Factors to Consider when Forming a Company in Hong Kong and China
Company formation entails the legal incorporation of a business as a limited company. Every limited company is entitled to its rights, responsibilities, and liabilities. A business owner will never be called upon to repay the debts of his or her company. When forming a limited company, business owners aim to lower their financial responsibilities. Owning a business in Hong Kong or China is a great move since you will gain a lot of benefits. Many foreigners are attracted by this, and they go to these places to try out their luck. In this article, the things that you need to know before you form a company in China are highlighted.
You can only start a company when you know the type of company you want. Hong Kong provides a variety of business options for foreigners. For those wishing to carry out their business in the mainland, there are WFOE and Hong Kong companies. The advantages and disadvantages you will face will depend on the type of business you engage in. You will be able to make the right business decision once you have exhausted all the available options.
It is important to make sure that your business is in the right location. Despite China being a massive country, there are few prominent places for doing business. You will face different pros and cons depending on the city you settle for. You should only start your company once you are aware of the treatment the local government is likely to give your business. Having a business in Hong Kong may be a better decision. In comparison to the mainland, company formation in China is easier.
You need to check the taxation rates. In China, every city has its taxation rates. It is advisable to be well aware of the tax rates of different cities. Business people often consider setting up their business in China due to the low individual and corporate taxes. According to the laws of China, a corporate bank account is a necessity for every individual who intends to open a business in the country. There is no limitation on what bank you need to use.
Every business person whether foreign or local is required to follow the law. You should never be swayed to set up illegal business just because you are in a foreign country. At times it is hard to tell the corporate legal laws in China since they are first published in Chinese. When setting up a business where you are advised to have local experts or lawyers to help you with the details.