How do I set up a sole proprietorship in Hong Kong and what is my liability?
Register the business with the Inland Revenue Department's Business Registration Office within one month of starting trading. There is no separate legal entity, so you are personally liable without limit for the business's debts.
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
- 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.
- Pay the business registration fee and levy for a 1-year or 3-year certificate (see the fee question in this section).
- Display the certificate where the business is carried on.
- 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.
Legal basis
- Business Registration Ordinance (Cap. 310)
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Which business structure should I choose in Hong Kong: sole proprietorship, partnership or limited company?Hong Kong offers sole proprietorships, partnerships, limited companies and, for overseas firms, branch or representative offices. The main trade-off is liability: a sole proprietor or general partner is personally liable without limit, while a limited company's members are liable only up to unpaid share capital.
- How does a partnership work in Hong Kong, and what is a limited partnership?A partnership is two or more people carrying on business together for profit. In a general partnership each partner can bind the others and all are jointly liable for debts. A limited partnership has at least one general partner with full liability and limited partners liable only up to their contribution.
- What is a private company limited by shares in Hong Kong and why do most businesses choose it?It is a separate legal entity whose shareholders are liable only for any unpaid amount on their shares. It is the most common vehicle in Hong Kong because it protects personal assets and makes ownership easy to transfer, in exchange for statutory filing and record-keeping duties.
- Should an overseas company set up a branch, a representative office or a Hong Kong subsidiary?A branch is the overseas company itself trading in Hong Kong and must register as a non-Hong Kong company within one month. A representative office can only liaise or research, not trade for profit. A subsidiary is a separate Hong Kong company that ring-fences liability.
- How do I incorporate a limited company in Hong Kong, step by step?Pick a name, then file Form NNC1, the articles of association and the business registration notice (IRBR1) with the Companies Registry, usually online through the e-Services Portal. Once the name clears and fees are paid, a certificate of incorporation and business registration certificate are issued together.