Talking to a business and they want your business license?
With a Hong Kong company, there are quite a few different pieces of paper, but the most common one to send them is the BRC, business registration certificate.
Today we’ll explain what it is, and how to use it!
Get A BRC When You Open Your Company
When you open a Hong Kong company (if you haven’t yet, please consider our HKVIP service), you will be issued a business registration certificate.
It will show your company name, the address in Hong Kong, and the date of validity. The number you may not pay attention to, but is key here, is the BRC number. It’s a long one, and it connects to the Hong Kong IRD (Internal Revenue Department). When you file your taxes, they will ask what your BRC number is.
Anyone with the BRC number can do some research in the Hong Kong government database to find out what the company name is, and if they pay more fees, the owners and other tax paying history.
Business Registration Certificate Allows You To Do General Business
So what is this BRC? Basically, it is the authority from the Hong Kong government to do business in Hong Kong. General business, which is of course a wide range definition. The BR stands for the Business Registration department of the Hong Kong government, and this license is the main paper they issue.
Many people get caught up with thinking they need more business licenses for importing and financial and tourism, etc. But at the beginning of your business, you can start with this BRC and “get by” for most things. Many times you can leverage other businesses in Hong Kong for their license on importing or other specialized services, and pay them a small fee.
I recommend this way first because as a startup, you need to be cautious on how you invest your money and only when you are 100% sure that you will use this exact business model long term.
BRC Renews Each Year
The Business registration certificate lasts for 12 months. After that, the government will automatically mail you a new one, but ask that you pay the renewal fee.
The renewal fee has been slowly increasing over the years.
You can choose to pay for a 1 year renewal or a 3 year renewal. The rate per year is the same, just paying 3 times as much. So why would someone want to do three years instead of just 1?
A few reasons.
1. It protects them from any BRC renewal rate increases over those years.
2. They don’t need to worry about forgetting to pay the fee each year.
3. Less admin
4. Work mostly in USD and just want to make your local payments in HKD as little as possible for your accounting.
Yet at the same time, just staying to renewing each year is beneficial if:
1. You’re not sure how long you will keep your business open
2. You don’t have extra cash on hand.
3. You don’t mind paying a hundred or so USD more in a year or two if that happens.
So the choice is up to you. But in my experience, most people just stick to the year to year renewal.
Hang It In Your Place Of Business
Local businesses are required to display this BRC at their premise for consumers to see. You can put a small glass frame and hang it behind the cash register.
This will assure customers and business partners and employees this is a legitimate business that has registered and is current with the Hong Kong government.
Officials may also spot check at places of business and look for it. Offices are not as strict to show it, but it does build trust with your visitors. You should at least keep it handy onsite in case it is requested.
A Valid and Recent BRC Confirms You’re “Legitimate”
When I first had my Hong Kong company running in 2008, about a year later I applied for a business account with a merchant account, I think 2checkout. They asked me for my business license, and I scanned in the original BRC I had in my green box.
They replied to me that it was expired, and yes, it was!
I was so clueless, so I asked my agency and they told me it was renewed and they emailed it to me. I searched and found it. I then made sure I put this in my online file folder with my other corporate documents and was ready when needed.
You won’t be using this too often, just when applying for banking or “close” business relationships where they want to do due diligence on your company background. But when it comes up, it’s best to have it in your file folder with your other Hong Kong company documents.
Forgot to Pay? Penalties Pile Up
Again, with a Hong Kong company, you can’t just skip paying the fees and the company goes away. You need to keep this current.
Not only will potential business deals not go through when they ask for a current BRC, but your company will be flagged at the tax department.
This is why you need to make sure that your Hong Kong address information is up to date at the BR department (business registration) so that you get immediate notification when the certificate is renewed and you need to pay it.
Just Keep This Renewal Fee on Your Calendar
It’s best to just budget for this business registration certificate by putting a calendar reminder every 12 months. By having it as an expected cost and admin task, you won’t run the risk of the HK agency receiving your mail to miss it, or other issues.
Just keep in mind, the CI (Certificate of Incorporation) is not renewable, that is from the CR (Company Registry) and this BRC is renewable each year.
The other government fee each year is the NAR1, or the Annual Return. This is a small fee that your company secretary will normally take care of when you renew your term with them (interested in using our company secretary services, check out our plans).
Get It? BRC Is Proof Your Company Is Current
Hope today’s guide clarifies what this fee is for. Again, Hong Kong is a first class jurisdiction and unlike BVI and other “island” it has an established and responsible government that ensures all companies renew their licenses each year.
It is also worth noting that if your company gets any kind of complaints, savvy business people or even end consumers could report you to the BR department.
Are you up to date on your BRC? How often have you had to show it when applying to open an account at a business? Normally it is just for financial companies like banks and merchant accounts, but really anyone can ask for it.
To our mutual international business success!