There are tons of guides on how to open a Hong Kong company (we have ours here), but not many on what to do after you’re all setup. Banks, money flow, invoices, customer handling, today we will give some important tasks you should do once you establish your business. While we’re focusing on Hong Kong in the guide, this can be for your company anywhere in the world.
Get The Bank Account Up and Running
Our Global From Asia blog is always talking about banking! We have a famous post covering all the experience I had visiting over 15 banks.
Yet we can all agree, if we’re doing business in today’s world – we need a bank account! To truly separate your business transitions from your personal – you need a company account. So apply, and make sure it goes through.
Once you have that, then your customers can pay you there, you can withdraw your Paypal funds there, and integrate your merchant account. Basically, until you have the bank account, you don’t have a business.
Though some who aren’t able to get the bank account right away get by with just Paypal, or cash – this is less than ideal.
Setup Your Business Paypal Account
So now that the bank account is up and running, time to get a new Paypal account. Sure, you may have a Paypal account already open in your personal name or in another business name, it is best to start with a fresh account for your Hong Kong company.
We have a complete Guide to opening and operating Paypal in HK here so check out.
So like the bank account, once you get a new Paypal account for your HK company, you can separate your personal account or your old business account from this newly established limited corporation.
Get a Merchant Account
A big challenge people have been faced with is merchant accounts. This is because banks still see online processing in Asia as higher risk than back in USA. We have a full list of merchant accounts you can look into.
But you may not need a merchant account. If you’re selling B2B such as import and export from China to the world via large orders – you won’t want to accept credit cards for that transaction. You would simply have clients pay you via wire transfer to your business bank account.
Yet if you’re doing e-commerce or selling online goods of any kind, it is best to be able to accept Visa and Mastercard.
In the meantime, you can get by with just a Paypal account. Luckily they are pretty flexible for new business startups and can apply and get approved immediately. Just make sure to keep good record of your transactions and be careful of any chargebacks or disputes.
Get a Business Credit Card (or Debit Card)
Now you can decide. Hong Kong isn’t the best for credit card points and miles. But the main perk of getting a business card in Hong Kong is that you can have all your expenses automatically go to this company.
It is worth noting you need to apply for a credit card separately from the business bank account. Hong Kong’s bank cards don’t work as debit or credit cards, they only work for offline purchases within HK borders. You need to specifically ask the banker you want a credit card that has Visa / MasterCard logo on it.
Doing this after you open the bank account is possible, but if you live outside of Hong Kong it is very painful to do remotely. Its best to come in and apply in person. We do offer this service to help you, as part of our bank account opening assistance program.
Get Your Company Books in Order
If you’re not taking care of your books, then you’re not taking care of your business. As a company owner and director, it is you duty to keep the accounting in order. Back to Spiderman memories “with great power comes great responsibility” and the same holds true by having a company in Hong Kong. This is a great chance for you to grow your international business, and you need to keep it in order. Believe me, I understand how overwhelming it is, to start and also to keep up with. At least write notes in a dedicated notebook about what transaction is what. Why? If you rely on your memory and HSBC Hong Kong bank statements, you will be a bit stressed out one year later when your CPA asks you what this transaction for 500 bucks is, and that one for 800 bucks is. At least have an Evernote folder with notes and dates and transaction details. Though the best way is to get setup on an online accounting software. We’re an official Quickbooks Pro Advisor and can help you get setup there, and also offer monthly bookkeeping services to keep you on top of the business flow. So entering transactions can be outsourced or hired – but the critical part for you as the owner and director is to look at the financial statements. Understand what the big income is, what is losing money, where you are spending too much, etc. Tweak and learn, this is what a business owner does.
Have Your Customers Pay You In This New Account
So once you have the bank account going and the other financial tools you need, time to get the money coming in. If you’re doing B2B, then most likely they will be wiring money to you bank account via Telegraphic Transfer (TT). Add this bank information to your invoices and now this sale is a business transaction.
All transactions in the business account will be for business. No longer will you mix your personal dealings with customer sales.
If you have a merchant account, then that is something you don’t really need to tell your customer about. They checkout online and then the merchant bank deposits the sales.
If you’re an Amazon seller, setup something where the funds are directly deposited to your business bank account. Depends on which country you’re registered as a seller, and there may be some international wires involved to get it finally to your business account – but this is where you center your business.
So going forward, all your business sales and transactions will go to this new company bank account. Try your best to stop using your personal or old business Paypal, bank account, etc.
Step Back and Look At Your Business Flow
Do you have more than one company? Planning to keep them all open? This is where things get pretty complicated. Take a step back, draw things out. Where are customers paying you? Where are your paying your suppliers and other expenses?
I used to have companies in various countries, but it is seriously a headache. Simplifying not only reduces headaches, but it also helps you increase your productivity.
Sure, you may have your reasons, maybe for credit card points, for Amazon, for a merchant account. Some people complain that Asia’s merchant account rates are about 4.5% vs USA company’s 2.3% rates. Sure, that is true, but is that worth you keeping multiple companies?
So draw out your business flow, where your money is coming in from, where it is going out to.
Put An Intellectual Property For the Business into The Company’s Name
Now for the less direct financial items. Domain names, hosting accounts, trademarks, contracts, etc. I love the hustling bootstrapper who does whatever it takes to get his or her business off the ground.
And yes, it is messy.
But once you get a proper company setup, you should also move all that value there too. These intangible items one cannot see, but you want to make everything legitimate. They can be things like:
* Domain Names
* Books, eBooks, content
* Customer lists, databases
* Customer contracts
The list can go on and on. And things can get sloppy if you have a few business owners operating things. So list everything out. Think like an investor or owner of the company and separate your personal self. What would an investor want to make sure the company had rights to?
Then the big question is, how do I transfer ownership from my personal name or my old company to this new company? This is best answered by an IP lawyer, but the main point is to document this.
These are assets you are putting into the company. What is the value of them? What is fair market price, what would someone else pay on the market to get them? This can be a topic on its own, the main idea is to write a formal agreement for the transfer.
Yes, you will need to sign as yourself as both the buyer and seller. But this is what tax authorities and governments want to see. And if it is ever questioned or scrutinized, you can show them these agreements.
Once you have the agreements, you can setup another Godaddy account for the company domains and transfer them over there. Keep your personal domain name in your old account, and feel refreshed that you have separated your business domains from your personal domains.
Governments have a long way to go to catch up on how to value a domain name as an asset, and if you’re still just starting out most likely its not worth much – so I wouldn’t sweat this too much. If you’re really concerned, have a chat with a trademark lawyer.
Physical Assets A bit Different
Also, its worth noting that I am discussing this as if I am talking to an e-commerce or online business owner. If you’re a real estate business, then you have a set of different problems and its not as straightforward. But still, it’s about who “owns” the deeds to those real estate assets and transferring the ownership. Physical assets are more closely monitored by government bureaus, as it is a more mature market and has a liquid value.
Have Full Time Staff?
Employing people full time? Well that must be hard if you don’t yet have a company! Now that you have a company, make a freelance contractor agreement, or give them a full-time employee contract. From your company to them personally.
Are they working locally in Hong Kong? Then most likely it will need to be a proper full time employment contract. That means taxes and benefits, the whole 9. If they’re working remotely, depends if they want to have the benefits in the country they live in, but this gets to be a global tax issue.
I’m assuming the bootstrapping entrepreneur reading this is still just paying people part time and per project. If you have any kind of agreement, then move it to the name of the company. Make it clear to these team members that they are working for the company now, and try to also get them a bit excited!
A new company is exciting for everyone! New opportunities, new growth – let them buy into the dream that they can make a difference.
If you have a company already and they are working for that company full-time, in another country – it will be pretty tough to switch them over. Or are they moving internationally? If you have local staff in a certain country, you may need to keep that company open and operating in order to fulfill your duties as an employer.
Yet today’s modern internet entrepreneur knows about sites like Upwork, and simply hires people through the platform and pays per hour or per project. Yet if you really want them to be fully dedicated to you, with a contract and non-compete, non-disclosure, it is best to hire them on as a full time employee.
Main Point – Business is Money Flow + Assets
So hope today’s guide kicked off your formal start for your business. Really, the main parts are the flow of cash in and out of the business and then the intangible assets such as customers and brand.
The secondary reason for a company is to hire people, legitimately. To pay the local taxes and benefit schemes so that the employees have proper protection in the country. The more I think about it, the more I think we need some radical change in all these systems – but for now, a full-time employee needs to receive their government benefits and pay their proper taxes.
And this is what a business is – money (sales), assets (brand, code, real estate, customer database), and a team (employees). I like the acronym CEO to stand for:
C = Customer
E = Employees
O = Owners (shareholders)
And that is what a business is!
I wish you the best on getting your Hong Kong company up and running. We offer a full range of support services and upkeep packages, and if you like this article and want to support, picking one of them will help us greatly – check it out.