How To Choose From 6 Types Of Hong Kong Entities?

Opening a company

Some expatriates may have relocated to work in Hong Kong many years ago. After their life experiences have grown, the next sensible upcoming phase is to start their own business.

The first most important step when starting a new business is to go through company incorporation. This will protect the expatriates against company projects, patents, financial side aspect, and more.

The entrepreneur should first understand the different types of companies that are available to them to set up a new HK business.

When you want limited liability – Limited company

The best option for many expatriates or even local HK peoplewould be to open a limited private limited liability company (or a limited company). For the setup, all you have to provide is a name (for your company that is available for registration), one or more directors, oneor more shareholders.

For compliance purpose, your company needs to have a secretary and a registered address. Both the company secretary and the registered office address, you can find them available through some paid services from some local agencies who can provide them for a certain fees.

When there is only one owner – Sole proprietorships

Sole proprietorships are best suited for a small-scale business with only one owner.

Just be sure your business is not a high risk one. You want it to be low risk because it isunlike the shareholders of a limited company, the sole proprietor is liable for his/her business with all personal assets.

When there are at least two owners (or co-owners) – Partnerships

The name partnerships actually suggestsit is a business that is owned and run by at least two people (or co-founders).

Again, a company of the partnerships typehas the disadvantage that you (i.e. all the owners) are fully liable for the company and responsible for your partner’s actions.

Another point you may not know is that you may invest in a limited partnership as a silent partner. The downside is that you will have no say in the day-to-day operation of the business.

There is more –Branch, subsidiary or representative Office

When the entrepreneur already owns a company in another country, he/she can establish a branch office in HK. Be reminder that the main company (that resides overseas) is still responsible for all the debts and liabilities of this Hong Kong branch office.

There is a way to avoid this.When you go for the subsidiary option. This subsidiary business is considered totally a separate legal entity.

There is also this representative office. You would use it asan entity to conduct market research. It hasrestriction on making any legally binding deals or engaging in profit making projects.

The next step

It is best to do it through a reputable and reliable Hong Kong company registration service, if you need to open a new company.

To summarize, there are six types of entities:

  • Limited
  • Sole proprietorships
  • Partnerships
  • Branch
  • Subsidiary
  • Representative

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