Company formation is the process of setting up (registering) a company as a limited liability company. When this happens, the company becomes a separate legal entity; individual “face” in the eyes of the law. Essentially, this means that the business is entirely different from its owners in terms of investments, liabilities, contractual negotiations, and ownership of assets and property. Several organizations go less on Hong Kong company formation fee.
Benefits of forming a corporation
Corporations give limited liability assurance to their owners (who are called shareholders). Usually, the owner is not personally liable for the debts and property obligations of the business. As a result, creditors cannot claim the owner’s assets, such as a house or car, to pay off business debts. Conversely, in sole ownership or general partnership, the owner and the business are considered legally equal, and the personal property gets used to pay for the business debts.
Companies often receive tax benefits such as a deduction of health insurance rebates paid on behalf of a self-employed person. Savings on self-employment taxes, since business income is not subject to taxes on social security, workers’ compensation and medical care; and deduction of other expenses such as life insurance.
- Transferability of ownership
Ownership of a company is usually easily transferable.
The life of a corporation does not depend on its owners. The corporation has the property of infinite existence, which means that if the owner dies or wants to sell his shares, the company will continue to exist and conduct business.
Capital can be increased more easily by selling shares. In addition, many banks, when granting loans to small businesses, want the borrower to be a registered business.
For setting up a company, a Hong Kong company setup price generally varies from place to place and company you register.