Deciding on a Business Structure in Hong Kong

Deciding on a Business Structure in Hong Kong
Factors that warrant existence of different businesses
• Nature & size of the business
• Capital required to start & execute business
• Tax requirements
• Current needs of business
• Future plans for expansion of business
Type of business entities
• Sole Proprietorship
• Limited Liability Company
• Partnership
• Foreign Company Office
- Subsidiary Company
- Branch Office of Foreign Company
- Representative Office

1. Sole Proprietorship
Advantages:
• Simpler structure
• Easy to set up
• Does not require legal recognition or attendant formalities
• No distinction between business and proprietor
• No separation between proprietor and management
• Proprietor receives all the profits earned
• Process of decision-making is easier and independent
• Sole proprietor usually has tax advantages
• Sole proprietor is taxed less than owners of other business structures
• Relatively easy to end the business

2. Limited Liability Company
Advantages:
• Separate legal entity which is not affected by change in ownership
• Each shareholder is only accountable to receive shares from their investments
• Has perpetual succession and does not cease to exist upon a change in ownership or membership
• Ease in transfer of ownership
• Benefits of tax and other incentives
3. Partnership
Advantages:
• Easy to form
• Offers employment opportunities
• Shared financial commitments
• Complimentary skills: partners contribute their various skills to help the partnership succeed

Structure