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The Hong Kong sole proprietorship
The sole trader in Hong Kong, also known as the sole proprietorship, is a type of business entity that is suitable for small-scale businesses, essentially those managed by only one individual. Unlike other business structures in Hong Kong, the sole proprietorship does not offer protection of personal assets. All that the entrepreneur invests in the sole trader can be lost if the business needs to be closed down. However, despite this inconvenience regarding the invested personal assets, the sole trader is the best option for some entrepreneurs.
Our Hong Kong lawyers can help you with the registration procedure if you want to open a sole trader in Hong Kong and can also tell you more about the owner’s liability and how it is best to proceed in some cases.
Key features for a sole trader in Hong Kong
One characteristic that differentiates a sole trader from other business types in Hong Kong is that this form of business is not considered a legal entity and it and its owner are one and the same. Thus, the sole proprietor is the one liable for all and any debts and liabilities.
Taxation for sole proprietorships in Hong Kong has a value of 15% of their assessable profits. The business owners must file an annual tax return and submit it to the Inland Revenue Department. Our Hong Kong lawyers can give you detailed information about taxation for companies in Hong Kong as well as taxation for individuals.
Foreigners who want to open a sole proprietorship in Hong Kong can use the services of a Hong Kong company formation firm that can register the business on their behalf. Also, foreigners who choose to invest in Hong Kong using a sole proprietorship should obtain an investment Visa. Our law firm in HKcan offer you special services if you want to relocate to Hong Kong.
We also invite you to watch the following video for more details on the characteristics of the sole trader:
Registration procedure for sole traders in Hong Kong
Any sole proprietorship in Hong Kong needs to be registered at the Inland Revenue’s Business Registration Office. Before submitting the registration documents, the investor must choose a suitable business name, either in English, in Chinese or a combination of the two languages. The required registration documents are a completed application form, a Hong Kong identity card for resident applicants or a copy of the passport or ID card for non-resident applicants.
As a sole trader you will be able to engage in your specific profession or trade and you will be able to apply for residency in Hong Kong. Understanding the mandatory requirements for obtaining his status as a Chinese or a non-Chinese national is an important step. Our team can help you with the application for the right of abode that needs to be submitted to the Director of Immigration. Sole traders who are interested in immigration in Hong Kong can reach out to our lawyers.
According to the business field in which the sole proprietor will start its business activities he or she may require additional business licenses. For example, restaurants in Hong Kong, travel agencies or import and export businesses will require additional permits and licenses in order to become operational.
For more information about sole proprietorships in Hong Kong as well as many other legal services, please do not hesitate to contact our Hong Kong lawyers.