On my recent business trip to Hong Kong I visited 3 companies who promise to help individuals and businesses set up a company in Hong Kong. I thought I’d jot down a few notes on how the process works and some feedback on the companies I visited.
Firstly, I want to point out that if you are considering setting up a company in Hong Kong, I highly recommend visiting Hong Kong yourself. There are hundreds of companies out there that can help you set the company up.
I also want to point out that I learned more in the 3 meetings than I did reading 10+ hours of information online; letting individuals sell their services to me a few times is a productive way for me to learn.
The benefits of opening a Hong Kong company
If you are considering opening up a company in Asia, let me lay something down that’s really important if your business starts to gain traction and you end up generating a shit load of cash; control. Singapore and Hong Kong are the only country’s in Asia that allow foreign nationals to own 100% of the shares and don’t require locals to sit on the board of directors.
When I opened a company in Thailand, I was pretty lucky that my business didn’t generate that much revenue in the grand scheme of things, so only being able to own 49% of the shares didn’t matter that much. Would it of mattered if the business started generating serious cash? Absolutely.
I’m getting older and a tad wiser, and as a result I can safely say that there is no way I’d leave my wealth in something I do not have 100% control over – so for me, opening up company anywhere apart from Hong Kong or Singapore is not a viable option. Some food for thought for those looking to set up a country in the region.
Here are some of the main benefits of opening a Hong Kong company:
Setting up a Hong Kong company is inexpensive
Foreigners can own 100% of the company (one individual can be the director and shareholder, although you do need a Hong Kong company or individual to be the company secretary)
A Hong Kong company offers global recognition and promotes stability compared to neighbouring countries
Hong Kong is ruled under British Law (democratic and fair)
For many western countries, Hong Kong is often viewed as the best gateway to doing business in China
You don’t need a physical address in Hong Kong (a holding address is fine)
Directors or shareholders do not need to be based in Hong Kong (although at least one director needs to visit to open the bank account)
A Hong Kong company allows you to open up a multi currency bank account
Hong Kong adopts a territorial source principle of taxation meaning that all profits generated outside of Hong Kong is TAX free (revenue generated in Hong Kong and income tax over 120,000HKD is around 17%
I am buying products from Taiwan to sell primarily to the UK market, with goals to expand to western Europe and the US later on. The Hong Kong company will invoice our supplier in Taiwan, and our customers and self employed contractors in the UK (shipping agents etc.) will invoice the Hong Kong company. As all of the business is generated outside of Hong Kong, so the profits will be tax free.
The process of setting up a Hong Kong company
The process of setting up a Hong Kong company is pretty straight forward. Firstly, you need to decide whether you are going to buy a company that’s already been registered or apply to open a company in your desired name. There’s no difference in costs, although a ready made company is a couple of weeks faster to set up.
When applying to open up a Hong Kong company, you’ll need to provide the following details for each director: name, passport details, nationality, residential address, and if shareholder; the percentage of shares.
As for bank accounts, HSBC seems to be the norm, however you are also able to open an account with China Bank, DBS and a few others.
There are not restrictions on nationality.
A minimum of 1 shareholder and 1 director is required, however the individual can fill both positions. As I mentioned above, the company secretary must be a Hong Kong company or individual – which is provided at a cost by the company helping you set everything up.
How much does it cost to open a Hong Kong Company?
Fees vary quite a lot between company to company, however I’ll publish the rates I got from one company who I am personally using:
The setup fee of HK$6,650 includes the following:
- Incorporation government fee and disbursement HK$3,150
- Incorporation service fee HK$1,000
- Annual company secretary parking fee HK$600
- Annual register address parking fee HK$600
- Bank account opening service fee HK$1,000
- HKCPA document certification fee for bank account HK$300
- Optional additional services:
- Nominee shareholder parking – annual fee HK$600 per beneficiary owner
- Nominee director parking – annual fee HK$600 per beneficiary owner
Annual maintenance fees:
- Government fee of HK$2,555 includes the business registration fee of HK$2,450 and companies registry annual filing of HK$105
- Service fee of HK$1,200 includes the annual parking company secretary of HK$600 and the address parking fee HK$600
- Annual accounting, auditing and tax filing varies due to the number of transactions and company setup.
Feedback on the 3 businesses I visited in Hong Kong
Please note I’m just a blogger who can write what I want to write and the following feedback is based on my own experiences. I guess what I’m trying to say is that it pays to do your own due diligence!
Located on Hennessy Road, I was greeted by 2 knowledgeable staff who were able to answer most of my questions, yet I got the impression they seemed a little pushy to me. The main focus of our meeting were their fees, rather than understanding my business requirements and offering practical advice.
One of the biggest accounts and law firm in Hong Kong. I was immediately impressed with their huge offices, reception areas and the hype I had read online. Sadly, my high expectations fell by the waist side 5 minutes into the meeting when the 2 ladies presenting the company didn’t have a clue what they were talking about. I was seriously gobsmacked. One question I had regarding employment pay left them with blank faces, and they ended up calling someone else into the meeting room, who also didn’t have a clue. It was a waste of my time and I was surprised how little they knew.
Company Three ( Accord Asia )
I was immediately impressed with the staff I saw here, and really liked the way they broke everything down into simple drawings on the back of a scrap piece of paper for me. In 15 minutes, I understood everything I needed to know. I was impressed that their office was lean, the staff extremely knowledgeable and friendly, they were not to pushy and above all, their rates – as seen above, seemed fair compared to the other companies I saw.
Over the past year I’ve personally referred 28 friends to my contact in Hong Kong who have gone on to incorporate their offshore company with my contact. They have also successfully opened a business bank account (with the likes of HSBC), which is becoming more difficult to do these days.