Hong Kong authorities (preparing and submitting your company annual return on time)
• Maintaining your company statutory records (register of members, register of directors, register of significant controllers, preparing and issuing share certificates)
• Organizing and documenting the meetings of the board of directors and the general meeting
• Preparing your tax filings
• Monitoring and reporting about regulatory changes that may affect your company

Who Can Be Appointed As Your Company Secretary?

If your secretary is an individual, they must reside in Hong Kong.

This means that you can appoint a friend in Hong Kong as your company secretary.

But you should make sure this friend is familiar with the regulatory obligations of company secretaries and the statutory filing deadlines for companies.

In order to save time and avoid problems, we recommend that you select a professional services firm as your secretary.

You can find a list of qualified professional services firms from the Registry for Trust and Company Service Providers.

Step 3: Choose A Legal Form for Your Business

The next step involves deciding on the legal structure for your Hong Kong business venture. While there are various options available, for most purposes, setting up a limited liability company is the recommended route for company registration.

The main types of entities available in Hong Kong are:

• Branch Office
• Sole proprietorship
• Partnerships
• Company limited by guarantee
• Company limited by shares

Step 4: Pick Your Company Name

You enjoy maximum freedom for your company name when setting up a company in Hong Kong.

You can select a name in Chinese (simplified characters), in English, or both.

Here are a few practical tips regarding the name of your company:

• There is no obligation to include a reference to Hong Kong in your company name
• Your company name must simply include “Limited” at the end if you set up a limited liability company
• You cannot select a name that is already used by another company. You can check by yourself if a proposed company name is available or already used. Just visit the website of the Companies Registry for an online, free, and easy company name search
• If you use your company name as a brand, we strongly recommend that you register it as a trademark in Hong Kong and possibly also as a trademark in China

Step 5: Select Your Registered Address

You do not need to rent an actual office in order to start your business operations.

Instead, you may just use a registered address provided by your company secretary.

If you prefer to have your own office, please note that you may not be able to use your apartment as a registered address for your company.

You can only set up a company in an office building, a commercial building, or a mixed building (both residential and office).

All correspondence from the Hong Kong government authorities will be sent to your registered address.

It is therefore important to make sure that someone (usually your secretary) will receive an email you any correspondence.

Step 6: Organize Your Company

There is no minimum amount of share capital required.

You are free to decide the currency and amount for the share capital of your company. You can also express your share capital in any major foreign currency.

The general practice is to have at least one shareholder with one ordinary share issued at the formation of the company.

Shareholders

• A Hong Kong private limited company can have from one (1) to fifty (50) shareholders.
• Shareholders do not need to reside in Hong Kong.
• Shareholders can consist of natural persons or companies.
• Local or foreign shareholding is allowed.
• Appointment of nominee shareholders is permitted.
• Shareholders meetings can be held anywhere in the world.

Directors

• A minimum of one individual director is required.
• The other directors can be persons or companies, local or foreigners.
• There is no need for the directors to reside in Hong Kong.
• Directors Board meetings can be held anywhere in the world.
• Board meetings can be held anywhere in the world.

Step 7: Prepare Your Incorporation Documents

If you set up a limited liability company, the documents that you need to prepare and present are as follows:

• Form NNC1 (see attached sample)
• Form IRBR1 (see attached sample)
• Articles of Association for your company (see attached sample). You are free to create tailor-made articles of association for your Hong Kong company. However, we recommend that you use the sample because (i) its provisions are very general and standard, (ii) the Companies Registry is familiar with it, meaning that it will speed up the incorporation process.

After the incorporation is complete, you will receive the following documents confirming that your company is ready for business:

Step 8: File the Incorporation Documents

Setting up a company in Hong Kong is straightforward.

The application must be filed with the Companies Registry.

It can be done:

• In person by submitting a hard copy of the application documents at the counter
• By courier sent to the Companies Registry office
• Online through Hong Kong's 24-hour Companies E-registry

Upon successful incorporation of your business in Hong Kong, the Companies Registry will issue the following documents:

• Certificate of Incorporation (see attached specimen)

The Certificate of Incorporation is issued by the Companies Registry.

The purpose of this letter is to confirm the name and date of incorporation of your company.

This document does not expire.

• Business Registration Certificate (see attached specimen)

The Business Registration Certificate is issued by the Inland Revenue Department and confirms that your company is enrolled with the tax authorities in Hong Kong.

The unique number indicated in this document is also known as the Tax Identification Number (TIN) of your company, as well as Unique Business Identifier (UBI) .

This document is normally valid for 12 months (unless you have opted for and paid for 3 years at the time of incorporation).

It must be renewed in time in order to allow your company to remain in good standing.

If you incorporate with Air Corporate, we guarantee that you will get your Hong Kong company and Statrys business account within 24 hours.

Step 9: Obtain Licenses and Permits

Hong Kong is a very open and free economy.

Most companies do not require a license or permit to conduct their business.

Certain companies still need to apply for a license or permit before they can start their business.

Such an application is done after your company is set up.

Examples of sectors where a license or permit is required include banking, insurance, medical services, dealing with securities, operating a food and beverage outlet.

Please refer to the HK government website or contact us in case you need guidance about the permits and licenses required to conduct your business.

Step 10: Open Your Business Bank Account

Your company will need a company bank account to start doing business.

You can apply with traditional banks such as HSBC, DBS, or Bank of China. But the process with traditional bank can be difficult if your company directors and shareholders live outside of Hong Kong.

If you are a young start-up, SME, or entrepreneur with no proof of existing business, the traditional banks will most likely reject your application.

For an easier process, you may decide to open an account with an online bank such as Airwallex, Currenxie or Aspire:

• You can apply entirely online.
• You do not need to visit Hong Kong.
• The application process is smooth.

All you need to onboard is your company's Business Registration and a copy of your passport, even if you are a foreigner and do not reside in Hong Kong.

And once your bank account is opened, make sure to watch the video below for practical tips on how to keep it safe:

Step 11: Get Familiar With the Onshore and Offshore Tax Systems

Your company is automatically registered with Hong Kong's Inland Revenue Department when it is incorporated.

Hong Kong offers a very attractive territorial tax regime.

Let's keep it simple.

If your company does business outside Hong Kong, it is not subject to profit tax in Hong Kong.

This is commonly known as the offshore tax system.

If your company conducts business in Hong Kong (onshore limited liability company), the profit tax rate is 8.25% on the first HK$2 million of profits, and 16.5% on everything thereafter.

In reality, the effective tax rate is actually lower than this thanks to the possibility of deducting the expenses required for your company to do business.

There is no VAT or capital gains tax in Hong Kong.

Step 12: Understand Your Annual Filing Obligations

You need to be aware that your company has some ongoing reporting and filing obligations during the course of its business life.

It is essential that you comply with the obligations to ensure that your company remains in good standing.

Some of the annual filing obligations include:

• The filing of an annual return FORM NAR1 with the Companies Registry each year on your company's anniversary date
• The filing of a profit tax return BIR51 with the Inland Revenue Department each year. The filing date depends on the financial year-end of your company.

You must also report certain changes regarding your company to the Companies Registry as soon as they occur.

This includes changes of directors, registered business address, and amount of share capital.

Register with Air Corporate today, and we'll handle all this greasy paperwork for you in less than 48 hours.