Hong Kong companies offer several advantages that can be very useful for new businesses in China. Opening your own business is by far, an exciting prospect given that, with the proper help, it is relatively easy to establish a Hong Kong business. The following points will provide you with information on the benefits of Hong Kong company formation. However, before we get into that, you should be aware of company formation risks in Hong Kong. As you probably know, Hong Kong is a small region, with its economy dominated by local industries. As a result, establishing your business in this region can be rather complicated, not to mention expensive.
One of the first things you should do is open a bank account. You can use your existing bank account as a means of Hong Kong company formation. Most importantly, you need to create a document called the Articles of Association. This document states the primary purpose of your company and the people who will be running it. Also included are the company’s business address and a contact phone number.
When you open a Hong Kong company, you will receive all the relevant documents you need to start your business. Next, a schedule must be prepared, containing all your company’s directors and other essential personnel’s appointments.
After preparing all these documents, you need to conduct Hong Kong company formation to submit them to the Cabinet Office’s Secretary. You can do this online. However, it would help if you remembered that offering these documents online must be done within the office’s time frame. If you submit it after this period, the government will consider that you have made efforts to disseminate false information, which will hinder your application for registration with the State Post Office.
You may not know this, but there is more than one reason why many Hong Kong people conduct company formation here. One of the main reasons is the fact that China has opened its economy to foreign companies. In other words, there are now many companies that are looking to establish operations in China. However, the benefits of doing so are not restricted to small businesses: even huge companies from western countries are now registering their companies in China because they feel that they can benefit from it.
For instance, many large companies with branches in Hong Kong incorporate their business in China because they want to benefit from the Chinese market’s lower tax rates. Moreover, a company formation in China can allow the company owner to use its currency to payits services. As a result, you will not have to pay any additional tax for the transactions you have conducted in China. In addition to that, you can also take advantage of the fact that the Chinese markets are highly competitive. The recent developments in the IT sector have made it possible for multinationals to operate in China thanks to thousands of outsourcing companies.
On the other hand, the benefits of company formation in China do not only apply to domestic investors. Most foreign business people who set up their companies in China also incorporate their companies in China because China’s corporate tax system is very favourable to foreigners. Moreover, the Chinese government makes it a point to provide foreign business people with the most conducive environment for their business operations. As a result, many companies can conduct business without paying any form of taxes at all. Therefore, they become beautiful to foreign investors.
Although the advantages of incorporating in Hong Kong countries are desirable, you should keep in mind that the corporate tax rate rules and regulations may vary from country to country. Therefore, you should consult your accountant to determine the corporate tax rate in your country and accordingly adjust the cost of registration fees or royalties in your company. Keep in mind that the corporate tax rate is the main tax component that should be considered when opening a China company.