Hong Kong is a desirable place for most entrepreneurs to start a company. There are various kinds of business structures in Hong Kong, and you can go for any one of them as per your purpose to incorporate business. The business types include a public company, a private company, sole proprietorship, limited by guarantees or shares, partnership, representative office, and branch office.
Limited Liability Business Entities
It is the most usual business structure in Hong Kong. Limited liability businesses are further classified into a company limited by guarantee and a company limited by share. And, the company limited by shares are further categorised into private and public companies.
- Private company
A private company is preferred by small and medium-sized businesses. It requires one director and a minimum of one and a maximum of fifty shareholders. There are special conditions for corporate directors. It should have a registered office and a local secretary of Hong Kong(HK).
- Public company
A public company requires at least one member and two directors. It has unlimited shareholders, meaning that the shares are open to the public. It should have a registered office and a Hong Kong local secretary. Corporate directors are not permitted.
The profit generated by the business can be given to the shareholders.
- A company limited by guarantee
These types of entities are usually the choice for non-profit organisations such as clubs, societies, or charities. They require one member and a minimum of 2 directors. The corporate directors are not permitted, and there are more than 50 to unlimited shareholders. Also, a company limited by guarantee requires a registered office and a local secretary similar to a company limited by shares.
The profit generated by the company can’t be shared among the members or shareholders.
A local secretary is mandatory to incorporate a limited liability company. Engage 3E Accounting Hong Kong, the Hong Kong secretarial company to receive reliable secretarial services HK for your incorporation.
Sole Proprietorship
This type of business structure has a single owner and is the basic business type in Hong Kong. However, it has a higher risk to operate because the personal assets are not safeguarded. It has a 7.5% – 15% tax rate. You should sell the business assets to transfer the company. The business exhausts if the owner dies.
The owner can have all the profits gained by the business. The maintenance and registration are simple, and the decision-making process is faster as compared to other business structures.
Also, it is recommended only if you have enough capitals to invest without support from external sources.
Partnership
In this business structure, it involves the cooperation of a minimum of 2 partners with the common intention of generating profits. It is mandatory to sign the agreement form with all the partners. You must register to obtain a Business registration certificate to incorporate a partnership company. The tax rate ranges from 7.5% – 15%.
The cost of maintenance and registration is lower than the above-mentioned business structures.
It is flexible, and you can add more partners simply by modifying the legal structure of the company.
It is further categorised as:
- General partnership
- Limited partnership
It is usually recommended only if you have trusty partners and have common business goals.