Business in Hong Kong
Hong Kong is nothing short of an economic powerhouse in Asia. This is evident from its robust governance, trade-friendly policies, and urge to embrace advanced technologies to spark innovation. Another thing that makes this nation stand out is its relaxed policies for cross-border trade, which pave the foundation for thriving international business. If you are inspired enough to join forces in this part of the world, you will require a definite understanding of underlying legalities. So, let’s break down what these are to ease the journey of setting up a business in Hong Kong.
Setting up a business in Hong Kong: A Step-by-Step Guide
The steps to register a business in Hong Kong are as follows:
Step 1. Get accustomed to concerned authorities
When it comes to a business establishment, the two government departments come into play, namely;
The Companies Registry
The Companies Registry is helmed by the government and offers services that primarily revolve around company registration, license renewal, compliance audit, etc. This authority also keeps a constant tab on registered entities to ensure operational and event-based compliance within the purview of corporate laws and
The Inland Revenue Department
The Inland Revenue Department (IRD) probes whether or not registered entities abide by the tax regulations. IRD also collects taxes and duties from eligible taxpayers as applicable. You must crosscheck applicable tax slabs at the IRD before figuring out how much you must pay.
Step 2. Choose Your Company Name
Name selection is a vital step in the business registration business. There are certain legalities to it that you must consider to avoid complications and process delays.
The name should be in Local, Chinese, or English dialect. The combination of these dialects for name formation is not permissible. The use of traditional characters is mandatory for those opting for a company name in the Chinese dialect. Such names should end with “有限公司.”
The legality of the name is another critical consideration you need to focus on. The registered name is not available for reuse by other entities since it is an offence. How does the name sound and what meaning it portrays can result in either approval or rejection of your request. Refer to the local legislation before you rush to the authority for name approval. Here are some tips to avoid legal complications:
- Select a name that does not hurt regional and personal sentiments
- The name should be trademark-free
- The selected name should not exist in the authority’s database
- The selected name should be short, crisp, and meaningful. It must reflect your products and services (not in a direct sense)
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Step 3. Select a structure that blends with your needs
Selecting the right legal structure is paramount for a seamless business journey. The type of structure you choose will define how much taxes and compliance you will bear. It can also influence your growth potential as well. Therefore, delving into each structure and scouting its potential is incredibly vital. Having said that, Indonesia offers various legal structures to choose from. These include:
- Public and Private Limited Company
- Sole Proprietorship
- Partnership
A limited company is one of the most widely used structures in the country since it ensures benefits like limited liabilities for members, expansion potential, definite management, etc.
Private limited companies have also earned a good reputation among businesses for their unmatched flexibility and potential to attract funds from investors.
Step 4. Look out for the Company Secretary – Business in Hong Kong
Appointing a company secretary is a part of incorporation compliance, which applies to all businesses no matter the legal structure or industry being served. CS plays a vital role in bridging the gap between the company and authorities, ensuring transparency and regulatory compliance. Among key tasks that CS serves include annual return filing, ensuring tax compliance, and enabling company restructuring.
Step 5. Select the Registered Address
Your company’s registered address refers to the location serving as a point of contact for authorities. This place is where you will make business decisions and brainstorm ideas with your team. If you cannot arrange a business place like this, use the company secretary’s address instead.
Note: If for some reason, you shift your business place to somewhere else, you must inform the authority via form NR1 to prevent miscommunication.
Step 6. Arrange Registration Dossiers
Unlike many nations, the incorporation process in Indonesia luckily attracts minimal paperwork and regulatory requirements. Here is the list of enclosures to apply for incorporation.
- NNC1 and IRBR1 Forms depending on the structure you choose. These forms must entail the signature of one shareholder, at least.
- Identity documents concerning directors and shareholders, including ID cards.
- For foreigners applying for incorporation, the facilitation of a passport is mandatory
- Charter documents like AoA (Articles of Association) boast the company’s rules concerning share transfer, director appointment, and financial management. The company secretary must probe these documents for accuracy and compliance.
Step 7. Submit documents and an applicable fee
The next step is to submit the documents to the applicable authority. You can do so by;
- Using the online portal
- Mailing to the Companies Registry’s address
- Visiting the Shroff Counters residing within the Companies Registry office
The authority shall thoroughly vet documents for compliance and accuracy, and only after successful inspection, they will issue the incorporation certificate, which comes with lifetime validity.
Note: Unlike an incorporation certificate, a Business registration certificate comes with a limited validity, ranging from 1-3 years. It requires timely renewal (one month before the expiration deadline). The non-renewal or delayed renewal can lead to severe fines.
Step 8. Get industry-specific approvals, if applicable
Getting industry-specific approval is as important as securing the incorporation certificate. The type of industry permit you need will be based on the industry you wish to serve. For example, if your entity deals with surgical equipment production, you will need approvals from the health department.
Similarly, if you own a restaurant that also offers liquor to customers, you must have approvals such as a Provisional General Restaurant Licence, a General Restaurant Licence, and a Liquor Licence.
To ascertain which approvals or permits apply to your business, you can visit the online portal of the Trade and Industry Department.
Conclusion
Setting up a business in Hong Kong requires a thorough understanding of regulatory requirements and mandatory paperwork. Especially foreigners seeking a fully operational unit in this country must pay attention to trade policies, applicable taxes, and set up requirements to avoid complications.
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