Setting up a company in Hong Kong is said to be quick and easy. It is. However, the real work starts when you get your Certificate of Incorporation. This is the area where most founders fail. It takes time, money, and discipline to remain on the right side of the regulators.

But worry not. We will inform you of what facilitates smooth operations.

Hire an auditor

Employing a Hong Kong-licensed auditor is one of the initial obligatory measures following incorporation. Hong Kong does not give exemptions to small companies, as some jurisdictions do. All companies are required to prepare audited financial statements.

Even if your company is dormant or has not yet earned income, you still must appoint an auditor and prepare some accounts annually. This means that you must keep a good bookkeeping record since the beginning:

• Bank statements
• Invoices
• Contracts
• Expense records.

Procrastinating on this process can lead to undue stress when the tax season comes.

Remit profits tax and ongoing filings

Once incorporated, your first Profits Tax Return will be issued by the Inland Revenue Department. This normally takes 18 months. Thereafter, filings are annual. You must provide audited financial statements along with your tax return, even when your company records losses.

Besides tax filings, you are also subject to corporate maintenance requirements, including:

• Annual returns to the Companies Registry
• Uptodate statutory records.

Failure to meet deadlines could result in fines. In severe instances, directors may be prosecuted.

Comply with MPF hiring requirements

If you intend to employ a worker in Hong Kong, even one employee, you are required to enroll in a Mandatory Provident Fund (MPF) scheme. It is a mandatory retirement system in Hong Kong, and both the employers and employees must contribute.

Registration under MPF should be done within 60 days of hiring your first employee. It is also your duty to make monthly contributions and keep good payroll records. This is required whether the employee is full-time, part-time, or locally employed under a small team arrangement.

Acquire special licenses and permits

Registration as a company does not in itself grant you the right to conduct business in any sector. Additional licenses or permits may be mandatory depending on your business activities. Some typical examples are:

• Trading firms dealing with regulated products
• Education providers
• Money and financial services
• Food and beverage establishments
• Some online businesses.

Before you start operating, you are supposed to find out and acquire the appropriate licenses. Working without the approvals may lead to fines, further closure, or future trouble with banks and regulators.

Ongoing compliance

When such obligations accumulate, most founders discover that post-incorporation compliance is a continuous operational cost. Many of them prefer to hire company services in Hong Kong for ongoing compliance. Professional providers normally assist in the areas of:

• Company secretarial work
• Audit coordination
• Registered address services
• Bank-account opening
• Regulatory filings.

Although optional, this support assists in meeting deadlines and administrative requirements as your business continues to grow.

The bottom line

There is a cost of operating in a well-regulated business environment like Hong Kong. The sooner you know these responsibilities, the more prepared you will be to manage your company effectively