Owning, managing and running a small business can be a risky venture for many startups or even experienced entrepreneurs. One of the best practices to minimize any personal liability is to incorporate your business.
Incorporating a limited company requires paperwork and some small expenses, and is more complicated than simply setting up a sole proprietorship or a partnership, a limited company offers important legal and tax advantages.
Going through all the paperwork and documents all by yourself can be troublesome and complicated. This Hong Kong company registration service (Prism Consultancy) provides the type of one-stop services which include not only registering your limited company, but also:
- Company secretarial service
- Registered office address
- Bank account opening
- Virtual office service
- Serviced office rental
- Accounting, auditing, tax filing, and payroll services
- Employment visa applications
The immediate question is should you incorporate a limited company, especially in Hong Kong (HK)?
Reason 1: The combined factors
For many years, Hong Kong has been recognized as a successful business center where it includes factors of being the ideal location, internationally well-known, trustworthy political environment and economy, low tax system, business friendly environment, a world-class infrastructure, solid legal system, and more.
Reason 2: Personal Assets Protection
To protect your personal assets, the best way is to incorporate your business.
- A corporation can own property, conduct business, incur liabilities, and sue or be sued.
- A corporation is responsible for its own debts, as it is as a completely separated legal entity by laws.
- Any creditors of your corporation can seek payment only from the assets of your corporation, but not from the personal assets of yours, shareholders, or directors.
- This puts the business owner in a great advantage as he/she can conduct business without risking his/her homes, cars, savings, or other personal property.
When you compare this to an owner of a sole proprietorship or partnership, he/she would face unlimited liability for both business and personal assets. In most cases, this puts anyone in a very complicated situation.
Reason 3: Incorporating your company makes it easy to access capital
When raising capital, it is usually a lot easier through a corporation in which it can issue shares of stock. When you are facing a bank, the bank would prefer lending money to a corporation than to any unincorporated business ventures. This lets your startup grow and develop with less complication.
Reason 4: It improves credibility of your business
Besides money lending or finances, your vendors, suppliers, customers, and business partners would perceive your corporation as being a more stable and more credible entity than those unincorporated businesses. In the perspective of psychology, they would see you being more committed to the daily ongoing success of your business venture.
Reason 5: Stay Anonymous
In some cases, the owner prefers privacy and wants to stay anonymous. i.e. You just want to open a small business and do not want all the public spotlights to reflect your involvement in the company, an incorporated company can offer the anonymity.
Reason 6: Business structure allows perpetual existence
Having a corporation, you can continue running business indefinitely, regardless of what happens to individual directors, managers, or shareholders or your company. An incorporated company provides great endurance to legal business structure.