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Online second-hand buying and selling has become increasingly popular, and many people are putting their unused items on second-hand platforms for sale. However, we have noticed a growing number of cases where people are being pursued for business registration fees, and many clients have informed our business consultants that they have received chasing letters from the tax authorities!
In fact, as long as there is an intention to conduct business and it involves continuous trading and profit, even selling used clothes on a second-hand platform requires applying for business registration.
Fortunately, the Hong Kong Inland Revenue Department has been implementing measures to exempt business registration fees and levies for small business owners, alleviating the burden for all of you. Please pay attention to the following details regarding the exemption of business registration fees to avoid unintentionally violating the law while running a small business.
Qualifications for Exemption
1.A business carried on by an individual, a partnership, an unincorporated body of persons (not limited company).
2.Limited company which is not incorporated or required to be registered under the Companies Ordinance.
The above businesses must meet the following conditions:
- For businesses primarily deriving profits from the sale of services: average monthly turnover does not exceed $10,000.
- For other businesses: average monthly turnover does not exceed $30,000.
- Sole proprietors of businesses cannot simultaneously operate other sole proprietorships.
- Partners of partnerships cannot simultaneously operate other partnerships.
Average Monthly Turnover
For existing business, the actual total turnover (i.e. gross income before deducting cost of goods, expenses, salary, etc.) from the previous 6 months before the application must be used as the basis for calculating the Average Monthly Turnover.
Example:
Previous 6 Months for Application January 1, 2023, to June 30, 2023
| Application Date |
1 July 2023 |
| Previous 6 Months for Application |
1 July 2023 to 30 June 2023 |
| Total Actual Turnover for the above period |
$96000 |
| Average Monthly Turnover |
$96,000 ÷ 6 = $16,000 |
For newly established business, the estimated turnover for the first 6 months of the commencement of the business should be used as the basis for calculating the average monthly turnover.
Example:
First 6 Months for Application January 1, 2023, to June 30, 2023
| Commencement Date |
1 July 2023 |
| First 6 months of commencement of business |
1 July 2023 to 31 December 2023 |
| Estimated Turnover for the above period |
$96000 |
| Average Monthly Turnover |
$96,000 ÷ 6 = $16,000 |
Application Methods
Submitted in person or by post
Existing businesses: Submit the application not later than 1 month before the date of expiry of a current business registration certificate.
Newly established businesses: Submit the application not later than 1 month after applying for the business registration.
Submitted online
Existing businesses: Submit the application not later than 1 week before the expiry of its current business registration certificate.
Newly established businesses: Submit the application not later than 7 weeks after the application for business registration.
Conclusion
Running a small business can be challenging, but choosing not to register your business for the sake of convenience can lead to serious consequences and end up being more costly in the long run. With nearly 20 years of experience in company formation, OneStart Business Centre offers a range of professional company secretary services, including secretary service packages, one-time renewal of business registration certificates, and BR fee exemption application service, to greatly alleviate your worries. To learn more, call 3575 6888 or WhatsApp OneStart Business Consultant now!
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