Do you know how much it costs to set up and run a limited company in Hong Kong?
If you’re thinking about setting up a Hong Kong limited company, then you’d be surprised to learn that incorporating a new company can cost not more than HK$6,500. We’ll take a look at how the costs to incorporate a company can vary according to the formation service you use, along with any additional running costs that may come up.
Cost of Forming a Hong Kong Company
Many feel that the cost of forming a company has to be pretty high, but this is not the case at all. Even though running a company takes more administration and the director of a company has more responsibilities than a self-employed person, running a company isn’t as financially or time-consuming for many people.
#1 Set Up a Company Directly with the Companies Registry
The cheapest way to set up a Hong Kong company is using the Companies Registry, the registrar for companies in Hong Kong. Incorporating directly through the Registry is possible, but it is no-frills. You need to give them a Hong Kong registered address and the details of the company’s company secretary, a position that needs to be filled by either a Hong Kong resident or a Hong Kong company. If you need extra support or services, you need to consider using a registration agent or getting advice from an accountant.
#2 Set Up a Company Using an Intermediary
You can also set up a company using an intermediary that sets the company up for you. They’re called formations agents or registration agents, and many firms offer this service in Hong Kong. They charge between HK$6,500 and HK$30,000, while some charge even more.
Corporate Hub Hong Kong has an in-house company formation service you can use to set up a company. We offer options such as providing a Hong Kong address and a company secretary, opening a Hong Kong bank account, and a mail forwarding and scanning service. You can also buy a shelf company in this manner. If you do not have a Hong Kong company secretary and a Hong Kong address, it costs HK$6,500 to set up a company, which all government fees are included.
Ongoing Costs of Running a Hong Kong Company
Outside of the minimal costs of incorporating a company, some other things can incur a fee when running a Hong Kong company.
#1 Company Secretary and Hong Kong Address
A Hong Kong company must have a Hong Kong company secretary and a Hong Kong address. The company secretary will typically act as the designated representative of the company’s significant controllers’ register. Corporate Hub Hong Kong has an in-house company secretary and address service you can use to fulfill these legal obligations at the annual cost of HK$2,500. We do not charge extra to act as the designated representative.
#2 Companies Registry
Every company needs to submit its annual return (NAR1) on the anniversary date of its incorporation. This gives the Companies Registry and the general public a glimpse of what each company is all about. This form includes the details of the company, its directors and shareholders. Usually, the company secretary will help you file it. The NAR1 government fee is waived if you submit the NAR1 on time from 1 Oct 2020 to 30 Sep 2022. We do not charge extra to submit the NAR1 form.
If you submit the annual return late, then the NAR1 government fee goes up to HK$3,480. Every responsible person in the company is also liable to prosecution if you take too long to submit the form. You can see why just hiring a professional to take care of the forms for you is a better option than ignoring them and potentially paying higher fees.
If you are changing your company’s name, the Companies Registry will charge you a fee too.
#3 Business Registration
The business registration certificate needs to be renewed annually before it expires. The business registration fee for 2021-22 is HK$250. Renewing the Business Registration late can incur a penalty of HK$300 and taking too long can also lead to legal troubles and even more fines. Usually, the company secretary will help you renew it if you use its address services. Except for the government fee of HK$250, we do not charge extra to renew your company’s business registration.
We offer a range of packages for renewal services you can choose from. Our standard company renewal fee in 2021 is HK$2,750, including the company secretary and registered address service for one year (HK$2,500), 2021 NAR1 filing fee (HK$0) and 2021-22 business registration fee (HK$250).
You’ll need to have your company’s management accounts ready before sending them to the auditor. You can do the accounting work on your own if you have sufficient accounting knowledge and time. Alternatively, you can outsource the accounting work to Corporate Hub Hong Kong or other accountants. Typically, they will provide you with the income statement, the balance sheet and the general ledger after the accounting work is finished.
#5 Audits and Tax Returns
During the first week of April, the IRD issues Employer’s Returns (BIR56A) to companies. The information you need to put on these returns is the salaries of your employees for the year. The forms need to be completed within a month of receiving them. Failing to complete them on time will incur a penalty.
Hong Kong limited companies are also required to have their financial statements audited every accounting year. You will receive your first profits tax return (BIR51) 18 months after incorporation and your annual profits tax return in May every year. Filling out this profits tax return is a requirement, and it will be based on the figures from your audited financial statements. Find more here. Submitting these forms late will incur a penalty of HK$1,200+. Further delay will lead to higher penalties and potentially court proceedings.
The cost of auditing and filing the tax return depends mainly upon the company’s business industry, the company’s turnover, and the number of transactions. Our price for the audit and profits tax filing work is highly competitive. We do not offer packages because a tailor-made quote depending on your company’s actual situation is always more competitive. The audit and tax filing fee of a company with only a handful of transactions should not be the same as a company with thousands of transactions when their turnover is the same.
Corporate Hub Straightforward Pricing (2021 Updated)
The following is a summary of our costs of forming and running a Hong Kong company (applicable to a company with a simple shareholding structure, i.e., not more than two individual shareholders).
|One-off costs of setting up a Hong Kong company
(including company secretary and Hong Kong address service for 1 year *)
|Ongoing costs of running a Hong Kong company|
|– Company secretary and Hong Kong address service for 1 year *||HK$2,500|
|– 2021 NAR1 annual return filing fee **||HK$0|
|– 2021-22 Business registration fee ***||HK$250|
|– Accounting, audit and tax filing fee||Depends|
* We do not charge extra to act as the designated representative of the company’s significant controllers’ register.
** We do not charge extra to file the company’s NAR1 annual return.
*** Except for the government fee of HK$250, we do not charge extra to renew the company’s business registration.
Winson Kwok is the co-founder of Corporate Hub. He has a background in entrepreneurship, economics, and business development. He has extensive experience in helping entrepreneurs develop their business and, at the same time, avoid common pitfalls. His personal goal is to bring significant values to entrepreneurs and startups around the world.