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$3,600 at the moment. 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 Company
Many feel that the cost of forming a company has to be pretty high but this is really 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, actually 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 company in Hong Kong is using the Companies Registry, the registrar for companies in Hong Kong. Incorporating directly through the Registry is effective but it is no frills. You need to give them a Hong Kong registered address and the details of the company secretary of the company, a position that needs to be filled by either a Hong Kong resident or a Hong Kong company. If you need some extra support or services then 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 there are many firms that offer this service in Hong Kong. They charge between HK$3,600 and HK$30,000, while some charge even more.
Corporate Hub Hong Kong has an in-house company formation service you can use to get online assistance, back-up and a number of other options including providing a Hong Kong address and company secretary, printing the share certificates, opening a Hong Kong bank account, and a mail forwarding and scanning service. You can also buy a shelf company in this manner.
Ongoing Statutory Costs of Running a Company
#1 Companies Registry
Outside of the minimal costs of incorporating a company, there are some other things that can incur a fee.
First of all, every company needs to submit its annual return (NAR1) on the anniversary date of their incorporation. This gives the Companies Registry and the general public a glimpse of what each company looks like. This form includes the details of the company, its directors and shareholders.
If you submit your annual return late then the government cost 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 the name of your company, the Companies Registry will charge you a fee too.
#2 Business Registration
The Business Registration needs to be renewed around one month before it expires. The business registration fee for 2020-21 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.
We offer a range of packages for renewal services you can choose from.
#3 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. Filling out this profits tax return is a requirement and it will be based on the figures from your audited financial statements. Submitting these forms late will incur a penalty of HK$1,200 at a minimum. Further delay will lead to higher penalties and potentially court proceedings. The cost of auditing and filing the tax return depends mainly upon the industry the business is in, the turnover of the company, and the number of transactions.