Q: How do I Become a Sole Proprietor in Hong Kong?
Learn about what you need to work as a self-employed freelancer in Hong Kong.
Boasting one of the world’s freest economies and some of the highest concentration of wealth in the world, Hong Kong has emerged as a cultural and economic powerhouse in the last century with over a million registered companies.
As its own independent government, Hong Kong actively takes progressive steps to attract global talent. In fact, the government passed the Limited Partnership Fund Bill in July of 2020 to attract venture capital and private equity to encourage investment into corporations and start-ups focused on technology.
Are you ready to start a sole proprietorship and bring your skills to Hong Kong’s competitive and lucrative marketplace? Here, we’ll explain everything you need to know to get your feet wet, establish yourself as a sole proprietor, and help you get to work. The information here should not be used in place of legal counsel.
What is a sole proprietor in Hong Kong?
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A sole proprietor is an individual who is self-employed and does not work as an employee for someone else. The great thing about becoming a sole proprietor is that, unlike incorporating, you can benefit from a simple registration process and streamlined filing. The downside, however, is that you will be personally liable for any debt that the business has accrued.
How do I become a sole proprietor in Hong Kong?
While it may sound like you’re getting ahead of yourself, the first thing you’ll need to do is start working. Only after you’ve started your business will you be able to register yourself as a sole proprietor with the Inland Revenue Department’s Business Registration Office. You can choose to register your new business with a Chinese name only, an English name only, or both Chinese and English names. Your business will be given an initial registration of either one or three years, after which you’ll be required to renew it.
To register your business, you’ll need:
- A copy of your passport (if you’re not from Hong Kong) or a copy of your Hong Kong ID card
- A completed application form
If you are already in possession of an eTax account, a MyGovHK account, or an iAM Smart+ account, you can complete your registration online.
Some types of businesses will also require you to acquire a business license. These include restaurants, travel agencies, educational institutes, employment agencies, financial services, retail shops, trading companies, financial services, and event management.
What kind of taxes will I have to pay as a sole proprietor in Hong Kong?
As a self-employed person, you’ll be required to pay 15% of your profits to the Inland Revenue Department on an annual basis. If your gross income is greater than HKD 500,000, then you’ll need to include a pro forma tax computation and a certified copy of your balance sheet when you submit your tax return.
Receiving Payments in Hong Kong via Liquid
Liquid supports payments to Hong Kong and 175+ countries worldwide in USD as well as select foreign currencies, including HKD. Payments arrive in 2-5 business days via wire transfer, whether the invoice was sent to an existing Client using Liquid or a Client who is new to Liquid.
Invoices in Liquid are in USD by default but can also be sent in Hong Kong Dollars, Euros and other select foreign currencies, allowing Vendors to receive payment in their local currencies instead of USD. In addition, Work orders / Project Proposals can also be agreed to in HRK, EUR, and other select foreign currencies in Liquid.
Liquid charges Clients who initiate payments $3 per US invoice paid and $8 per international invoice paid.
Liquid never charges Vendors to receive payments, even when Vendors are requesting payments from Clients who are not current users of Liquid.
Now you’re ready to start making money in Hong Kong!
That’s everything you need to become a registered business as a sole proprietor. Now you’re ready to open a bank account and build your brand. As long as you renew your business registrations on time and file your tax returns, being a freelancer in Hong Kong should be smooth sailing.
Ready to invoice your United States-based clients? Try Liquid today.
Updated: June 10, 2021
Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.