What You Need to Know If You Start up a Business in Hong Kong
When the Hong Kong government announced the billion-dollar Innovation and Technology Venture Fund in 2016, many investors flocked the city to launch their startup.
According to Invest’s 2016 data, more than 2,000 startups in Hong Kong were able to hire over 5,000 employees. That is a massive 24% growth from its previous year.Not only that, but you can tell that Hong Kong has grown into a global hub through the rising number of coworking spaces and innovation labs all over the city. These labs are not a far cry from those in the Silicon Valley, complete with high-end design and free coffee.If you are planning to do your startup in this thriving city, here are some things you need to know beforehand:
How to Register Your Business in Hong Kong
Setting up your company in Hong Kong is easy and affordable as it is one of the few Asian cities that have a one-stop company incorporation and business registration.
Before submitting your application for incorporation, you have to secure a business name. This can be done online, and you can also see the list of Hong Kong’s registered company names via the Company Search Mobile Service (CSMS) of the Integrated Companies Registry Information System.
Then, all you need to do is send the following, along with the incorporation documents to the Companies Registry:
• IRBR1 – this Notice to Business Registration Office should be specified by the Commissioner of Inland Revenue.
• Business registration fee – prepare HK$2,000 (US$ 256) for a one-year certificate and HK$5,200 (US$ 665) for a three-year certificate.
• Levy to the Protection of Wages on Insolvency Fund – It is an annual levy of HK$250 (US$ 32) on each business registration certificate.
Hong Kong’s one-stop company incorporation and business registration will issue your business registration certificate after two working days.
What You Need to Know About Licensing your Startup
Before starting your business, you need to secure your licenses, permits, and certificates first. If you need more online information in licensing your business, visit the Business License Information Service website.
Simply give all the information asked by the website to find out what specific permits you need to obtain for your business operations.
Taxes: Rates, Filing, and Important Notes When Using the Electronic System
As a business operator, you are obliged to pay Profits taxes. The good thing here is that Hong Kong is one of the Asian cities that have a dead simple taxation system. Corporations have to pay a 16.5% tax rate regardless if they are residents or non-residents of Hong Kong. Meanwhile, unincorporated businesses are subject to a 15% tax rate regardless of their residential status.
You can benefit from the fact that Hong Kong is slashing its already low-taxes. In the new tax measures proposed by Financial Secretary John Tsang for the 2017-18 budget, the profits tax is reduced. The ceiling of the tax reduction is applied to each business.
Steps in Filing Your Profits Tax Return Electronically
There a few easy steps you need to do when filing your tax return for your startup:
1. Enter your file number and Return Identification Number (RIN)
2. Complete return
3. Add notes to file
4. Save draft return for submission
Do note that there are conditions that apply to corporations to qualify for using the Internet filing service. One of which is that your corporation’s gross income is not more than HK$ 2million. All the other requirements are posted in the Hong Kong government’s website.
Labor Legislation: Your Responsibilities As the Employer or Business Owner
As a future employer, you have responsibilities in protecting your employees. You have to prioritize occupational safety and health as well as ensure that your employees are well-benefited. You have to study Hong Kong’s Employment Ordinance, which covers both part-time and full-time employees.
According to the Labour Department, all employees are entitled to the following notwithstanding their work hours each week:
• Statutory Holidays
If the employee is working under a continuous contract for more than three months, he is entitled to statutory holiday pays.
• Wage Protection
All employees, irrespective if they are working under a continuous contract or not, are covered under the Statutory Minimum Wage.
• Protection Against Anti-Union Discrimination
The Labour department states that every employee has the right to participate in Trade Unions. You, as the employer, shall not prevent your employees from exercising any of their rights.
Pros and Cons of Doing Business in Hong Kong
Hong Kong, like any other Asian city, has some advantages and disadvantages in terms of startups. Some of them are listed below.
Pros of Starting up a Business in HK
• There is an interesting inflow of talent.
• Its ecosystem is far less crowded compared to other Asian cities, such as Singapore.
• Its close proximity to China makes it a good financial hub
Cons of Starting up a Business in HK
• Little support from the government, except the Innovation and Technology Venture Fund.
• Lack of support from private sectors
• Rising cost of living. If you are currently in Hong Kong, you surely knew by now that the high rent in the city is one of the drawbacks.
Tips on Getting a Location for your Business
As soon as you are done registering your business, licensing, and minding the tax matters, you can now focus on finding offices where you’ll operate your business activities. Neglecting the location aspect could cost your business in the long run. Think about it; you’ll want a clean space that aspires trust and professionalism to your clients and is located in the heart of Hong Kong busy business centre for convenience. Finding the perfect one that ticks all of the boxes could be tough.
There are service providers that will help you find the best location for your business centre in Hong Kong. At Skybizcentre Hong Kong, this is our objective: providing you with our wide range of business centres and hassle-free incorporation services.
We are dedicated to providing shared working space, virtual offices, and meeting rooms to businesses and startups.We have 21 excellent locations in Hong Kong you can pick from to start operating your startup. All of our offices come with complete packages, including free WiFi, concierge, and secretarial services, IT support, visa assistance, and much more.Contact us if you need more help and information about setting up your business in Hong Kong. Need a quote?
Click the link on our website, and we will be more than happy to help you in your chosen venture!