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.
The main options, in plain terms:
- Sole proprietorship: one individual trades in their own name. Simple and cheap to start, but you are personally liable for all business debts.
- General partnership: two or more people carry on business together. Each partner can bind the others and partners are jointly and severally liable for the debts.
- Private company limited by shares: a separate legal person. Shareholders risk only what is unpaid on their shares. It costs more to set up and has ongoing filing duties (annual return, registers, changes).
- Branch or representative office: only for an existing overseas company. A branch is not a separate legal entity; a representative office is limited to liaison or research and cannot trade for profit.
A sensible way to choose:
- Will you take on credit, leases, staff or customer contracts that could exceed your savings? If yes, a company usually protects you better.
- Will you bring in investors or want to sell the business later? A company's shares are far easier to transfer.
- Do you need a bank account, contracts or tenders that expect a company? Many counterparties do.
- Are you willing to meet the filing and record-keeping duties?
Whatever you choose, the business must hold a business registration certificate from the Inland Revenue Department. Tax differences between structures are covered in the profits tax section and are not discussed here.
Legal basis
- Business Registration Ordinance (Cap. 310)
- Partnership Ordinance (Cap. 38)
- Companies Ordinance (Cap. 622)
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
- 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.
- 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.