There’s no time like the present to take the bold leap into the world of business!
According to the World Bank’s Doing Business 2019 report, Hong Kong ranked fourth globally on the ease of doing business and is ranked fifth out of 190 economies in terms of ease for starting a new business. The startup scene has only continued to gain momentum and the city is filled with world-class talent across almost every industry. The Hong Kong government recently launched incentives to help you launch your dream venture – it slashed the cost of registering your new business from $2,250 to just $250! Valid from now until March 2020, it makes this the perfect time to test the entrepreneurial waters of Hong Kong. To help get you started, we’ve put together a list of key steps to chart your own course.
But first, there are some fundamental questions you should ask yourself:
- Why do I want to start a new business?
To disrupt an existing industry with a transformative idea, or to earn extra income while feeding a personal interest perhaps? The answers will help you decide the type of business to set up and the approach to take.
- What need is my business filling?
This will help you find your audience and work out how large it is and how many customers you need in order to make the venture profitable.
- How does my business idea leverage my passion and experience?
A startup will demand personal commitment and a differentiated position, both of which will be well served if you develop your business concept around your individual talents and expertise.
- How crowded is the space?
Weigh how your resources, capital, and ingenuity stack up against your competitors’ and use this to form your business strategy.
- How can my network be valuable to my startup?
It takes a village to raise a child as they say, and this particular baby is no different! You’ll need to tap into every relationship you have and you may be surprised by how the smallest piece of advice or a chance introduction makes all the difference.
Once you’ve fine-tuned your business idea and plan, there are several Hong Kong resources that can help you navigate through what may seem like a complicated process. A great place to start is InvestHK whose mission is to strengthen Hong Kong’s status as the leading international business location in Asia. It offers free advice and services to support companies from the planning stage, through to the launch and expansion.
Its useful guide simplifies the steps to setting up a business in Hong Kong and provides details on how to incorporate and register your business. The rules state that any form of trade, commerce, craftsmanship, profession, calling or other activity carried on for the purpose of gain qualifies as a business and needs to be registered within one month of beginning operations. The registration process can be done quickly and now only costs $250. Check out the Inland Revenue Department’s website for details on the fee waiver which expires Tuesday, 31 March 2020 (do note that limited liability companies will still need to pay the company registration fee – more details on that below).
The process is as follows:
- Select a company type and company name
- Register and incorporate
- Open a bank account
- Choose business premises
- Sort immigration and visas
InvestHK can also be reached via email and by appointment for additional guidance regarding the benefits and requirements of setting up a business in Hong Kong.
Read more: Interview Tips: How To Land Your Dream Job
Taxation, banking and other legalities to consider
Business structures used in Hong Kong are limited liability companies, sole proprietorships or partnerships. A limited liability company should be used for any business that is risky or dependent on a lot of external factors, as it limits your personal liability. Many startup ventures by mamas which do not have many staff and subcontractors would fall under the sole proprietorship and partnership categories. Check out this guide when thinking about what structure makes the most sense for your business. The business registration fee waiver that is currently in effect applies to all three structures, but for setting up limited liability companies, entrepreneurs do have to pay to an application fee for company incorporation of $1,720.
If you want legal help, Zegal is a great cost-effective resource to help with the incorporation process and beyond. It offers over 1,200 documents which are essential to starting and running a business.
Once your company is incorporated and registered you can then set up your bank account. As most expats starting out in Hong Kong have experienced, opening a bank account can be a challenge. InvestHK advises entrepreneurs on how to open a company bank account with checklists for all the necessary documents. It is best practice to have a separate business bank account, but not mandatory. There are many Hong Kong-based companies that can help open a bank account for a fee. In addition, some small businesses have been using the services of Neat. If you don’t have a company bank account, it is recommended that you have separate bank accounts for home and business. Payment services such as PayMe and PayPal have made it much easier for small and online businesses to get going.
As far as business premises go, please note that you only need to provide a registered address which is different from a physical one. In many instances, companies that provide company secretary and accounting services will also be able to provide you with a registered address (get in touch with FastLane, Suzanne Liu or your own chartered accountant for more details). This allows companies who may not have a physical space to abide by this requirement.
Hong Kong has an amazing support community for entrepreneurs. Co-working spaces such as The Hive, Campfire and METTA all offer their own unique environments and do an excellent job at providing networking opportunities and workshops for its members. These events are a great place to get a feel for Hong Kong’s unique startup culture, and to road-test your concept among like-minded entrepreneurs. You may even meet a co-founder or first client!
As mentioned earlier, a great network is often key to startup success.
- Hong Kong Momtrepreneurs is the first bilingual non-profit platform in Hong Kong, with a mission to educate mothers and families, by providing a platform to create opportunities through its membership network, training and events.
- Female Entrepreneur Worldwide (FEW) is an online-to-offline business community that connects, inspires and empowers women for entrepreneurial success, and to scale their business locally and globally. FEW Academy offers female entrepreneurs and professional women the chance to acquire the skills, mindset and network for personal and business development.
- Startup community, WHub, is great when you’re looking for job opportunities or to hire. It has teamed up with entrepreneurial ventures, VCs, incubators and more to come up with its Hong Kong Startup Ecosystem Toolbox.
Starting a new business is a courageous, fulfilling and challenging experience in which you can learn a lot, establish great relationships, and create income and wealth. For so many reasons, Hong Kong is one of the best places in the world to start a business, and the business environment for startups is continuing to get even better. All the very best in your endeavours! You’ve got this, mama.