How to Set Up a Sole Proprietorship in Hong Kong and Liability

A sole proprietorship is the simplest structure: one individual runs the business in their own name (a trade name is allowed).

How to set up

1. Apply for business registration with the Business Registration Office of the IRD, within one month of the business starting. Sole proprietors can apply online through GovHK.
2. Pay the business registration fee and levy for a 1-year or 3-year certificate (HK$2,350 for a one-year certificate from 1 April 2026 to 31 March 2027).
3. Display the certificate where the business is carried on.
4. Check whether your trade needs a separate licence (food, education, money lending and others). The certificate is not a licence to trade.

Liability The proprietor and the business are legally the same person. If the business cannot pay its debts, creditors can pursue personal assets without any cap.

Good to know

• You can hire employees.
• Changes of business name, address or nature, or stopping the business, must be notified to the IRD within one month.
• Very small businesses may apply for exemption from the fee and levy if average monthly receipts stay under the IRD limits (HK$10,000 for service-based businesses, HK$30,000 for others), but local companies cannot use this exemption.
• Raising outside investment is harder than with a company.