Starting a business is the way to be your own boss. Although there are plenty of perks of setting up a company in Hong Kong, the money required for the starting cost and annual maintenance are to be recognized. In this article, we will explain the costs and steps of incorporating a limited company so as to prepare interested parties! 

Cost of limited company incorporation

It is crucial to budget wisely. The basic cost of setting up a registered limited company includes the fee of company registration and business registration certificate, which are listed below:

Company Registration Fee: $1,720 (submitted in hard copy form) / $1,545 (submitted through e-Registry)

Business Registration Certificate: $2,200 (1-year certificate) / $5,870 (3-year certificate)

Therefore, if you pay the company registration fee electronically and apply for a one-year business registration certificate, you can theoretically set up a company for as little as $3,920. However, since only a pdf version of the Certificate of Incorporation and Business Registration Certificate will be issued after applying online, many businessmen with an offline store choose to apply in the traditional way to obtain paper certificates.

Statutory Documents Fees for Company Incorporation

Although a company can be set up for just a few thousand HK dollars, the reality is not that simple. After incorporation, a series of statutory documents are generally required as support, such as the Significant Controllers Register (SCR), Articles of Association, and Statutory Book, etc. A Company Kit (Gren Box) includes the aforementioned papers, a Kit usually costs about a few hundred HK Dollars to customize.

Company Secretary Fee

All limited companies are required by the Companies Ordinance to appoint a company secretary and register his/her particulars in the statutory register. To comply with the law, the sole director of a company is not allowed to be the company secretary simultaneously. So, many one-man startups seek the employment of a company secretary. Due to convenience and cost-effectiveness, obtaining company secretarial services through business centres has become a popular choice in recent years

Annual fee for limited companies

Business Registration Certificate

Even if you have successfully registered your company, you will have to pay a number of fees annually to maintain its legitimacy. If you originally applied for a one-year Business Registration Certificate, a renewal fee of $2,200 has to be paid per year. (1 Apr 2024 update)

Annual return

Every year, limited companies in Hong Kong are required to submit an annual return at a cost of $105.

Accounting Audit, Financial Statements

A company will receive its first profits tax return within 18 months of its incorporation, and thereafter annually, with a financial year end date of either 31 December or 31 March. Each time a tax return is filed, a company has to prepare accounting records, an audit report and a tax return, then submit them to the Inland Revenue Department (IRD). Although a company can handle the accounting records internally, the audit report has to be completed by a certified public accountant (CPA) in Hong Kong, and hiring such professionals will incur expenses.

Profits tax

The Inland Revenue Department (IRD) issues profits tax returns to all companies in Hong Kong in April each year. According to the two-tier profits tax system, the assessable profit of a limited company is 8.25% for the first HK$2 million and 16.5% thereafter. Companies should also pay attention to whether they have been charged provisional tax and allocate sufficient funds for it.

Flow of setting up a limited company

1. Determine the election of directors, shareholders and company secretary.
2. Name your company.
3. The name of the company must be unique and non-duplicable, therefore the proprietor may request an agent from a company service provider to conduct a search of the company's name or visit the Companies Registry's Cyber Search Centre to check the name of your company.
4. Select a registered address:  A Hong Kong limited company must register a business address as the company's registered address. Keep in mind that it’s illegal to use a residential address for that. Many company service providers offer registered address rental service, and in recent years it has become popular to use a virtual office as the registered address.
5. Prepare incorporation documents: There are three application forms: Incorporation Form (NNC1), Articles of Association and Notice to the Business Registration Office (IRBR1) with related fees required. Applicants can download the forms through the Companies Registry website, and then submit through e-Registry or in person at the Registry.
6. Receive Certificate of Incorporation and Business Registration Certificate after the application is approved.
7. Open a business bank account: According to the regulations, personal bank accounts are not allowed to conduct financial transactions for commercial purposes. If the bank discovers any suspicious records, it may be regarded as a breach of rules, the relevant account may be terminated, and the funds may even be frozen. Opening a company account allows you to manage your business expenses independently, such as staff salaries, purchase of company equipment, etc., so as to avoid large sums of money being transferred from your personal account. Therefore, opening a company account is a necessity after setting up a company.

However, banks have set high bars for first-time account holders. Applicants must have all the necessary documents and reputable credit to open a company account, the process may not be smooth. Therefore, many people will contact the bank through a company service provider and request the intermediary to submit documents on behalf of them in order to speed it up.

Overview

Not only do you need to pay the company registration fee and business registration certificate fee to set up a company, but a follow-up cost for statutory documents, a company secretary, accounting and audit is also influential on your budget. A sufficient liquidity is hence essential for entrepreneurs and those who intend to incorporate a limited company.

To never mess up payments, a clear concept of what should be submitted is much needed. OneStart Business Centre specializes in providing comprehensive support for entrepreneurs to start a company from scratch. Through OneStart, you can register various kinds of company in Hong Kong, and then apply for company secretarial services, tax representatives for accounting and audit, serviced and virtual office rental at discounted rates. To get started, Call 3575 6888 or WhatsApp OneStart Business Consultants to find out more!