ART Power HK: Art community collaborates to celebrate the arts in Hong Kong in 2020• A creative solution to the current situation, showcasing that the arts in Hong Kong are open, active and resilient• An organically grown, grassroots campaign#ARTpowerHK #HKart2020(HONG KONG 4 March 2020) ART [...]
By Kaelyn Ha | With Hong Kong holding the world title for the most liberal economy, it comes as no surprise that many budding entrepreneurs choose to start their first venture in the city (2019 Index of Economic Freedom). The perk to setting up in Hong Kong is that foreigners can build a company without having to even step foot on the city’s soil. In 2017, the city boasted a total of 160,229 newly registered companies; 51,002 of which were registered via the e-Registry–an expedited method that many foreigners opt to use (Startupr.hk).
Hong Kong’s economy thrives on entrepreneurs, and embedded in it is a system whose aim is to make the creation of startups that much easier. From the government’s HK$5 billion Technology and Innovation Fund tailored towards encouraging venture capitalist investment to the market’s international prestige, Hong Kong is the place to open a company as a foreigner. Here’s why:
- You don’t even have to live in or enter Hong Kong
- The cost of setting up is low
- Hong Kong provides a great platform into China’s market
You don’t even have to live in or enter Hong Kong
With the e-Registry, applicants can register their companies online. The one caveat, however, is that entrepreneurs can only register incorporated companies. To apply for sole proprietorships and partnerships, you must be a Hong Kong resident or have a work visa because such applications require owners to show proof that their business is running prior to applying.
For most entrepreneurs who choose to incorporate, this restriction is not a problem, but it serves as a fair warning to those seeking unincorporated registration: don’t apply before you have the proper certification.
The cost of setting up is low
The low cost is a byproduct of the government’s aim to incentivize entrepreneurship. To register, the government generally requires a fee of $2,000 (+ a small levy) for Company Registration and a Business Registration Certificate. But as of April 1, 2019, the government has imposed a one year waiver period.
This policy waives the Business Registration portion of the fee ($2,000), requiring registrees to only pay the Business Registration Levy (Startupr.hk). Some entrepreneurs choose to hire an agency to help out with the registration and paperwork, which would incur further costs, but by-and-large, the process is not overly burdensome.
Hong Kong provides a great platform into China’s market
Since Hong Kong is officially a Special Administrative Region of China, the city has access to the Chinese market with the Closer Economic Partnership Arrangement. Starting your business in Hong Kong is one of the best ways to later launch in the Mainland (Sapore di Cina).
A step-by-step guide
Based on these three key benefits, many foreigners opt to launch a business in Hong Kong. The next step is to learn how to register your business. To break down the process, I’ve created a how-to guide, interspersed with expert advice about potential pitfalls and tips for success:
- Choose a name for your company: It cannot be the same as another registered Hong Kong company.
- Choose a business type: Among them are sole proprietorship, partnerships, branch offices, limited companies, and companies limited by guarantee or by shares. Remember the caveat about unincorporated businesses: as a foreigner, if you do not have access to a work visa, be careful about applying for sole proprietorship or partnerships (AsiaBC).
- Register your company with the Hong Kong Companies Registry: You can register either with the e-Registry or with the Queensway government office.
Here, paperwork could become a little tricky, especially for someone foreign to Hong Kong. That’s why many recommend hiring an agency to take care of this part for you. An agency is especially important if you do not want to live in Hong Kong.
To earn your Business Registration Certificate, you need to have a Hong Kong company office and a company secretary. As of March 1, 2019, the newly enforced Companies Ordinance requires companies to have company representative on board who could produce an up-to-date Significant Controllers Register for on-the-fly government inspection. An agency could provide these services and fill out the paperwork for a typical cost of between $6,000 to $7,000 (Sapore di Cina).
The paperwork required to register are listed in the e-Registry:
- Incorporation documents and forms
- Copies of the identification of directors and shareholders
- Proof of company address
After two weeks of processing time, should the government approve your application, you will have earned your company’s registration and Business Registration Certificate, which are needed for the next step of opening a corporate bank account (Sapore di Cina).
- Open a corporate bank account
Before you even approach a bank, make sure your company is already operational, for which you have tangible proof (Marco Schwartz). While there is no explicit rule about how long after registration you can apply for an account, it does not make sense to come in without beginning operations. Think of a bank like a business partner: if you have nothing to show for, why would they want to safehouse your money?
While paperwork is important, the key to securing an account is establishing trust. Banks want to know that you are opening a legitimate company with a genuine aim to do business (Marco Schwartz). At minimum, banks will require proof of business, your registration information and certification, and a complete corporate account application specific to the institution.
Equally as important, Hong Kong banks want you to “have something to show,” as entrepreneur Marco Schwartz reflects on his own online business venture into Hong Kong. His proof of business were the company’s website and analytics dashboards (Marco Schwartz). If your business has an online presence, present that. If you are selling a product, bring in the preliminary designs. The bank’s application will be more like an interview with a venture capitalist (Marco Schwartz); ae it by knowing and being able to show the ins and outs of your company.
But don’t just trust my word for it. Often times, hiring an adviser and speaking to an accountant will help you navigate the complexities of opening a corporate bank account.
Hong Kong is the perfect place to launch a business, and now you know how. Start registering online on the e-Registry. You don’t even have to be in Hong Kong to watch your company take off.