So You Want to Be Your Own Boss? Your HK Business Setup Cheat Sheet Is Here!

Ever had a brilliant business idea over a cup of coffee, only to be stopped cold by the thought of actually setting it up? The forms, the fees, the fear of getting it wrong… we’ve all been there at some point.

Today, we cut through the confusion with an informative Q&A session led by Vivian Chow, CPA and business consultant specialising in setting up and running your own business in Hong Kong. She broke down the nitty-gritty of company formation, compliance, and tax tricks into bite-sized, actionable advice to empower community members hoping to take that first business step.

Whether you're dreaming of launching the next big e-commerce brand or formalising your freelance hustle, here is a quick breakdown of everything you need to know.

The Big Question: To Incorporate or Not to Incorporate?

This is the first crossroads for any new business owner. Vivian laid out the two main paths:

1. Sole Proprietorship - the simpler, faster, and cheaper option: This route is perfect for freelancers and solo operators. But, be warned, this option offers zero liability protection. If your business hits a rough patch, your personal assets (yes, that includes your savings and apartment!) are on the line.
   

2. Limited Company - the gold standard for businesses: This path comes with higher setup and maintenance costs, but it creates a legal shield between your company and your personal life. Your liability is limited to your investment in the company, and, as Vivian emphasised, this protection is often worth every penny.
   

The Verdict: If you're testing the waters, a sole proprietorship might be your starting line, but if you're building a vessel meant for bigger seas, a limited company setup is the way to go.

Pro Tips from the Expert

Vivian gave us some golden nuggets of wisdom to ensure our businesses not only start strong but stay strong:

• Your Company Secretary is Your Best Friend. They aren’t just a legal requirement; they’re your guide through annual filings and compliance. A good secretary will help you prepare the necessary board resolutions, ensuring you stay compliant without the legal guesswork. For single-director companies, you can even draft your own board resolutions and have your secretary review them—a great way to stay hands-on and save costs.
  

• Ownership Changes? Transferring company ownership is typically done via a share transfer. It requires proper documentation but can be done at a value you and the buyer agree on.
  

• Offshore Claims Are Getting Harder. The rules have tightened. It's now much more difficult to claim that your income is sourced outside HK and is tax-exempt. Always get professional advice on this.
  

• Stay on Top of Your Mail! Ignoring letters from the bank or the government is a one-way ticket to penalties, fines, or even frozen accounts. Respond promptly!

Myth-Busting: The Rules They Don't Tell You

We love a good myth-buster, and on top of her pro tips, Vivian also delivered some helpful advice to break through the noise once and for all.

• "I run my business from my laptop, so I don't need a business address." ❌ FALSE. Even if you're a digital nomad running a global empire from a coffee shop, you must have a local Hong Kong business address for registration.
  

• "I'm just freelancing; I don't need to register." ❌ Think again! Registering your business isn't just a legal hoop to jump through; it's your ticket to maximising tax deductions. You can only claim legitimate business expenses (think marketing, software, equipment) if you're officially registered. Don't leave money on the table!
  

• "I'll just pay my teenager to help out; it's a tax write-off." ❌ Not so fast. For sole proprietors, salaries paid to family members are not considered deductible expenses. Keep it professional!

Your Quick-Start Action Plan

Feeling informed and ready to get started? Here’s a simple three-step guide for getting it done:

1. Define the details of your business. You’ll need:

   - A company name;

   - Shareholders & Directors (Minimum 1 person for each role, though this person can be you);

   - A Company Secretary (a mandatory role to ensure you stay compliant; this person has to someone other than yourself);

   - The Capital Structure; and, of course,

   - That all-important local business address.
   

2. Decide if you’re going to apply digitally or not:

   - The Digital Route: Company incorporation can be as quick as 24 hours after submitting your online application. Yes, you read that right!

   - The Paper Trail: Using paper forms? Expect a process of 6-8 working days.
   

3. Receive your Certificate of Registration

You've Got This!

Remember, every big corporation started with a single step. The journey from idea to incorporation is less daunting when you have a roadmap and a community to support you. A huge thank you to Vivian Chow for her invaluable time and wisdom.

Ready to set up your business in Hong Kong or have more questions? Connect with Vivian via Instagram, LinkedIn or her website: http://ask-vivian.com

P.S. Want more real talk and support? Join our Women of Hong Kong Community Calls every Tuesday and Thursday at lunchtime where we cover more topics ranging from personal to professional. Find more information here.