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Benefits of setting up a limited company in Hong Kong

Startupr
15 April, 2019

Do you want to set up a limited company in Hong Kong? If so, you must be looking for the maximum benefits which you can experience while launching up the business. As a matter of fact, before diving into the sea, it is better to dip your toes into the ocean in order to get a better understanding of the environmental benefits and more importantly, about its rules and regulations.

But before providing you with the benefits of a limited company, we want to say that you have really made a great choice by selecting Hong Kong as your business setup place, and the limited business structure for your organization.

Benefits Of Setting Up A Limited Company In Hong Kong

Being a record-holder for the world's freest economy in the last two decades, and with a minimum level of restrictions and bureaucracy, Hong Kong is an excellent choice for setting up a company for many entrepreneurs. More importantly, you don't have to think about the legislation and other regulations, because Hong Kong is governed by a reputable, and regulated international jurisdiction where business is booming.

What's more, its strategic location, attractive tax regime, pro-business environment, effective legal systems, productive workplace, and a stable economy, are some of the others most pertinent factors that lure business people into launching their business in the competitive business world.

Let's start with the benefits of launching a limited company in the freest economy of the world - Hong Kong.

However, we would like to give some details about limited liability business vehicle before describing the advantages of incorporating your business in the competitive business world.

Limited Liability Company

Well, a limited liability company is a type of business entity which is made up of at least one shareholder, director and company secretary. In this business vehicle, shareholder and director can be one person who does not have to be a local of Hong Kong. More importantly, while setting up a limited company in Hong Kong, the owner experiences an advantage where they would have the reassurance of the limited liability.

Didn't get?

This means that if somehow business is facing any financial issue or stuck in any fraudulent business activities, then a person would not be liable for any financial loss. Therefore, the limited company provides a person enough protection when something went wrong. On the other hand, if you operate any business as a self-employed person or sole proprietorship, then you wouldn't be able to enjoy any such protection from the financial disputes.

Benefits of setting up a limited company in Hong Kong

Let's dive into the advantages of setting up a limited liability company.

Separate Entity

The first and foremost benefit of setting up a limited liability company is that this kind of business vehicle is considered as an entirely separate entity from its owners. From the involvement in contracts, and tenders to business bank accounts, and most important, the ownership of all the assets are all together separate from the shares of the company's shareholders. Consequently, this protects the shareholders from any financial disputes of the business.

Ownership and Control

Ownership and control over the business play a dominant role in the competitive business world. And if you are choosing to incorporate your business as a limited company in Hong Kong, then you can enjoy this liability. In the private limited companies, the directors also have the authority to act as the principal shareholders of the company for small startups.

In short, both the control and ownership of the organizations remain in the hands of directors. Consequently, the decisions can be made easily and quickly without any chaos and leading to a more successful business management platform.

Taxation Benefits

Do you know Hong Kong taxation system is entirely based on the territorial source principle? So, while setting up the business in Hong Kong, you don't need to take tension about the taxation sectors. The tax is paid for the profits based on the place where it has been earned.

When it comes to taxation, LLCs get the best of all worlds. LLCs don’t have their federal tax classification but can adopt the tax status of sole proprietorships, partnerships, S corporations or C corporations. More importantly, the sourced profits in Hong Kong has a tax rate of 16.5%, and when you earned profits outside Hong Kong, then don't have to pay for the taxes in Hong Kong. Ultimately, the profit tax on the incomes of the company, in this case, is 0% of the profits that are earned out of Hong Kong.

Besides, there is no withholding tax on dividends and interests, no capital gains tax, no VAT or sales tax in Hong Kong. That makes it the best choice for a person to set up a Limited company in Hong Kong.

Less Paperwork

Paperwork is the most important factor that affects the business while setting up. In the case of limited companies in Hong Kong, business owners don't have to take the load of the documents.

Management Efficiency

Another essential factor that attaches feathers in one's cap is the efficiency of the management. There is no denying the fact that the companies management is under the control of the shareholders, commonly owners, where they appoint the board of directors. These directors, have to ensure that the business is obeying all the policies, and regulations of Hong Kong, while they also monitor the progression of the daily affairs of the company.

More importantly, it is stated that while launching up a limited company in Hong Kong, all the business owners have to make sure that the company has the stability and is committed to responsible and effective management.

This way, both the customers and suppliers will have a sense of confidence and relief that the business is doing well in the race. One more thing that is important for you is that if you want to deal with the companies who have placed their business in a larger scale, then you need to incorporate your business as a limited in the freest economy of the world.

Incorporating, a limited company in Hong Kong, would open up the new opportunities and gates for the business that was otherwise not assessable in other countries. As you must have an idea that the sole traders have to take the risk of selecting a name for their company, which someone else is already using or can use in the future.

On the other hand, for a limited company, you are already one step ahead of other competitors because there can only be one specific Hong Kong company with any particular name, where no one else can use it or any name that is similar to it.

Well, that was all about the benefits of incorporating your business in Hong Kong as a limited company.

Below are some programs which are offered by the government of Hong Kong which will act as the cherry on the cake for you.

Government Announces Special Programs For Startups!

As per stated earlier, Hong Kong is known to have the best supportive government in the world with few legal complications. Due to this, it has become easier for a person to set up a limited company in Hong Kong and make a presence within no time.

In fact, in Hong Kong, there are a plethora of marketing funds, incubators programs, and loan guarantees programs for startups that lure foreigners into setting up a startup in Hong Kong.

Hong Kong Permits Easy Selling Of Corporate Shares!

Easy selling of Corporate shares! Yes! This is something that is not easy and common in other countries. While launching the business in Hong Kong, you will get liabilities, where the owner may sell their shares in the market.

And after selling the shares, the person can contribute that collected amount to a charitable case, pay down the business debts, diversify the assets, and even can expand their business.

Hong Kong Businesses Are Recognized Worldwide!

Do you know that Hong Kong businesses are recognized worldwide? The reason behind its recognition is its political stability, the open market, and the rule of laws. More importantly, both foreign and local companies have equal growth opportunities through international forums to get recognized worldwide.

Conclusion

So, now that you have a profound idea about the benefits of setting up a limited company in Hong Kong and the programs initiated by the Hk's government for the betterment of the businesses. Hence, while setting up a business in Hong Kong, you can expect the best of the best and the highest levels of success.

So, if you have made your mind to launch the business in Hong Kong, then Startupr can help you in complying with all the regulations of Hong Kong and would take care of all other necessities. Contact us now!


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Startupr

Startupr puts you first. This is why our main focus is Startups with global ambitions. We give you the freedom to build your business while we take care of the tedious, administrative tasks, leaving you to concentrate on your dream for your company. As part of our brilliant service, our back end software will automatically send you reminders of important annual filings, and upload your important document to your online account. startupr.hk

 

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