When you have a unique business idea and are ready to start a business, you may consider setting up a limited company in Hong Kong. Although starting a company is not as difficult as before, many people misestimate the time it takes to start a business from scratch, especially when it comes to opening a company bank account. In this article, we will explore the process of opening a new company in Hong Kong.

1. What to consider before starting a company
2. Hong Kong company opening process, company opening fees, company opening address teaching
3. What should you pay attention to after starting a company?

According to Hong Kong laws and regulations, anyone who does not hold a valid company business registration cannot legally conduct any form of commercial activities in Hong Kong.

A few years ago, when the business model of online stores and commonly known as checkered shops emerged, some shop owners were found to have failed to obtain business registration and eventually received notices from the tax bureau. In recent years, some shop owners in Carousell have even received fines from the tax bureau.

Therefore, it is the most important step to obtain a company BR first and then operate the business to avoid any unnecessary losses or legal liabilities.

Early stage of starting a company

Preparation work and precautions

Starting an entrepreneurial journey is more than just an idea, it requires careful planning and preparation. In the early stages of starting a business, there are some important steps and considerations to be aware of. Below we’ll discuss these important factors and provide some guidance to ensure your entrepreneurial journey goes smoothly.

1. Determine the business type

First, you need to determine the type of business you want to open. This will determine the registration process you need to follow, and how your company will operate. Your business type will determine what type of license your company requires, as well as how your taxes are handled.

2. Select company name

Choosing a business name may seem simple, but it's actually an important decision. Your company name will become part of your brand and appear on all company documents and promotional materials. You need to choose a name that is relevant to your business and easy to remember.

The company name must be unique. If there are too similar company names, you may need to change the name to successfully apply for company registration.

When deciding on a company name, you can first go to the Companies Registry ( http://www.e-services.cr.gov.hk/ ) to make a preliminary Hong Kong company inquiry to avoid that the name you intend to apply for has already been registered.

In addition, after deciding on the company name, it is also recommended to use the online search system of the Intellectual Property Department ( https://ipsearch.ipd.gov.hk/ ) to check the trademark records to avoid being labeled as "counterfeit" or Risk of trademark infringement.

3. Prepare appropriate documents

To register a company in Hong Kong, you need to prepare some documents, such as articles of association, business registration certificate, and other related documents. These documents will define how your company is structured and operates.

4. Understand legal requirements

Before opening a company, you need to understand all the legal requirements related to your business. This includes intellectual property laws, labor laws, business laws, and other laws that may apply to your business.

5. Plan initial capital

Starting a business requires capital. You need to plan your initial capital to ensure you can cover opening costs and keep your business running during the early stages of your business.

In general, the early stages of starting a company require careful planning and preparation. Although this may take some time, it will help ensure that your business can open smoothly and operate successfully.

What is Unlimited Company? What is the difference from a registered limited company? Cost of starting a company? Definition of company?

	Limited Company	Sole Proprietorship/Partnership
Eligibility	Hong Kong residents and non-Hong Kong residents	Hong Kong residents only
Number of founders	1 to 50 people	1 to 20 people
Time required	Available today	Today to 2 working days
Government fees	Company registration fee: HK$1,720 Business registration fee: HK$2,150 (from April 1, 2023)	Business registration fee: HK$2,150 (from April 1, 2023)
Required documents	Form of incorporation, articles of association, accountant certification documents, minutes of the first meeting of directors and shareholders, minutes of account opening meeting of directors and shareholders, registration list	Hong Kong ID card

Open an unlimited company (sole proprietorship/partnership)

To open an unlimited company, you only need to obtain a business registration. The establishment procedure is quick and simple. It basically only takes one to two working days to obtain the business registration.

An unlimited company means exactly what it sounds like. There is no upper limit on the liability of the proprietor and shareholders. Once the business ends, the proprietor and shareholders need to bear all the debts of the company. However, since the accounting and auditing fees for starting a company are not too expensive, the company tax filing procedures It is also very simple, just fill in the relevant items according to the tax form.

Moreover, the establishment of an unlimited company is simple. As long as two shareholders trust each other, the company can be formed, eliminating the need for complicated legal registration procedures.

Therefore, it is more suitable for businesses with simple business scale or small operations.

For example: online store, checkered shop, etc.

LIMITED

A limited company also represents a limited liability company. In a legal position, shareholders are only responsible for the company's debts based on their own capital contributions, thus preventing creditors from pursuing debts related to the company's shortage of funds from shareholders.

In terms of taxation, a limited company is different from an unlimited company. It requires accounting and auditing before filing taxes.

The number of shareholders of a limited company will be limited to about 1 to 50 people. Since the number of shareholders is small, the company establishment registration procedure is also very simple. The entire procedure can be completed in as little as two to three working days.

Advantages of opening a company in Hong Kong: The company structure and the flow of shares are also very clear, which can increase the confidence of shareholders.

Therefore, start-ups, small and medium-sized enterprises, or family businesses with a high degree of trust are all suitable choices.

If you want to know more about the company establishment procedures, you can browse Chinglink Limited Service Plan

*What are the advantages of opening a Hong Kong limited company in the market? **

In fact, Unlimited Company is relatively unprotective for shareholders or members, because in the event of liquidation of the company, all shareholders will bear huge financial debts.

There is no limit to the losses they can suffer, and before a business can pay its bills, someone has to keep paying.

For many members and shareholders, the loss of an unlimited company threatens shareholders' money and assets.

On the contrary, Limited Company has fewer regulations. Basically, as long as the shareholders agree, the directors (executive business shareholders) are in charge of the operation, and the management responsibilities are relatively flexible.

– Limited Liability

The business is completely separate from the people who own and manage it, and any debts, losses or legal claims related to the company are the responsibility of the company and not the owners (shareholders/guarantors) or directors, thus reducing personal liability.

Therefore, there is no legal obligation as a shareholder to pay more than the value of the shares held in the business.

Therefore, if the company encounters financial difficulties, the shareholders' personal assets will be protected and the company will only be required to pay the value of the unpaid shares.

– Legal status of the profession

When starting trading as a limited company, the company's professional status and corporate image will be enhanced, thereby increasing the value of the business. Moreover, government departments will have stricter monitoring of registered companies, accounting and reporting requirements for limited companies will be more complex, and all company details and accounts will be released in public records. So other individuals or businesses can conduct a credit check on the limited company in question.

–Government Funding and Financing

Many I&T companies will choose to apply for admission to Science Park or Cyberport , or some have already Business companies want to apply for government funding such as technology vouchers, BUD, small and medium-sized enterprise financing guarantees, etc. These applications involving funding and financing require Hong Kong registered limited companies.

What else do you need to prepare before opening a company?

1. Directors, Company Secretary, Shareholders of the Company

Every private limited company must have at least one director who is a natural person and a company secretary.

Directors: If a company has only one director, that director shall not also serve as the company secretary of the company. The directors of a limited company are selected by the general meeting of shareholders and can be elected by shareholders' votes. Have the power to make decisions on daily affairs of the company

Company Secretary : To ensure the full performance of the company’s administrative and legal duties and act as an advisor on corporate governance. If the company secretary is a natural person, he must ordinarily reside in Hong Kong. If the company secretary is a corporate body, its registered office or principal office must be in Hong Kong.

Shareholders: Shareholders are also an integral part of Hong Kong companies. They often also serve as directors or secretaries.

2. Important Controllers and Designated Representatives

In 2018, the Companies Ordinance (Chapter 622) stipulates that companies incorporated in Hong Kong must identify the persons who have significant control over them (i.e. significant controllers) and must maintain a register of significant controllers for law enforcement purposes Staff review upon request.

That is, if the shareholder qualifies for more than 25% of the company's shares or voting rights, or even has the right to appoint or remove the board of directors, he is an important controller of the company. The information of shareholders must be recorded in the register of significant controllers.

Each company is required to designate at least one person as the company representative to provide assistance to law enforcement officers on matters relating to the company's significant controllers register.

The designated representative of a company must be any of the following categories of persons: a shareholder, director or employee of the company, and must be a natural person resident in Hong Kong; or an accounting professional, a legal professional or a trust or company services licensee.

3. Registered address

Registering a Hong Kong company in accordance with legal requirements / establishing a Hong Kong limited company requires a Hong Kong business address as the company's registered address. Residential addresses do not meet the requirements. Since the registered address will also be disclosed during company searches, government agencies may visit or conduct searches from time to time. Therefore, some accounting firms, business centers or secretarial companies will also provide addresses for company business registration and communication.

Using a registered address or Virtual Office service is legal and very common in Hong Kong. The basic registered address costs about HK$1,000 per year, which generally includes registering a business address, collecting company mail and packages, and providing company name tags in Chinese and English.

If you need to know more details about how to choose a suitable virtual office, you can read this article

Before choosing a company's registered address service, in addition to paying attention to the quality of the company service provider, you must also pay attention to the other party's company service provider license. It is illegal to provide related company services without a license and may be ordered to suspend business. Users need to change their addresses within a short period of time, which adds unnecessary trouble to their business. For verification of relevant licenses, please go to the government’s [Trust and Company Service Providers Registered Office Website] ( https://www.tcsp.cr.gov.hk/tcspls/ )

So it’s not easy to find a Virtual Office provider that suits your business needs. A good virtual office can scale a business while reducing operating costs and moving toward achieving business goals.

Hong Kong company opening process

Limited Company Application Process

1. Submit documents and pay government fees

If you want to set up a limited company by yourself, you need to submit an application to the Companies Registry yourself. The company opening documents that need to be submitted when opening a company include:

• Incorporation Form (NNC1)
• Articles of Association of the Company
• Notice to the Business Registration Office

Then, you can submit the company registration documents to the Inland Revenue Department and the Companies Registry electronically, by mail, or through a company secretary. It will take about six to eight working days from submitting the application to successfully obtaining business registration.

However, there are many one-stop company opening services in Hong Kong and bank account opening appointment services on the market, and the prices only range from about HK$1,000 – $2,000.

Therefore, many people choose to entrust a company secretary because the establishment process is convenient and simple. Our services are all handled online, and the process does not require you to queue up at the company registration office in person, making it fast and convenient. The electronic process allows us to provide services to customers at lower costs. The full service fee is only HK$900.

Specialized personnel will be provided throughout the process to assist with relevant documents. In addition to business registration and establishment forms, other relevant documents such as bank account opening meeting minutes, accountant certification documents, company articles of association, etc. will also be prepared.

2. Get the business registration certificate

If the application is approved, you can receive the "Company Registration Certificate" and "Business Registration Certificate". The relevant certificates will be issued in electronic form or hard copy, depending on the form of delivery application.

In Hong Kong, secretarial companies usually give clients a green box after registering a limited company, commonly known as ["green box"]( https://www.chinglink.com/zh-HK/blog/what- is-the-use-of-green-box), when you receive the "green box", it means that new business has been handed over to you. Times have changed, and new regulations have simplified the procedures for starting a business in Hong Kong. Now many newly established companies no longer need to use a physical green box! The wool comes from the sheep. In order to help entrepreneurs and promote the popularization of digitalization, Chinglink has waived the "green box" and related fees in our service plan!

3. Open a bank account

Hong Kong banks usually require a minimum deposit amount, which varies from bank to bank.

In order to prevent international criminal groups or money laundering syndicates from using the banking system, banks may ask customers to provide information about the identity and nationality of corporate interest holders. Some banks may even require customers to pay a search fee, and after one to two months of approval by the bank, they may not be able to successfully open a company account** in the end. Before opening a bank account, you must first complete the company's commercial registration and company registration procedures/opening a limited company procedure to obtain the documents required to open an account.

In fact, the bank owner requires proof of the company's business, such as major business customers, supplier information, shareholder identity documents, etc. During the account application process, you may also inquire about the company's business nature, source of funds, etc. Most banks even require the company's business certificates to be submitted. Therefore, secretarial companies usually help assist with the official documents of these companies, and directors also need to prepare their personal documents. Most banks will require directors to submit the application in person, sign it and verify their identity.

Therefore, if you want to save trouble and reduce time, find Professional Secretarial Company to assist in opening a company account. They have rich experience and have referrals from familiar bank brokers. They can definitely help customers open a company account. Open a corporate bank account smoothly.

Company establishment fees

1. Registration fee

When setting up a company in Hong Kong, the first and most important cost you will encounter is the registration fee. According to information from the Hong Kong Companies Registry, the current company registration fee is HK$1,720. This fee covers the cost of processing the application and issuing a certificate of incorporation. If you use electronic services, you can enjoy a discount of HK$1,545

2. Business registration fee

In addition to the registration fee, you will also need to pay a business registration fee. As of April 1, 2023, the business registration fee in Hong Kong is HK$2,150. This fee is used to issue a business registration certificate, which is required for any business operating in Hong Kong.

3. Professional services

While you can handle the company registration process yourself, many people choose to hire professional services to ensure the process goes smoothly. These services typically include company secretarial services, registered office address services and legal advice. The cost of these services can vary widely, but you could expect to pay a few hundred to a few thousand Hong Kong dollars. Chinglink's service fee is HK$900 including secretarial services.

4. Secretarial services

Company Secretary (Company Secretary, which can be referred to as Com Sec) is a statutory position. Every limited company established in Hong Kong must appoint a company secretary in accordance with the requirements of the Companies Ordinance. This position is directly subordinate to the company rather than the boss, and To serve as a communication bridge between the company and government agencies, you must also have knowledge of regulations and laws, monitor corporate governance, and ensure the company's legal operations. There are different charging methods on the market. Some companies will set up company service fees and company secretarial fees independently. Please pay more attention when using them.

#Complete the later stage of company opening

1. Annual General Meeting

The main function of the annual general meeting is to review the company's accounts and discuss dividends and important company decisions.

Registered companies are required to convene an annual general meeting within 18 months after incorporation, and hold an annual general meeting for each financial year.

• A limited company or a private company that is not an affiliated public company must hold its annual general meeting within 9 months after the end of the accounting reference period;
• For any other company, the annual general meeting must be held within 6 months after the end of the accounting reference period.

2. Annual Return

A private company is required to file its first annual return within 42 days after the first anniversary of its incorporation.

The annual registration fee payable is HK$105.

If the annual return is not delivered within the prescribed time limit of 42 days, you will have to pay a significantly increased registration fee.

The annual declaration includes the following items:

1. Details of the company’s issued share capital;
2. Names and addresses of directors and company secretary;
3. Name and address of registered shareholder;
4. The amount secured by any registered charge.

Companies have the responsibility to comply with various requirements of the Companies Ordinance and make appropriate arrangements to deliver annual returns for registration within the prescribed time limit.

The Companies Registry will not issue any reminder to the company to deliver the annual return. If the payment is late, the maximum fine can be HK$50,000 and the maximum daily fine is HK$1,000. This responsibility will be placed on the directors.

Therefore, if a registered company uses Chinglink secretarial services, the company secretary will make relevant notifications one month before the date of submission of statements to prevent customers from suffering unnecessary losses.

3. Renew business registration

The business registration certificate is only valid for one year, so it needs to be replaced regularly every year after the company's founding anniversary.

In addition, the Notice of Requirement for Business Registration Renewal will be sent by the Business Registration Bureau in the middle of the month before the effective month for renewing the Business Registration Certificate. The 2023/24 government business registration certificate fee is $2,150.

If you renew your business registration certificate after the expiration date, in addition to paying the previously owed government fees, you will also be required to pay an additional fine of HKD 300 per year.

4. Annual Audit

To inspect or audit its company accounts and financial statements, the company needs to submit an annual audit and income tax return to the Inland Revenue Department for each financial year. About 18 months after the company is established in Hong Kong, it will receive the first one issued by the Inland Revenue Department. tax return.

A director of a company who willfully fails to take all reasonable steps to present a list of the company at an annual general meeting or any other general meeting directed by the Court of First Instance commits an offence.

Therefore, it is recommended to find a qualified and licensed company secretarial company to avoid all complicated procedures.

You can also contact us immediately for a preliminary free consultation about the company opening fees and detailed steps.

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