‘Unlimited Company’ turns out to be not a company?

In essence, you are applying for a "Business Registration" in your own name.

Unlimited company is just a common name, mainly due to its "unlimited liability" risk characteristics. In fact, you are applying for a "business registration" in your own name, and since the issuing agency of the registration certificate is the Business Registration Office under the Inland Revenue Department, it's easy to see that the main function of the business registration certificate is to file taxes — it doesn't have any "company" related functions (such as independent legal status, protection by company law, or the advantages of limited liability risk control and management).

So what's the actual difference between a "limited company" and an "unlimited company"? Here's the full breakdown.

The core difference: liability

This is the biggest difference between the two. An unlimited company has no separate legal status — the business and you personally are the same legal entity. If the business loses money or gets sued, creditors can go after your personal assets: property, savings, investments, with no protection in between. A limited company is different — shareholders' liability is limited to their capital contribution, and the company's assets are separate from the shareholders' personal assets.

Setup and ongoing cost

An unlimited company is much cheaper: setup costs around HK$2,950, and annual maintenance (mainly the BR certificate renewal) is around HK$2,350. A limited company costs around HK$4,795 to set up, with annual maintenance (company secretary, BR renewal, Annual Return) around HK$3,555. Both need an extra HK$1,150/yr (Kai Tak) or HK$1,350/yr (Tsim Sha Tsui) if you need a registered address.

The unlimited company actually pays less tax

Many people assume a limited company gets the better tax rate — it's actually the opposite. On the first HK$2 million of profit, an unlimited company pays 7.5% versus 8.25% for a limited company; above HK$2 million, it's 15% versus 16.5%.

Bank accounts: the biggest headache for unlimited companies

This is the part most people don't think about before registering: most banks simply won't open an account for an unlimited company. It's not a matter of waiting longer — in many cases, it just isn't possible. If your business needs to send and receive payments regularly, or needs a working relationship with a bank, this needs to be thought through before you register.

Audit and company secretary

A limited company must be audited every year and must have a company secretary — currently HK$1,100/year, including Significant Controllers Register maintenance. An unlimited company needs neither, saving both costs. But note: not needing an audit doesn't mean you don't need to file tax or keep proper accounting records — both entity types still carry that obligation.

"But running a small business isn't really risky..."

Generally speaking, that's true. But actually...

Running a small business like an online store doesn't often mean facing legal disputes.

But most government subsidies and other funding aren't available to unlimited companies, or the approved amount tends to be small. Opening a bank account is also a lot more trouble, because under the regulations you're just one person conducting business. Most of the vegetable and pork stalls in wet markets, for example, are unlimited companies — and most of the risks a wet market stall faces really can be solved with a bit of goodwill. But not every business is like that.

Planning to start unlimited and switch to limited later?

Worth knowing: Hong Kong's Companies Ordinance provides no mechanism to convert an unlimited company into a limited one. To switch, you'd need to deregister first (around 1-2 months), then incorporate a new limited company from scratch, at a cost of roughly HK$5,000-8,000 — losing your original registration date, and potentially affecting your banking relationship and contract continuity. If there's a realistic chance you'll want a limited company within a year or two, starting limited from day one may be the better trade against the HK$1,845 saved at setup.

So which one should you pick?

There's no single answer that fits everyone — liability risk, funding needs, bank account requirements, and privacy all factor into which structure suits you. For a full side-by-side comparison, see Limited vs Unlimited Company Comparison. If you're ready to register, go straight to Chinglink's unlimited company registration service.

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