How to open a Hong Kong company as a non-resident – AVOID these newbie mistakes!

Introduction

We frequently meet foreigners who tried to open a company in Hong Kong and face problems such as:

• wrong or lack of documents
• denial of opening a bank account
• denial of opening a brokerage account

We want to go through the most common mistakes foreigners have made for opening a Hong Kong company so you can avoid these at all costs to reduce time and energy and avoid the risk of not being able to open one at all.

Mistake 1: How to open HK company 

Documents:

Many foreigners do one of these mistakes when it comes to their documents.

1. They have no proof of residential address
2. Their proof of residential address is older than 3 months
3. Their proof of residential address is in a different language (Thai)
4. Their proof of address is in a sanctioned country (Russia, Ukraine) – although you can still open a Hong Kong company with this, but not a bank account. (Note: You can have the Russian or Ukrainian nationality)
5. Your passport’s expiry date is less than 6 months.

Hacks:

Usually getting a proof of address is not very hard, not even as a digital nomad.

Here are few examples how you can get a proof as someone with no residency.

1. Bank accounts in your home country: You may still have bank accounts in your home country. These usually provide an address on the bank statement. This is completely sufficient.
2. Bank account as a tourist: Some countries (such as Vietnam) allow foreigners as tourists to have a bank account for their duration of stay. The adress on the bank statement will be your hotel address which again is more than enough.
3. Mobile phone number registration: Some countries (such as Germany) you can get a prepaid mobile number which will be registered on an address (usually your hotel). This can also be used as a proof of residency.

As we can see opening a Hong Kong company is one aspect, but another aspect opening a Hong Kong bank account. Both are separated processes and require similar attention to details.

Mistake 2: How to open HK company

Bank and Payment Gateway opening.

1. They have no referrals when going to a bank (having a referral from a CPA or a lawyer goes a long way in Hong Kong)
2. They answer questions in a lot of detail to the bank teller and confuse them (don’t forget: Less is more and bank tellers don’t understand every business model)
3. They try to open a bank account with a traditional bank at the beginning (it is best to open one with a fintech company like Airwallex first and then open a bank account with a traditional bank account after 6 months).
4. They do not have their company registration documents readily available (business registration certificate)

Mistake 3: How to open HK company

Cooperation partners.

1. Using different providers for different services (secretary service, virtual office service, tax accountant service, audit service) instead of a one-stop service that includes all of them.
2. Using a Hong Kong company incorporation service provider that is not a legal accountant that gives wrong or partial information
3. Your incorporation partner does not understand the offshore tax requirements, so you can be granted a 0% corporate tax.
4. Your incorporation partner does not consult you properly before starting a Hong Kong business due to conflict of interest of closing a sales.
5. A sales guy instead of a legal expert attends the consultation call – so your questions cannot be properly answered, and maybe even false information is communicated. 
6. Your incorporation partner has no network of people working in legal and bank (this will be important sooner or later for any business)
7. Your incorporation partner sells you an opening package without getting to know you in a video call (knowing your customer and their goal is very important).

How to open HK company: The proper way

There are a couple of steps and decisions to take when opening a Hong Kong company.

These are our recommended steps.

How to open HK company: Step 0 – Can you afford it?

Before taking too much time you should consider whether you can afford a Hong Kong company.

A Hong Kong company typically costs around 1000 – 2000 USD for the setup (depending on business and requirements) and around 2000 – 3000 USD annually for being tax compliant (e.g. tax filling, audit, fulfilling other government requirements).

If you need an offer for you specific use case, feel free to book a call with us.

Further reading:

Also read about how much tax you have to pay in Hong Kong and how you can potentially pay 0%.

How to open HK company: Step 1 – Are you eligible?

First, make sure that you fulfil all the requirements to open a Hong Kong company.

To open a Hong Kong company you need:

1 – A proof of residency:

The proof of residency can be

• a bank statement
• a phone bill
• an electricity bill
• a renting contract or bill

Please make sure that:

• It is not older than 3 months
• It is not from a sanctioned country (e.g. Russia, Ukraine)
• It is written in latin letters (so Arabic or other phonetic languages are hard – or at least should come with a informal translation of yours)

If you live in Russia or Ukraine and still want to open a Hong Kong company, you can travel to another country (e.g. Vietnam) and open a bank account during your stay (this is possible in Vietnam). The bank statement will then include your temporary address (your hotel address).

Or you can travel to Germany and get a prepaid card (for 10 Euros a month) and the bill will also include your temporary address (your hotel).

Then you can also open a Hong Kong company.

As a matter of fact, you can actually open a Hong Kong company with the residency from a sanctioned country, but receiving a bank account becomes difficult.

2 – Passport Scan:

Please keep a scan of your passport ready to send to the immigration office or the agency that helps you.

If you are unsure whether you fulfill the required documents, feel free to contact us.

How to open HK company: Step 2 – Choose a tax accountant

To properly open an HK company and also to do yearly tax filing, it is important to find the right partner alongside your business.

The best person is usually who can do all of that from A to Z meaning:

• open company
• do your tax filling and bookkeeping
• do your yearly audit
• can give you proper tax advice and
• can even help you to pay 0% corporate tax by applying to the tax offshore exemption

If you are not yet sure, who is the right tax accountant, feel free to search on the internet.

Be aware that most companies who are visible online (Google, YouTube) may be able to do the above, but are not proper HK tax accountants, but only middlemen who outsource the tasks to tax accountants.

If you like to get to know us better and see whether we are a good fit for you, feel free to book a call with our legal team.

Further reading:

Read more about how to qualify good tax accountants and what the difference is between a tax accountant and a middleman.

How to open HK company: Step 3 – Opening the company

Once you have chosen the right tax accountant for your business, and you have all your documents in line, then everything is set.

Your tax accountants may send you a few questions (at least we do this to understand your business to properly prepare the documents for the government) and then he or she will communicate the rest with the tax department.

This can usually take a few days – our fastest opening took only 1 day and the longest was 3 days.

How to open HK company: Step 4 – Opening HK bank account and HK payment gateway

Opening a bank account and payment gateway is the next step.

Usually your tax accountant will refer you to bank tellers at your preferred bank (at least we do because a referral will most definitely open the bank account).

If you are a foreigner without residency, some banks may be suspicious if you do no have a referral from someone and just do it completely by yourself.

The same goes when opening a business PayPal account in Hong Kong or a business stripe account in Hong Kong for your business.

Further reading:

Read more on how to open a bank account as a non-resident the easiest way in Hong Kong.

How to open HK company: Step 5 – Write invoices

You are done and you can start writing invoices to your clients – happy earning!

You don’t need to think of anything further and your tax accountant will keep your company tax-compliant over the year and should ask you in case of questions.

Further reading:In case you are unsure whether your tax accountant is doing everything by the book, then read our article about keeping your Hong Kong company tax compliant.