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Hong Kong is one of the world’s international business hubs with a growing number of expat-owned businesses. Therefore you will find that it is fairly easy to set up a business as an expat.
First of all, you will have to ensure that you have the legal right to live and work in Hong Kong. Expats wishing to start their own business, will generally need to apply for an Entry for Investment visa. The requirements are relatively simple – you will have to prove that you have no criminal record, have good academic and/or technical qualifications in your field of expertise, and can make a substantial financial contribution to the economy of Hong Kong. However, you will also need a local sponsor, who can either be an individual or a business based in Hong Kong.
To apply, you will have to submit the application form ID999A and supporting documentation as well as pay the application fee of HK$160. Additionally, your sponsor will have to submit the form ID999B. The application process usually takes around 4 weeks to be completed. If granted, this type of visa allows you to take your spouse and unmarried children under 18 with you to Hong Kong.
To read more see Guidebook for Entry for Investment. For other immigration matters see the Expat Briefing guide on Immigration in Hong Kong.
The Hong Kong market is very competitive, therefore it is vital to have a good business plan before starting your own business. Furthermore, you will also need to enclose your business plan when applying for the Investor visa.
First of all, you should have a clear idea of what you wish to do and in how far your business idea is feasible. Make sure to research which businesses already operate in your field and determine your potential customers, partners and competition. At the same time, take ample time to consider your best financing options. Based on your research you can then develop a proper business plan which sets out your business objectives, target market, commercial strategies, potential obstacles and financial projections. For visa purposes, you will also need to include a section about your business premises.
Legal Structure, Registration and Obligations
Another important step is to decide which legal structure is best suited for your business. The legal structure will determine the nature of your legal, financial and tax obligations. The most common business structure in Hong Kong is a Private Limited Liability Company. While it is also possible to set up your business as a Sole Proprietorship, you will find that in Hong Kong’s business circles limited liability companies tend to be more highly-regarded.
Limited Liability Company
The advantage of setting up a business as a Limited Liability Company’ is that it forms an independent legal subject and its finances are separate from your personal finances. It is typically led by a director and has members who own shares in the company. It is also subjected to regular reporting requirements and must comply with the rules and regulations set out in the Companies Ordinance.
The process of setting up a limited liability company generally involves the following steps:
For more detailed guidance on how to register your company, see the Guidelines for Company Registration on the Companies Registry Website.
Note that companies will have to pay a Profits tax, which is currently set at 16.5% of assessable profits. However, there is no VAT and no capital gains tax. To read more on taxation matters in Hong Kong, see Taxation in Hong Kong.
The advantage of setting up your business as a Sole Proprietorship is that you will have full ownership and control over the business and all profits after taxes will remain yours. At the same time, however, you will be personally liable for all losses your business might make.
To start a Sole Proprietorship you will normally only have to choose a business name and register your Sole Proprietorship with the Inland Revenue Department. The latter can be done using the eTax system. Your Business Registration Certificate will generally be ready within a day.
Note that sole proprietors need to pay a Profit tax at 15% of assessable profits.
For further information on sole proprietorships in Hong Kong click here.
As employer, you will have to ensure that your business complies with Hong Kong’s labour regulations. You should familiarise yourself with different types of contracts, minimum wage requirements, equal opportunities policies, work permits and recruitment options. To read more see the Inland Revenue articles on Employer Obligations.
The Government runs a free consultation service for those starting or operating small or medium-sized businesses: Support and Consultation Centre for SMEs (SUCESS). You can also contact them from abroad on +852 2398 5133 or under email@example.com. Working hours are Mon-Fri from 8:45am to 6pm.
Sections in EMPLOYMENT AND BUSINESS IN HONG KONG:
» Finding a Job, CVs, Interviews and Etiquette for Expats in Hong Kong
» Work Culture and Labour Market for Expats in Hong Kong
» Expats Owning and Operating a Business in Hong Kong
» Business Groups, Associations and Networking for Expats in Hong Kong
» Business Taxation for Expats in Hong Kong
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If you are considering moving to Hong Kong or are soon to depart, you can find helpful information and advice in the Expat Briefing dedicated Hong Kong section including; details of immigration and visas, Hong Kong forums, Hong Kong event listings and service providers in Hong Kong.
From your safety to shopping, living in Hong Kong can yield great benefits as well as occasional drawbacks. Find your feet and stay abreast of the latest developments affecting expats in Hong Kong with relevant news and up-to-date information.
Working in Hong Kong can be rewarding as well as stressful, if you don't plan ahead and fulfill any legal requirements. Find out about visas and passports, owning and operating a company in Hong Kong, and general Hong Kong culture of the labour market.
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