The critical factors of a Hong Kong company formation are no need for auditing or even to submit accounts and year-end financial returns. A minimum of two Directors, one Secretary, and at least one Shareholder must also be appointed. But these facts do not necessarily mean that you can use this method for every business in Hong Kong.
One of the essential things to be taken into consideration while considering this method for Hong Kong company formation is the fact that the registration of the business will have a few limitations that should be kept in mind. It will ensure that no illegal practices can be conducted in the business.
This form of the business formation may also provide for limited liability for the business. The only other constraint to the business in this respect is that the business can only engage in individual businesses in a single day. A business that can run only for a week will have to get the permission of the Department of Justice before opening the business. The only exception to this rule is if the company gets a permit to operate a restaurant or similar restaurant.
A business must be able to show that there are enough clients to justify their investment. But this does not mean that all businesses should be treated as franchises. Many people start their own small business but later decide that they would like to turn their small business into a more significant business. In such cases, the business can be treated as a franchise, but if it is a small company, it will have to seek a license from the Department of Justice.
The only problem with this method for starting up a small business is that there are a lot of rules and regulations that apply to this type of business. It makes it easier to comply with them than it is for a regular business. But the fact remains that this is a lot simpler and easier to comply with than setting up a regular business.
The second method of company formation in Hong Kong is called Limited Liability Partnership, and it is a very convenient and easy method for small businesses. It is because it requires less documentation, and there are fewer formalities involved. Even though there are fewer formalities involved, this method is still theright choice for starting up a small business in Hong Kong. As soon as the business registration is complete, the only document that is required is a certificate of registration, and no annual accounts or financial reports are required.
It has been observed that some companies that have registered themselves using the limited liability partnership (LLP) method of company formation in Hong Kong are scams. Some companies offer ‘low commission rates, fake directors, and fake documents. They charge high costs for the registration process and often fail to deliver on their promises after the registration process is complete. Such companies are best avoided.
As it is not a legal requirement to disclose details about your business to anyone else, you must choose the company carefully. Before signing any documents relating to the formation of your business, you should consult a chartered accountant to guide you on this matter. Once you have a lawyer’s help, you will be able to have a clear picture of the advantages and disadvantages of the LLP method.
You can also choose to set up your business in Hong Kong using an International Business Scheme. It is a legally recognized system of business registration, and you will not need to submit a formal application for it. You will not require a company secretary who is a qualified member of the Hong Kong Chamber of Commerce and will be paid the same wages as other members of the IBS.
IBS is very popular in Hong Kong. Suppose your business is registered under this system. In that case, you will receive all the benefits that are offered by a standard company, and you will be able to avoid most of the formalities that are involved in the LLP method.
Before you decide on which method of company formation to use, you should look for an accountant who has experience in operating and dealing with both the LLP and IBS method in Hong Kong. An accountant with more experience will be able to provide you with a good idea of how to deal with this system.