Advantages and Disadvantages of incorporations in Hong Kong
Incorporation is a term defined as "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of the law". With the term properly defined, we will further state that incorporations are made up of shareholders. A share holder is one who has bought a specific number of shares from the company and enjoys the benefits of profit or suffers in the loss if there are any. The normal pre-requisite is that there are at least two share holders. To enjoy the benefits of share holders, you will have to buy a specific amount of shares as deemed necessary by the corporation.
Advantages
Having your business incorporated in Hong Kong means that all incorporations are legal bodies. The advantage is that you can sell or buy shares at any time. The buying or selling of the shares does not hamper the operations of the corporations. Daily business activities go on as if nothing has happened.
Another main advantage of incorporations is that they all belong to a class known as limited liability. This means that in case of a loss that is being suffered to the corporation, the only loss that the shareholders will have to suffer is the amount that they have invested. The reason for this is because the creditors cannot claim losses more than the assets of the corporation.
Management is seen to by the shareholders of the corporation. The shareholders appoint directors to represent them. These directors see that the policy and the regulations are being followed by everyone. They are also there to see to the progression of the daily affairs of the business.
The best part of getting your business incorporated is that you won't require a local registered agent. This is normally a requirement that needs to be fulfilled in certain Caribbean countries.
All profits made internationally will not be taxed as long as it is booked and structured in a non resident Hong Kong company.
Hong Kong is home to one of the best multi currency banks with the best corporate facilities. So the advantage of having one of the best banks in the world to look after your financial affairs is a real blessing.
Disadvantages
It is sad to say that the disadvantage that sits on the top of the list is the issue of tax. The taxes that you will be paying will be to the federal government. Since you will be incorporated, you won't be treated how sole proprietorships and partnerships are treated.
The other tax issue being a disadvantage to most incorporation is double taxes. First, the corporation pays on the total profit made in a certain period of time. The Shareholders are also taxed when they earn profits.
Hong Kong does not have a good support for double taxation treaties.
