Should I Register Company In Usa Or In Hong Kong

Desire to Class a Hong Kong Company? Read this Starting time

Operating through a Hong Kong company comes with several hassles, and its benefits are minor to non-real for most expat entrepreneurs. A company in an easier jurisdiction (like Belize) would most likely work much improve for y'all.

This article is for "expat entrepreneurs" and "digital nomads"–Usa citizens who live outside the United states and operate a location-independent business.

For folks running in sure circles, forming a visitor in Hong Kong seems to exist the trendy thing to do. But how does a Hong Kong company compare to forming a company in a place like Belize? Go along reading and we'll dig into the details.

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No Usa Revenue enhancement Divergence

The Us tax consequences of operating through a Hong Kong company are identical to the US tax consequences of operating through a company formed in any other state. For US tax purposes, a not-US corporation is a non-US corporation.

Run into this article for an overview of the United states of america tax aspects of operating through a non-The states corporation.

Hong Kong Hassles

When yous operate your business through a Hong Kong company, you have to put up with several hassles:

The company must have a visitor secretarial assistant in Hong Kong. This costs money and is just a little weird (i.eastward., someone you don't know is an officer of your company).
The company must have annual audited financial statements, which must be prepared in accordance with Hong Kong accounting rules. This costs money and is a hassle every single year.
The company must accept a virtual office. This costs coin and is another step in the set-up process.
The visitor is nominally subject to Hong Kong tax. To avoid Hong Kong's 16.5% income tax tax, Hong Kong companies that don't accept income from Hong Kong can utilise for an exemption.

All of these Hong Kong hassles are used as acquirement generators by low-price Hong Kong incorporators. If y'all find a sweet bargain on forming a Hong Kong visitor, y'all can bet y'all'll pay out the olfactory organ for a virtual office or audited financials.

The Ease of Belize

By contrast, when you form a company in Belize (or one of the similar Caribbean jurisdictions):

No local officers. The visitor is non required to accept a visitor secretarial assistant (or whatsoever other person in Belize connected with your company). Y'all're the sole shareholder and sole director, and that'south the end of it.
No audited financials. The company is not required to submit (or even prepare) annual audited financial statements. Of course, you should all the same have solid accounting processes in place, simply you can practise that all the same you lot'd like. Y'all aren't required to fix financial statements in accordance with any Belize rules or pay several thousand dollars to take them audited by a Belize accountant.
No virtual office. The company is not required to accept a virtual office in Belize.
No Belize tax. The visitor is explicitly complimentary from Belize taxation past police force. Y'all don't accept to utilise for a tax exemption or worry about the source of your income. Belize companies are simply non bailiwick at all to any Belize tax.

Hong Kong "Benefits"

Then, forming a Hong Kong company is painful in several means. What do yous really get in return for all that hurting?

If your business is a startup (every bit opposed to a lifestyle business), forming your company in Hong Kong may give it some legitimacy. It shows that you're willing to leap through some hoops to fix your legal structure and you're willing to deal with the rules in a "first-world" jurisdiction. (By "startup" I mean a growth-focused business with plans for venture capital funding and/or an IPO go out. Past "lifestyle business" I mean a cashflow-focused business organisation that you'll own until y'all sell information technology or current of air it down.)
If you want to bank in Hong Kong, then forming your company in Hong Kong allows you to do that. Hong Kong banks generally don't open accounts for companies formed outside Hong Kong.

That'southward it, folks. That's a complete list of the advantages of a Hong Kong visitor.

Notation that Hong Kong banking is going through a rather difficult period at the moment. Bank accounts are difficult to open, and so banks go far difficult to do business (e.g., by requiring you to submit proof of the concern activity underlying inflows and outflows). The "do good" of being able to bank in Hong Kong actually isn't much of a benefit anymore.

Similar this article? Click here to stay informed on the latest revenue enhancement topics for global individuals who live or invest abroad.

The Bottom Line

So, to summarize the higher up and add some additional info relevant to many expat entrepreneurs:

Operating through a company in Hong Kong does absolutely nothing for a lifestyle business that doesn't banking concern in Hong Kong. Some expat entrepreneurs seem to think that information technology lends their company legitimacy, but there's no one to show your visitor'south legitimacy to. No one even has to know that your business is held by a non-U.s. company. Using a Hong Kong visitor only for "legitimacy" is like staging a play with no audience—you lot're spending money to print no ane because no one cares.
It'southward not necessary for US revenue enhancement purposes (or any other purpose) to bank outside the US. Some expat entrepreneurs seem to think their non-US company will be discipline to United states of america tax if it banks in the US. This may lead them to open a Hong Kong company so they tin bank in Hong Kong. Simply this line of analysis is flawed from the outset—merely banking in the United states does not cause a non-United states of america visitor to be discipline to Us tax. Click here for more than item on how this works.

Some special structuring is required to open a United states banking concern business relationship under a not-US visitor, and it tin exist difficult to open up a US banking concern account without visiting the US in person.

If you're putting together a start-upwardly or you simply must bank in Hong Kong, then you go to deal with the hassle of a Hong Kong visitor. But there'south no demand to deal with those hassles for a lifestyle business concern that banks in the U.s.a. (or anywhere exterior of Hong Kong).

Don't believe the hype

Some people apply the jurisdiction of their offshore corporation as a vanity metric, or they research offshore jurisdictions as a fashion to seem busy and experience like they're "working on their business."

That couldn't exist any farther from the truth (and it's pretty distressing really).

If you lot really desire to get your business organisation started, you should really become your business started. The legal entity that holds your business organisation isn't your business concern; information technology's but i of the many start-up details you can knock out speedily if you lot get the right assist.

But get it done and get on downwards the road

In The 7-24-hour interval Startup, Dan Norris shows why yous should start your business as quickly every bit possible, ideally in just seven days. You'll larn how to run your business organisation only after y'all launch, so yous should launch as quickly as possible instead of going down all sorts of rabbit holes in the setup procedure.

Dan advises founders to spend one of the seven start-upward days on the legal structure for your business organization. That'southward why I created Revenue enhancement-Savvy Expat: Entrepreneur. The course is a complete resource that allows you to create the best legal structure for your business concern. You could easily go through the whole course and get your legal structure up and running in a unmarried twenty-four hour period.

If you're stuck in the "which offshore jurisdiction is best?" rabbit hole, Tax-Savvy Expat: Entrepreneur is your ladder to freedom. Click here to read more.

Ready to become an expert on this stuff? Click here to take the Usa Tax Masterclass for Americans Away (absolutely free).