Have you ever wondered how top multinationals manage to maintain an enviable balance sheet with high profits? The answer is expanding operations abroad to grow market share and strengthen their brands.
If the local business environment is not supportive, do not let it choke your business, ideas, or vision for growth. Opening a company offshore in Hong Kong might be a perfect idea, but is this the right time?
This post takes a closer look at the main signals that show it is the right moment to go offshore. We will also highlight some of the unique benefits that come with opening a company in Hong Kong.
What Makes Hong Kong the Ultimate Hub for Foreign Business?
Every year, thousands of businesses move or extend their operations to Hong Kong. These businesses and investors are attracted by the following benefits:
Hong Kong Serves as the “Gateway” to Mainland China
Most offshore companies registered in Hong Kong target trading with China. This is facilitated by the Closer Economic Partnership Arrangements (CEPA), which allows most products from Hong Kong companies to gain entry into China tax-free.
Hong Kong Boasts Highly Developed Infrastructure
From road networks to internet connectivity, Hong Kong boasts state-of-the-art infrastructure. Therefore, communication, logistics, or running an international business from Hong Kong, among others, is affordable and straightforward.
If you want to run a successful business, the jurisdictions of choice should have supportive administrations. The country is very proactive in passing laws and policies that help it to maintain competitiveness in the market. For example, Hong Kong does not have a withholding tax on interest and dividends. Companies also pay a low corporate tax of only 8.25% for the first HKD2 million, while the remaining taxable income is charged 16.5%.
Signs that Show It is Time to Incorporate a Company in Hong Kong
If you notice any of the following signs, know that it is time to take your company offshore.
This is probably the most notable signal that shows everything is not okay and changes are required. If your company has made losses every other year or the profit keeps declining, consider going offshore.
Steady Profits Over a Number of Years
If your company’s profits have been on an impressive uptrend for a number of years, that is an indication that you need a new challenge. By expanding offshore, your company is assured of more sales. This is the best way to transform your enterprise into a revered global brand.
Hostile Business Environment
It is not uncommon to hear people say that their home environment is hostile to business. This hostility can come in a number of ways. Most notable is by oppressive policies from the governments. For example, very high taxes can eat into your company’s profits. New technology, competition, and insecurity can also prevent businesses from operating effectively.
Other signs include maturity of a plan for expanding a company offshore and availability of new markets. If you get new opportunities to supply raw materials to manufacturing firms in China or neighboring markets, you can open a company in Hong Kong which would be an excellent idea.
To make your offshore venture in Hong Kong successful, ensure to have it registered with the assistance of professionals. An agency, such as GMHK, works with experts with experience in company registration in Hong Kong and neighboring markets. They can also assist you with other executive functions, such as payroll management, accounting, and strategy formulation.
How To Incorporate a Company in Hong Kong?
Registering a brand-new business, especially in a stringent place like Hong Kong, can feel like a daunting task at the beginning. However, it’s actually super-easy. Just follow these steps accordingly and you’ll be done with it in no time!
Step – 1: Choose Your Interlocutors
At the time of setting up your company and throughout its life, you will have to be in contact with three people or departments, including the following –
- The secretary of your company.
- The Companies Registry, and
- The Inland Revenue department.
So, before you establish your organization, make sure to get in touch with these three people or departments quickly. Ask the latter two about how you should you get started. Hopefully, they can clarify some of your confusions efficiently.
Step – 2: Choose the Name of Your Company
While doing so, you must ensure that the name you are choosing is unique from every possible aspect. If it’s not, then the company with the same name will sue you.
So, it might be best to do the following –
- Check if the name is currently available in the website of Hong Kong Company Registry.
- Make sure that your organization’s name isn’t trademarked in some other region.
- If you want to get more details on your company name registration, check the guideline of the Companies Registry properly.
Step – 3: Choose a Legal Vehicle
So, you are done with naming your organization, right? Well, then, now, it’s time to decide the type of legal vehicle you are thinking about choosing. There are three different options that you can choose from –
- Sole proprietorship.
- Limited company.
If you are looking for a recommendation, it might be best to go for the third option. Here are the reasons behind doing so –
- It’s the most common legal infrastructure in Hong Kong.
- It’ll be easier for you to have new investors for your company.
- It’s an independent legal entity. So, all of your personal assets are protected from various risks and liabilities
The Final Steps!
So, once you are done with the aforementioned three, you must work on appointing a company secretary. It’s mandatory. So, it’s better to select someone right away!
Also, before you establish your organization, choose the registered address and prepare your documents clinically. And, finally, submit all of them to the Companies Registry before making sure that you’re ready to get your business started.