Once you have a registered business in Hong Kong, the next step is to open a corporate bank account to ensure all of your business bank transactions are kept separate from your personal accounts.
This will make filing taxes for Hong Kong companies a much simpler process in the long run. There are many local and international banks in Hong Kong to choose from with each offering different features and services.
Hong Kong is recognized as an international financial center and is ranked third in the Global Capital Index. Because of this, Hong Kong has around 30 multinational banking headquarters in the region which makes Hong Kong a leading offshore company jurisdiction for foreigners.
Opening a corporate bank account can be a time-consuming and complex process for Hong Kong companies. There are a lot of variables that go into play when banks are making their decisions on which companies will be approved to open a business bank account.
Here, we will cover what to consider when choosing a bank, go over the required documents, and discuss the actual step-by-step process on how to open a Hong Kong corporate bank account.
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Factors to Consider When Getting a Corporate Bank Account in Hong Kong Banks
When deciding on which bank to open an bank account, you should choose the one that can best meet the needs of your business operations. Things to consider when choosing a bank that is suitable for your business include the following:
- The availability of services needed in the future such as loans, etc.
- How does the bank rank among its competitors?
- What type of business do you run and does the bank fill those needs?
- What services does the bank offer?
- Monthly fees
- What is the initial deposit requirement?
- Do they offer online banking?
- Do they offer credit and ATM cards?
- What is the minimum balance requirement?
- What is their foreign currency account availability?
- Does it have a secure banking system?
In choosing a bank, you need to consider which of these factors is going to be essential in running your business and then choose the bank that is the most compatible.
Documents Required to a Business Bank Account Registering in HK
Opening a Hong Kong company bank account requires very specific company’s documents. Some of these documents include the following:
- Company’s Business Registration Certificate
- Certificate of Incorporation
- Articles of Association
- Director and principal shareholders declaration
- Passport or Hong Kong Identity Card
- Residential proof
- List of authorized signatories
- Financial & bank statements or a detailed business plan
- Sales contract
- Most recent annual return
- Reference letter from a bank in your country
Having all of the required documents upfront can simplify and speed up the process.
Hong Kong Bank Account Opening
After pulling all of the required documents together, there are several steps that follow in starting the bank account process. These steps include the following:
- An initial appointment with a bank officer
- A bank interview to ensure you have a sound business plan and to gain knowledge of the nature of the business
- Preliminary review
- Signatures for relevant documents and application forms along with the initial deposit
- Department review
- Approval or rejection
It’s important to have an overall picture of the process so you will know what to expect every step of the way.
Things to Consider During the Bank Interview
The bank wants confirmation that you are a real company and that you have a feasible business plan. The bank is basically assessing risk management during the interview and will focus on the nature of your business.
The following are some things that you will be asked about during the interview.
Nature of your businesses
- Office location – banks want more than a paper presence. They want a physical presence and location
- Business activity – banks want to know the basics of what your business entails minus the technical details
- Business model – prove that your business is feasible
- Profits – explain how your profits will be gained, describe the product or service, discuss business partners, and tell the bank about any major buyers and suppliers
- Company size
- Countries you do business with
- Types of transactions
- Operations
- Average contract amount
Relationship between your businesses and HK
They will also want to know what the connection is between Hong Kong and your business.
- Business connection with Hong Kong – if there isn’t a clear connection and the directors, beneficial owners, and authorized signatories do not reside in Hong Kong, then it will be difficult to get approval for a business bank account.
- Backup plan – provide information on the buyers & suppliers which would help tremendously if they were in Hong Kong. Explain how a Hong Kong’s business bank account would help your business. Make sure you tell the bank that you consult with a tax professional including documents and tax advisor details. Also, be prepared to answer why you don’t have an corporate account in the country of operation
If your business doesn’t have a strong connection with Hong Kong, then you need to be prepared with an air-tight back-up plan.
Bank account
The bank will want to know what kind of accounts are needed for your business.
- Accounts needed for business – what currencies are needed and the type of bank account
- Primary source of funds – the nature of the funds and the country of origin
- Transaction pattern – how much money and where it will be going
They will also want to know all the ins and outs of your funds and transactions.
Proof of profession for new businesses
It can be difficult coming up with proof that your business exists, especially for new businesses.
The following are suggestions of what to use as proof for the existence of your business:
- Office lease
- Business plan
- Storage leases
- Product orders
- Business memos
- Utility bills
It’s best not to go into the bank interview blindsided. You should prepare for the bank interview by carefully considering the answers to these questions to improve your chances of being approved for a business bank account.
Reasons for the Bank Rejection of Corporate Banking Account Applications
There are many reasons why your application for a bank account may be rejected. Some of these reasons include the following:
- High risk business
- An individual who is an active participant in the business is from a high-risk country
- A failed background check on a director, an ultimate beneficial owner, or shareholder
- The source of income is in doubt
- Directors or shareholders lack experience in running a business
- There is nothing related to Hong Kong in the business plan
- There is no sound business plan
Rejections can be filed with the Hong Kong Monetary Authority. Knowing possible reasons for rejection ahead of time will better prepare you for the application process.
Money Cost of an Business Account
There are many fees incurred during the process of opening a business account. There are fees for appointments, applications, opening fees, transactions, ATM withdrawals, and low monthly balance.
The opening fee usually runs anywhere from HKD 800 to HKD 1,200 for processing the application. If the application is rejected, the fee to process the application is non-refundable.
Minimum balances typically range from HK 5,000 to HK 500,000 with fees for low monthly balances running from around HK 150 to HK 200. Fees and their amount vary with the different banks.
How Long Does It Take to Open a Corporate Bank Account in Hong Kong?
It can take quite a while to open a Honk Kong bank account, especially for those businesses that are foreign-owned.
There are many stringent rules and regulations when it comes to money laundering and finances that are traced back to terrorist organizations.
The process has become more difficult over the years due to international criminology. The process can take some time due to all of the paperwork and the time it takes to filter out high-risk clients and transactions.
It can take anywhere from a couple of weeks to a month or two to open a corporate bank account.
Is Registering a Bank Account Difficult?
On the surface, in Hong Kong open a business bank account sounds like a relatively simple process but it has grown more and more difficult over the years. This is due to stricter auditing and risk management regulations. It’s also more difficult for new businesses because they have a more difficult time providing proof of their business.
Hong Kong had to introduce anti-fraud regulations after 2012 which made the levels for due diligence unattainable for some companies making it hard for them to open bank accounts. Banks are hesitant to go through this expensive process of companies opening business bank accounts due to the uncertainty of the success and profitability of the business.
For opening a bank account in Hong Kong is more favorable if there is proof of stable cash flow, proof of actively doing business, and already having a bank account that has been audited. You basically want to prove to the bank that you and your business can be trusted.
Can Businesses Outside of Hong Kong Open a Bank Account?
Hong Kong banks will open corporate bank accounts for companies that are foreign owned, but they are very cautious in doing so. Again, this caution is due to bad experiences in the past with international criminology such as money laundering and financial ties to terrorist groups.
What are the Benefits if You Open a Bank Account in HK?
If you need to open a business bank account in a jurisdiction other than where your business is incorporated, then an offshore or international bank account is a good option. There are many benefits to opening a local and international bank account in Hong Kong (treaty Hong Kong).
Some of these benefits include the following:
- No tax on interest
- Free transfer of capital
- Many reputable bank options
- Minimizes the cost of currency exchange such as currency conversion fees
- Online banking for access to funds anywhere in the world
- Faster payments across borders with limited paperwork
- Transactions are transparent and easy to track
- Less risk of fraud or lost payments
- Transactions clear quickly which improves cash flow
- Customers put more trust in and prefer to work with companies who have a local bank account
In addition to the typical required documents for Hong Kong opening a business bank account, for offshore accounts, banks also require a Certificate of Incumbency and a Certificate of Good Standing.
Alternatives to Bank Accounts in Hong Kong
Setting up a Hong Kong business bank account as a foreigner can be challenging. Fortunately, there are alternatives.
One such alternative is fintech or financial technology that digitizes traditional financial services and transforms it into electronic money.
Fintech solutions are also beneficial to start-ups and companies in Hong Kong that are newly incorporated. For traditional bank accounts in Hong Kong, you must be physically present when opening a bank account.
With fintech platforms, no physical presence is required when opening an account in Hong Kong. This is a huge advantage to those living outside of Hong Kong.
Fintech Solutions
- Virtual banks. A virtual bank is a digital-only bank that does not have a physical building. Instead, it’s like having a business bank account online and everything is processed through internet banking. Some of these virtual banks are licensed Hong Kong banks and are regulated under the HKMA, also known as the Hong Kong Monetary Authority. This type of internet banking must follow specific guidelines and regulations.
- Money service operators. Regulated by the Customs and Excise Department of Hong Kong, money service operators allow businesses to engage in money remittance and conversion services in Hong Kong.
The difference between a virtual bank and a service operator is that a MSO is not a bank and therefore does not provide current internet banking services but they do provide payment services.
MSOs are a good alternative for those who have been rejected by local banks in Hong Kong.
FAQ
Is the bank account opening process in Hong Kong demanding?
Opening a Hong Kong bank account is a much simpler process for residents than non-residents. It’s also an easier process for established businesses versus new businesses. Proper preparation and using a professional service provider can make the process of set up a bank account less complicated.
Does Hong Kong have international banks in addition to their local banks?
Yes, Hong Kong offers around 30 global banks.
Do you need to be physically present to open account in HK? (Bank Account Online)
Yes, Hong Kong banks adhere to strict procedures when opening an account. Typically, directors, shareholders, signatories, and beneficial owners need to be present to open bank account. Some banks will allow you to submit the bank account set up form such as the application and documents online but ultimately, you’ll need to be physically present in Hong Kong to finalize the process of bank account opening.
Can banks reject or deny applicants during the process of opening account?
Yes, you could be rejected if you are not a Hong Kong resident or if the activity of your business is considered high-risk to Hong Kong banks.
What is the cost associated with opening Hong Kong bank accounts?
It’s difficult to determine the exact cost because fees vary with the different banks. At minimum you would need to pay the bank account opening fee and an initial deposit.
Should you use a personal account for businesses expenses?
No. That’s a disaster when it comes time to do checking personal and corporate taxes.
What is one of the first things you need to do after a Hong Kong company formation?
After your Hong Kong company formation, the next step is to open a business bank account.
What is the largest bank in HK?
Comparison Hong Kong Banks – the largest bank in Hong Kong is HSBC. The HSBC group, which is one of the major banks, is a global banking superpower.
What exactly is a business bank account?
A business account is a bank account opened under the business name of your company. This is also known as a commercial bank account or a corporate bank account.
What kind of account benefits overseas companies?
Overseas companies can really benefit from multi-currency corporate bank accounts. With Hong Kong being a financial hub, most bank accounts are multi-currency. This is a great feature especially if your business makes and receives payments in currencies from different countries.