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Setting up a company in Hong Kong

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Mister Gu

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Has anyone opened an LLC in Hong Kong?

I'm about to open one. It's my first company and I'm walking blind except for the walking stick that is the internet.

I need to go through an agent but prices vary greatly - 500 to 4k USD for what looks like the same package. Listed government fees are also usually not in line with what they should be based on my research. I couldn't find much in the way of reviews beyond a few tangential blog posts and suspicious 14 5-stars in broken English on the iOS store.

I thought I'd ask the forum (this actually prompted me to register - hello!) instead of blindly jumping in since it can cost me a lot of time and money. So if anyone has any experience with this I would greatly appreciate advice :smile: If not then I'll just bite the bullet on Monday and see if it's made of chewing gum or iron.

I've been looking at:
- Incorporate Company Registration in Hong Kong
- Hong Kong’s #1 Company Experts - StartItUp.hk

Thank You :smile2:
 

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Mister Gu

Mister Gu

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I live in Taiwan and don't have US citizenship so US is not something I can do. Biggest thing about HK is completely territorial tax system - there's no tax on sales outside of HK.
 
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Mister Gu

Mister Gu

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Is this legit?
Probably yes. I Googled a bit and some US states (Wyoming) allow non-citizens to create companies. Buuuut... I was really just asking if anyone has experience with any HK agents. I don't want a company in the US.
 

Tim Wallace

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So, to put things in perspective:

- You live in Taiwan
- You want an LLC in HK, to benefit from territorial taxation.

I assume you are trying to run a business, which services people in Taiwan, or others outside HK. In the hopes of not paying HK business taxes.

If this is the case, have you done all your research on the business taxation policies of the primary place you intend to do business? Mainly because some people try to circumvent business taxes in their primary place of business by setting up elsewhere, but end up paying more.

Things like where the business account is domiciled, and so on can be used to demand business taxes from that account operator. This can potentially defeat the entire goal. Just something to consider, if you haven't already.
 
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Mister Gu

Mister Gu

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Yeah, that's about right.

In short the plan is to learn e-commerce while I work on my online service. I only have a rough idea on how I'll do it. I don't expect profits until much later.

I didn't realize I could get taxed outside of HK based on customer location or bank account location. How would that come about? VAT?

This is probably not what most people do but I want to use Revolut Business for the bank account:
  1. Opening a bank account in HK would mean showing up in person and quarantining for 2 weeks after coming back. Taiwan is Corona-free.
  2. I briefely looked into traditional banks that allow opening accounts online but at least for the ones I looked at the reviews aren't great. Plus I already use Revolut.
  3. Taiwanese banks are terrible when it comes to international payments. No PayPal support anywhere except for one bank with horrendous fees).
 

Odysseus M Jones

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I live in Taiwan and don't have US citizenship so US is not something I can do. Biggest thing about HK is completely territorial tax system - there's no tax on sales outside of HK.
Someone's going to tax you though, probably Taiwan.
Anyway I'm sure you've done your homework.

I set up a limited company back in the 90's, didn't want to pay agency money so did a DIY jobbie with assistance & paperwork supplied from a company called EDP Shop, John Saunders, he's a good guy, not sure if he's around anymore.

Seems like a lot of hassle to avoid taxes.

Remember, you only get taxed when you have revenue & the bigger your tax bill the bigger your revenue.

Consider it a trophy.

I don't expect profits until much later.
Cross that bridge when you come to it then.
 

Tim Wallace

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Yeah, that's about right.

In short the plan is to learn e-commerce while I work on my online service. I only have a rough idea on how I'll do it. I don't expect profits until much later.

I didn't realize I could get taxed outside of HK based on customer location or bank account location. How would that come about? VAT?

This is probably not what most people do but I want to use Revolut Business for the bank account:
  1. Opening a bank account in HK would mean showing up in person and quarantining for 2 weeks after coming back. Taiwan is Corona-free.
  2. I briefely looked into traditional banks that allow opening accounts online but at least for the ones I looked at the reviews aren't great. Plus I already use Revolut.
  3. Taiwanese banks are terrible when it comes to international payments. No PayPal support anywhere except for one bank with horrendous fees).
I am not familiar with the Taiwan market, so I can't say.

However, in the US for instance, some people attempt to do the same thing by registering an LLC online, in the state of Delaware. Then they attempt to operate their businesses in some other state. If they have their business bank account in that other state, then that state might consider it as a criteria "operation" in that state. Which means, the business income is liable for taxes in that state.

In essence, all they have ended up doing is taking on the annual $300 franchise fee and other smaller fees in Delaware, on top of their normal local state taxes in their home state.
So depending on how things work there, this plan might work against you.

Though from what it sounds like, you are still far away from having to worry about this. Maybe start your business, and if it is actually shaping up to be a real business with paying customers, then revisit your business structure options.
 

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If you want to build an online business, I'd recommend opening an e-company in Estonia. Everything is made for you to effortlessly run your company anywhere in the world and the Estonian government provides you with a trusted list of companies that can help you deal with taxes, vat, accounting etc. They automated as many tasks as possible to make it efficient and effortless. You benefit as well from the fact that Estonia negotiated agreements with most world countries so you won't have to pay taxes twice.

In terms of taxes, it's a 20-20-20, let me explain. Firstly, good news: you won't pay any taxes if you leave your revenue in the company, which is quite nice. Otherwise, it is always 20% for everything: VAT, state taxes, employee taxes. So, if your company makes 100 000€ in revenue and you reinvest these revenues or simply leave them as it is without paying yourself nor anyone any dividend or salary, you'll pay...0% tax.

If out of these 100 000€, you pay yourself a salary/dividend of 1200€, you'll pay 240€ of taxes (20% of 1200€) and will therefore end up with 960€. The VAT is also at 20%, but if you don't sell anything in Estonia, that is completely irrelevant. If you hire an estonian employee and pay them a before-taxes salary of let's say 1200€, same thing: you'll pay 240€ of tax for your employee.

I met an Australian once that was buying and selling commodities on world financial markets with this type of LLC, he said it worked really well. For me, where starting a company is a rather long and expensive process, I've thought many times that I'd use this Estonian service. Anyone in the world can sign up, no need to be European.

More info here: What is e-Residency | How to Start an EU Company Online
 

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Mister Gu

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Estonian e-residency way is more expensive in terms of maintenance so even if admin were better it's still overall worse for me right now but it's a good contender :thumbsup:

I'm not trying to be tricky by registering the company in HK. It's simply the best based on the research I've done. The thing I'm missing is having some social proof that the agent I use is actually good. That and lack of experience.

John Saunders should be this guy, right? John D. Saunders | I help entrepreneurs build brands online
 

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Estonian e-residency way is more expensive in terms of maintenance so even if admin were better it's still overall worse for me right now but it's a good contender :thumbsup:

I'm not trying to be tricky by registering the company in HK. It's simply the best based on the research I've done. The thing I'm missing is having some social proof that the agent I use is actually good. That and lack of experience.

John Saunders should be this guy, right? John D. Saunders | I help entrepreneurs build brands online

Here you go buddy: VIRTUAL OFFICE IN ESTONIA – Starting from 5 EUR!

I used them once before lol
 
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Mister Gu

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Here you go buddy: VIRTUAL OFFICE IN ESTONIA – Starting from 5 EUR!

I used them once before lol
I stand completely corrected. I calculated and my "way more expensive" is actually 50 EUR less in Estonia (albeit for a VERY rudimentary package with no accounting or filings taken care of so I'll probably end up paying more in the end but it shouldn't be much by the looks of it - plus I'll learn some things first before offloading them).

Thank you :happy: :smile:

By the way, is there something wrong with HK? I did not expect so many people proposing alternatives. Hong Kong looks like a very popular place to incorporate.
 
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Odysseus M Jones

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Definitely not him, John was a middle aged obese white guy. Your guy doesn't look like he was even born then.

By the way, is there something wrong with HK? I did not expect so many people proposing alternatives. Hong Kong looks like a very popular place to incorporate.
I can't see a benefit if you operate in another country, you're subject to local taxes unless you fly under the radar.

Even HK public companies are registered offshore, Caymen Islands etc.

How do you expect to gain by registering in HK?
 

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I stand completely corrected. I calculated and my "way more expensive" is actually 50 EUR less in Estonia (albeit for a VERY rudimentary package with no accounting or filings taken care of so I'll probably end up paying more in the end but it shouldn't be much by the looks of it - plus I'll learn some things first before offloading them).

Thank you :happy: :smile:

By the way, is there something wrong with HK? I did not expect so many people proposing alternatives. Hong Kong looks like a very popular place to incorporate.
HK is a popular place to incorporate but its future is quite uncertain. The city is trapped between China and the US and no one knows how it's going to end up. Also, seems that with the rising resentment against China globally, it may "taint" the company's brand/reputation as people will see it as a "Chinese company".

Also, in terms of fulfilment and logistics, it's cheaper and more stable to do it from Shenzhen (China) than HK.
 
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Mister Gu

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I can't see a benefit if you operate in another country, you're subject to local taxes unless you fly under the radar.
Are you asking why I didn't just register in Taiwan? High capital requirement (~8k USD) coupled with very special administration (I fought with them for half a year to get my residency - the law said one thing and the gov. agency did another. It took some insider knowledge to get me through :happy: ) and a bunch of other reasons. I hoped to get low costs, minimal admin and obviously as little tax as possible.
 

Odysseus M Jones

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Also, in terms of fulfilment and logistics, it's cheaper and more stable to do it from Shenzhen (China) than HK.
Tell us more about 3PL from Shenzhen

Are you asking why I didn't just register in Taiwan? High capital requirement (~8k USD) coupled with very special administration (I fought with them for half a year to get my residency - the law said one thing and the gov. agency did another. It took some insider knowledge to get me through :happy: ) and a bunch of other reasons. I hoped to get low costs, minimal admin and obviously as little tax as possible.
8k ouch!
 

The Racing Driver

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Has anyone opened an LLC in Hong Kong?

I'm about to open one. It's my first company and I'm walking blind except for the walking stick that is the internet.

I need to go through an agent but prices vary greatly - 500 to 4k USD for what looks like the same package. Listed government fees are also usually not in line with what they should be based on my research. I couldn't find much in the way of reviews beyond a few tangential blog posts and suspicious 14 5-stars in broken English on the iOS store.

I thought I'd ask the forum (this actually prompted me to register - hello!) instead of blindly jumping in since it can cost me a lot of time and money. So if anyone has any experience with this I would greatly appreciate advice :smile: If not then I'll just bite the bullet on Monday and see if it's made of chewing gum or iron.

I've been looking at:
- Incorporate Company Registration in Hong Kong
- Hong Kong’s #1 Company Experts - StartItUp.hk

Thank You :smile2:
I opened a Limited Company in Hong Kong back in late 2015. The cost to start up the company was just about USD$ 1200. That included the incorporation fees, 1-year registered office plan, local secretary fees and other documentation fees. It can be done cheaper, depending on the level of service and the firm you use.

Renewal fees on a yearly basis cost me around $650. Plus there's the annual audit which starts from $750 and can go up to thousands depending on how many transactions need to be audited. For the annual audit, don't go to the big accounting firms. They'll charge you lot even for a simple audit.

The whole process to open a limited company was super easy back then and it still is. However I am a permanent resident of Hong Kong, which makes things easier.

If you're a non-Hong Kong resident trying to open up an offshore company, there are some hurdles that may make you want to reconsider opening up a company there. Namely opening up a business bank account.

HSBC for example, from what I hear hardly entertains any offshore company unless they're a massive operation with millions of dollars worth of projected transactions. I've heard countless stories, where offshore companies go through a lot of trouble to open up a bank account. At the very least, before you can open up a bank account you'll need a solid business plan to show the bank, as well as compelling reasons as to why you want to incorporate in Hong Kong.

Right now, Hong Kong is going through huge political and economic uncertainty. I will be leaving soon, and am considering whether to make my company offshore.

Feel free to DM me if you want to know any more details or need any help.
 

Odysseus M Jones

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If you're a non-Hong Kong resident trying to open up an offshore company, there are some hurdles that may make you want to reconsider opening up a company there. Namely opening up a business bank account.
You're right, even a personal account is difficult.
I know foreign domestic helpers that live & work there being denied an account.

And I just remembered in Feb when I wanted to change my address to UK, the bank teller advised me not to because they might close the account, that was a personal account.

If you have HSBC in Taiwan, they will help you open an account anywhere in the world they have branches, but you have to have a Premier account which has minimum deposit requirements.
 

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Getting a bank account in Hong Kong is MUCH harder these days. If you want to go offshore for tax reasons there are easier countries to incorporate in.

@GlobalWealth will be able to help. Or if he is tied up with his Cypto stuff then I would check out Nomad Capitalist YouTube channel. Lots of very useful information there for anyone considering going offshore or building a mobile lifestyle.
 

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Nowadays they're is almost no reason I would advise a client to open a HK company.

There are almost always better options.
 
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Mister Gu

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There are almost always better options.
Can you elaborate?

Estonian e-residency route requires me to fly to Singapore (closest pick-up location - needs to be done in person) and then quarantine for two weeks after coming back :inpain::cool: Singapore itself is not bad though.

In any case I'm going to hire an agent somewhere today. I resolved to do that after delaying for two weeks :happy: Even if HK is not the best it can't be bad and that will do.

Getting a bank account in Hong Kong is MUCH harder these days. If you want to go offshore for tax reasons there are easier countries to incorporate in.
In HK itself yes but you can open one elsewhere and use it. I was going to use one of the fintech services first.
 

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First of all, no I cannot elaborate.

I don't know any details of your situation. These are not the decisions that should be made from responses posted on a forum.

Your issue will be banking. If you insist on moving forward, budget lots of time and money for flying around opening new bank accounts when they are closed on you.

You need a qualified expert to assess your situation and make proper recommendations. This will cost you money.

Either you pay an expert now to sort out a proper structure, or you pay an expert later even more to fix the mess you made and sort out a proper structure.
 

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Has anyone opened an LLC in Hong Kong?
I used BRIDGES to open my company in HK and the process with them went smoothly.

That also recommended two banks and set up appointments for me to open the account. But to open the bank account, you will have to fly over yourself. It's a very big deal and not something you just do quickly online without meeting in person. Good luck with your future endeavors.
 

MarkLavagne

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@Mister Gu , indeed why HK? Especially in current situation I wholeheartedly agree with @GlobalWealth - HK certainly not the place to open the company now.

Have you looked into Singapore? I have multiple companies there so let me know if you have any questions regarding process/cost of establishment and operation.

Opening bank account is very difficult in pretty much every country due to tightening of central bank regulations. Especially if company beneficiaries are offshore based. You will have to deal with it in HK, Singapore or any other country.

Additionally I may advice you to look to @Odysseus M Jones advice - cross the bridge once you started the journey. Perhaps it makes sense to start and see substantial revenue first and look into proper legal/tax framework afterwards. It's a good advice.
 
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Mister Gu

Mister Gu

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I have looked at Singapore. To incorporate in HK it costs 500-1000 USD, in Singapore it's upwards of 1000 USD. That's really my only reason (btw. I discovered this but I'm not using them: Osome).

To be fair originally I wasn't even asking for help in choosing a country but the thread went that way.

@Odysseus M Jones 's advice is right. I'm not going to HK for tax benefits and to play smart before making money. But incorporating in Taiwan wasn't feasible so I had to go somewhere. Hence the ordeal.

HK is cheap and easy to incorporate in (there may be banking troubles, I know) and has good reputation. Estonia was not a bad idea but I can't get e-residency without a lot of trouble (flying to the nearest country with a pickup point and borders that aren't closed and then quarantining for two weeks in Taiwan). I will see if it makes sense to move after I'm making money (or sooner - if I have issues in HK). Maybe this is foolish but I'm not too worried about the unrest.

Hopefully this makes sense. I emailed an incorporation company in HK. If it fails I'll at least have learnt some things.

Thank you to everybody for your advice. I'll let you know how it goes :thumbsup:

edit.

Osome spams we with intrusive sales emails almost every day since the day I opened their app. Letting you know in case anyone's looking at them.
 
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Ronak

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In short the plan is to learn e-commerce while I work on my online service. I only have a rough idea on how I'll do it. I don't expect profits until much later.
Nobody has asked the question yet, but why spend so much time and effort before you have a proven business model? This can turn into an action fake that brings you no closer to your goal of your first dollar. Once you have some cashflow, then you can spend the money to do it properly.
 
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Mister Gu

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Uh, yes, that's actually spot on. In hindsight maybe I could've started without one. I don't know how it'd work legally. I don't know how things work very much at all yet.

Thank you for making me wary of this becoming an action fake. Made me aware of some smelly things. I'll definitely take it until it makes some money though :thumbsup:
 

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