Guide to Register a Sole Proprietorship in Hong Kong – An Insight Into Everything You Need to Know
Registering a sole proprietorship business in Hong Kong is ideal if you intend to run a small business on your own (self employed Hong Kong) with no other employees. Sole proprietorships in Hong Kong differ from Private Limited Companies in Hong Kong because with sole proprietorship Hong Kong, there is no protection when it comes to your personal assets and limited liability. Other factors that must be kept in mind when register sole proprietorship in Hong Kong is that it is often difficult to raise capital with this business entity. Some investors may be hesitant to invest with Hong Kong sole proprietorships registration business because it is viewed as a non-corporate entity.
Should you feel that registering a sole proprietorship Hong Kong (self employed Hong Kong) is the way forward for you, this guide will provide an insight into everything you need to know before getting started.
What You Should Know Before Register a Sole Proprietorship in Hong Kong?
Before registering your sole proprietorship business in Hong Kong, there are a few key facts about this entity that you should bear in mind. Firstly, you will not be considered a separate legal entity from your business. This means that as the owner, you will bear all responsibility for any debts, losses and liabilities which your business may incur. As there is no protection offered against your personal assets, this could be considered a high-risk area.
Sole proprietorship entities in Hong Kong a charged a tax rate of 15% based on their assessable profits. All taxes in Hong Kong are filed with the Hong Kong Inland Revenue Department on an annual basis.
If you conduct more than one type of business, when registering a sole proprietorship in Hong Kong you will also need to apply for a Business Registration Certificate for each type of business.
Why Register a Sole Proprietorship in Hong Kong?
Compared to other business entities, Hong Kong sole proprietorship registration is considerably easier and a lot more straight forward. The registration process involves only a single step, which is to register your business with the Inland Revenue Department’s Business Registration Office. If the details of the particulars registered for your business change at any time, you must notify the department in writing within one month of the change taking place.
All Business Registration Certificates must be renewed one month prior to the date of expiration. These certificates can be renewed annually or once every 3 years depending on your certificate’s validity.
Registering a Sole Proprietorship in Hong Kong as a Foreigner
If you are a foreigner who intends to relocate to Hong Kong to run your sole proprietorship business, you will need to apply for an Investment Visa to do so. Foreigners are also advised to engage a professional firm to assist with the registering of a sole proprietorship in Hong Kong. You will need to register your business prior to applying for the Investment Visa.
To be eligible for the Investment Visa, you must be able to prove that you will be making a substantial contribution to Hong Kong’s economy. This can be done by demonstrating that the business you intend to set up will effectively create jobs locally for the people of Hong Kong. You must also demonstrate your intent to utilize local service providers, manufacturers and suppliers, and that you intend to contribute to the market you’re venturing into. Given the criteria which need to be fulfilled for this visa, there is generally a low chance that registering a sole proprietorship business can obtain approval.
How to Register a Sole Proprietorship in Hong Kong?
Registering your sole proprietorship in Hong Kong must be completed within a month from the date your business commences. Once you have been issued with your Business Registration Certificate, your profits tax file number will be the same number that is printed on your certificate.
Registering a sole proprietorship in Hong Kong will require you to select an appropriate name for your business before registering with the Inland Revenue Department. You may choose to register your business name in either English, Chinese or both. Chinese business names may include English alphabets but must not contain any English words. Your business name should also not suggest that your company is incorporated as a limited liability company or any connection with the Government or public body. Your company name must be infringing on any trademarks, be offensive or contrary to the public interest.
You will be able to register a sole proprietorship in Hong Kong within a day if all your documents are in order. Once you have been issued with a Business Registration Certificate, you must display it must always be conspicuously on your business premise. The documents you will be required to provide for the registration:
- A completed application form which includes your proposed business name
- A copy of your Hong Kong identity card or passport if you’re a foreigner.
What to Do After Registering a Sole Proprietorship in Hong Kong?
Once you have registered your sole proprietorship business in Hong Kong, you may need to apply for a business license, depending on the nature of your business activities. Among the business activities which may require a business license include educational institutions, restaurants, financial services, import and export, and travel agencies to name just a few.
Upon completion of the registration, you will be able to then open a corporate bank account for your business. Hong Kong has a vast array of banks to choose from, although some banks may require your physical presence to open an account (part of their due diligence procedure).
Fulfilling Your Ongoing Compliance After Registering a Sole Proprietorship in Hong Kong
It is required by law in Hong Kong that your sole proprietorship business must file their profits tax return on an annual basis. Newly registered sole proprietorship in Hong Kong will be issued with their first tax return file notice within 18 months from the date of incorporation. If your business’s gross income doesn’t exceed the HKD500,000 revenue, you will not be required to attach financial statements along with your tax return.
If your registered sole proprietorship in Hong Kong does exceed the HKD500,000 mark, you will be required to submit a certified copy of the company’s balance sheet, profit and loss account relating to the business period, a tax computation which indicates how the amount of assessable profits or losses have been derived.