Can I Close My Business for Free?

a22162
9 hours ago
14 min read

Closing Business in Hong Kong: Costs

Closing a business in Hong Kong is rarely "free" in the absolute sense, but it can be surprisingly inexpensive if you manage the process yourself. While professional agencies might charge between HK$3,000 and HK$10,000 for the service, the mandatory government fees are much lower.

Can I Close My Business for Free?

The short answer is yes. Bestar Hong Kong handles all the paperwork and pays fixed government administrative fees to the Inland Revenue Department (IRD) and the Companies Registry (CR).

For a Limited Company, Bestar pays the statutory filing fees.

The Free Services

Bestar literally provides our labor and the government fees for $0.

What Bestar Covers

If our firm is handling the process for you, we are taking over the "Heavy Lifting" that we outlined in the checklists. Here is what we are actually doing:

1. Paperwork Management

Drafting the Board Resolutions and Shareholder Minutes.
Filling out Form IR1223 (NNO) and Form NDR1 (Deregistration).
Acting as the "Nominated Person" to receive legal correspondence from the Registry.

2. IRD Liaison

Responding to the "Query Letters" we will mention in the upcoming tax checklist.
Checking your tax portal to ensure no "ghost" penalties are blocking the application.

3. Statutory Compliance

Ensuring your Annual Return (NAR1) is filed right before the application (the Registry will reject a deregistration if you are even one day late on an annual filing).

A Note on "Fixed Government Fees"

The government fees are statutory and non-negotiable. If Bestar says we "pay" these for you:

We are not billing you separately for disbursements.
We simply "absorb" the HK$795.
Audit Fees: Bestar does not include the cost of a "Final Audit" in a free package. Since the IRD usually requires a final audited report to issue an NNO, this can be a cost of HK$3,000–$8,000.

Summary Comparison

Expense	DIY Method	Bestar Professional Service
Service Fee	$0	HK$0
Gov Fees (NNO + NDR1)	HK$690	Not billed as "Disbursements"
Final Audit	Vendor Quote	An additional charge
Risk of Rejection	Moderate	Low

Bestar Hong Kong can Close Your Business for Free

Hassle-Free Business Closure with Bestar Hong Kong

Closing your Hong Kong company doesn't have to be a costly or complex burden. Bestar Hong Kong offers a comprehensive, end-to-end solution where we handle the entire deregistration process on your behalf.

What We Handle for You:

Complete Paperwork Management: From drafting board resolutions to filing the formal Notice of No Objection (NNO) and Form NDR1, our experts manage every document.
Government Fee Coverage: Bestar covers the fixed government administrative fees required by both the Inland Revenue Department (IRD) and the Companies Registry (CR).
Limited Company Support: For limited companies, we take care of all mandatory statutory filing fees, ensuring your business is closed legally and officially without any surprise out-of-pocket costs.

By partnering with Bestar, you ensure your company's "Final Return" is handled with precision, protecting your directors from late penalties and ensuring all legal obligations are met.

Comparison Table Showing the DIY Costs vs. the Bestar All-Inclusive approach to highlight the Savings for lients

To help our clients visualize the value of choosing Bestar Hong Kong, here is a comparison table that highlights the "Hidden Costs" of a DIY closure versus the "All-Inclusive" convenience of our professional service.

Deregistration Comparison: DIY vs. Bestar Hong Kong

Expense / Requirement	DIY (Self-Managed)	Bestar Hong Kong
Professional Service Fee	$0	Waived / Included
IRD "Notice of No Objection"	HK$270	Paid by Bestar
CR Deregistration (NDR1)	HK$420	Paid by Bestar
Document Preparation	You draft all Minutes/Resolutions	Handled by Experts
Final Annual Return (NAR1)	HK$105 (if on time)	Included / Managed
Risk of Late Penalties	Up to HK$3,480 per year	Zero Risk (Bestar Tracks Dates)
Post-Cessation Support	None (You handle IRD queries)	Full Representation with IRD
Time Investment	10–15 Hours of Admin	Minimal (Just Sign Online)
TOTAL OUT-OF-POCKET	HK$795 + Your Time	$0 (Standard Terms Apply)

Why Choose Bestar?

While the DIY route saves on service fees, it leaves you vulnerable to regulatory traps. Most DIY applicants fail because they forget to file the final Annual Return during the 6-month wait period, resulting in heavy fines.

With Bestar, we don't just "fill forms"—we absorb the administrative burden and the costs, allowing you to focus on your next venture.

Eligibility for the "Free" Package

To ensure a smooth, cost-free transition, your company should generally meet these "Defunct" criteria:

Solvency: No outstanding debts to creditors, banks, or the government.
Inactivity: No business operations for at least 3 months.
Clean Record: No pending legal disputes or unfiled tax returns from previous years.

Can Bestar Close Your Business for Free?

The "free" aspect refers to the waiving of professional service fees and the removal of government costs. In our "Free Deregistration" offer:

Bestar handles the paperwork: We prepare the minutes, resolutions, and statutory forms (NDR1 and IR1223).
Government Fees: Bestar "absorbs" the government (IRD and CR) mandatory payments.

The "Zero-Out" Costs

If Bestar manages your closure, here is the breakdown of what the "Free" package is covering versus what you should confirm:

Mandatory Requirement	Status in "Free" Packages	Actual Cost (HKD)
Service Fee	Waived	$0 (Promotion)
NNO Filing (IRD)	Absorbed	$270
Deregistration (CR)	Absorbed	$420
Final Annual Return	An Extra Charge	$105

Peer-to-Peer Tip: The "Free" offer applies only to dormant companies (those with no transactions). Active companies often require a Final Audit, which is a significant expense (HK$3,000+) that is never included for free because it requires a Certified Public Accountant (CPA) to review your books.

Why Use a Service Like Bestar?

The value of using a firm like Bestar lies in Risk Mitigation:

Avoiding Penalties: If you miss an Annual Return while waiting for the 6-month deregistration process, the CR will fine you up to HK$3,480. A professional firm tracks these deadlines.
Tax Clearance: We handle the "Query Letters" from the IRD, ensuring your Notice of No Objection isn't rejected due to a minor accounting error.
Asset Protection: We ensure your bank accounts are closed at the exact right moment so your balance doesn't become government property (bona vacantia).

Checklist: Is Your Business Eligible for Free Closure?

To qualify for a simple deregistration (the type Bestar can handle quickly), your company must:

[ ] Be solvent (no debts to suppliers, banks, or employees).
[ ] Have no assets remaining (all bank accounts emptied/closed).
[ ] Have no legal proceedings against it.
[ ] Have ceased operations for at least 3 months.

To verify if you qualify for a "Free" service package, would you like help to check your company's current status on the ICRIS (Companies Registry) database to see if there are any outstanding filings?

The Cost Breakdown (2026 Estimates)

If you choose the "Deregistration" route—the cheapest and most common way to close a defunct, solvent private company—your "at-cost" budget should look like this:

Requirement	Authority	Fee (HKD)
Notice of No Objection (NNO)	Inland Revenue Dept	$270
Deregistration (Form NDR1)	Companies Registry	$420
Final Annual Return	Companies Registry	$105
Total Mandatory Cost		~$795

Note: These fees are for a company with no outstanding debts or taxes. If you have missed previous filings, penalties can range from HK$870 to HK$3,480 per year.

Steps to Close Your Business at the Lowest Cost

To keep the process as close to "free" as possible, follow these steps to avoid professional service fees:

1. Clear All Liabilities

The government will not allow you to close if you owe money. Ensure all utility bills, employee wages, and supplier invoices are paid.

2. Obtain the "Notice of No Objection" (NNO)

Apply to the IRD using Form IR1223. This proves you don't owe any taxes. If your company was active, you may be required to file one last Profits Tax Return and an audit report.

3. File Form NDR1 with the Companies Registry

Within 3 months of getting your NNO, submit Form NDR1 to the Companies Registry.

4. Cancel Business Registration

You must notify the Business Registration Office in writing within 1 month of ceasing business. Failing to do so can result in a HK$5,000 fine.

Important Warnings

The "Sinking Ship" Risk: If you simply "walk away" without formal deregistration, the company continues to accrue annual fees and penalties. Eventually, the government may strike it off, but the directors can be prosecuted and blacklisted.
Bank Accounts: Close your corporate bank account after you have received all refunds but before the final deregistration. Once a company is dissolved, any remaining money in the account becomes bona vacantia (property of the HK Government).
Dormant Status: If you aren't ready to close but want to stop costs, you can apply for Dormant Status, which exempts you from filing Annual Returns, though you still pay a small BR fee.

Cessation of Business Letter for the Inland Revenue Department

To close a business in Hong Kong, you must notify the Business Registration Office of the Inland Revenue Department (IRD) in writing within one month of the date of cessation.

Below is a formal template you can use for a Limited Company or a Sole Proprietorship/Partnership.

Cessation of Business Letter Template

To: The Commissioner of Inland Revenue G.P.O. Box 132, Hong Kong (Or via fax: 2519 6896)

Date: [Current Date]

Subject: Notice of Cessation of Business

Dear Sir/Madam,

I am writing to formally notify the Business Registration Office that the following business has ceased operations:

Business Name: [Full Name of your Company]
Business Registration Number: [8-digit BR number found on your certificate]
Date of Cessation: [The exact last day of business, e.g., December 31, 2025]
Reason for Cessation: [e.g., Termination of operations / Restructuring]

Please find the following details for your records and for the issuance of the final tax return:

Correspondence Address: [Provide an address where the IRD can send final tax documents/refunds].
Contact Person: [Your Name]
Contact Number: [Your Phone Number]

I request that you update your records accordingly and confirm the closure of our Business Registration account. We understand that a final Profits Tax Return may be issued in due course, which we will settle promptly.

Yours faithfully,

(Signature)

[Your Full Name]

[Capacity: Director / Sole Proprietor / Partner]

Important Filing Requirements

Simply sending a letter is often not enough to satisfy the IRD's digital or procedural requirements. Depending on your business structure, you should also include the following:

For Sole Proprietors/Partnerships: You should ideally complete and attach Form IRC 3113, which is the official "Notice of Cessation of Business."
For Limited Companies: This letter is the first step toward getting your Notice of No Objection (NNO). You must also ensure your final audit is completed up to the date of cessation.

Key Reminders

The 1-Month Rule: If you notify the IRD later than 30 days after closing, you may technically be liable for a fine of HK$5,000 and imprisonment for one year (though fines are more common than jail time).
Keep Records: Under Hong Kong law, you must keep your business records (invoices, receipts, books) for at least 7 years after the date of cessation.

Checklist for the Companies Registry (Form NDR1) filing

To file Form NDR1 (Application for Deregistration of Private Company) successfully, you must meet specific legal prerequisites. Filing this form is the final "lock" on the door for a limited company in Hong Kong.

Below is your comprehensive checklist to ensure your application isn't rejected by the Companies Registry (CR).

1. Statutory Eligibility Checklist

Before you even touch the form, your company must legally meet these six conditions:

[ ] Agreement: All members (shareholders) must unanimously agree to the deregistration.
[ ] Cessation: The company must have never commenced business OR have ceased operations for at least 3 months immediately before the application.
[ ] No Liabilities: The company has no outstanding debts (this includes bank loans, taxes, utility bills, and wages).
[ ] No Legal Action: The company is not a party to any ongoing legal proceedings inside or outside Hong Kong.
[ ] No Real Estate: The company does not own any immovable property (land or buildings) in Hong Kong.
[ ] Clean Subsidiary Record: If the company is a holding company, none of its subsidiaries can own real estate in Hong Kong.

2. Document & Information Checklist

You will need to have the following ready for the filing:

[ ] Notice of No Objection (NNO): The original (for paper filing) or a certified copy (for e-filing) of the NNO issued by the Commissioner of Inland Revenue.
Note: The NNO must be issued within the last 3 months. If it is older, you must apply for a new one.
[ ] Business Registration (BR) Number: The first 8 digits of your BR number.
[ ] Company Name: Exactly as it appears on your Certificate of Incorporation.
[ ] Applicant Details: Name and address of the applicant (can be the company itself, a director, or a member).
[ ] Nominated Person: The name and address of a natural person (not a company) who will receive the notice of deregistration from the CR.
[ ] Latest Annual Return (NAR1): Ensure your filings are up-to-date. The CR will reject an NDR1 if you have missed an Annual Return.

3. The Filing Process

[ ] Payment: Prepare the filing fee of HK$420. (This fee is non-refundable, even if the application is rejected).
[ ] Submission Method: * E-Filing: Submit via the Companies Registry e-Services Portal.
- Paper: Deliver the form and NNO to the 14th Floor, Queensway Government Offices, 66 Queensway, Hong Kong.
[ ] Gazette Wait Period: Once submitted, the Registrar will publish a notice in the Gazette. You must wait 3 months for any potential objections from creditors. If none appear, a final notice is published, and the company is dissolved.

Pro-Tip: The "Bona Vacantia" Trap

Do not leave any money in the company bank account when you submit Form NDR1. Once the company is dissolved (usually 5–6 months after filing), any remaining assets—including bank balances—legally belong to the Hong Kong Government as "vacant goods" (bona vacantia).

Board Resolution and Shareholder Minutes required to Authorize Deregistration

To legally deregister a Hong Kong company, you need to document the internal decision-making process. This involves two sets of documents: Board Minutes (directors' decision) and a Written Resolution (shareholders' formal approval).

Below are the templates for both.

1. Minutes of the Meeting of the Board of Directors

This document records the directors' recommendation to close the company.

[Company Name] (the "Company")

Minutes of a Meeting of the Board of Directors Held at: [Address]

Date: [Date]

Present: [Names of all Directors]

Notice and Quorum: It was noted that a quorum was present and the meeting was duly convened.
Purpose: The Chairperson noted that the meeting was called to discuss the deregistration of the Company pursuant to Section 750 of the Companies Ordinance (Cap. 622).
Financial Position: The directors reviewed the financial status and confirmed that the Company has no outstanding liabilities and has ceased all operations for more than 3 months.
Resolutions: It was RESOLVED that:
- The Company apply to the Commissioner of Inland Revenue for a Notice of No Objection.
- Subject to the NNO, the Company apply to the Registrar of Companies for deregistration.
- [Director Name] be authorized to sign all necessary documents to effect the deregistration.
Close: There being no further business, the meeting was closed.

Signed: __________________________ (Chairperson/Director)

2. Written Resolution of the Shareholders

This proves that 100% of the owners agree to the closure (required by the Companies Registry).

[Company Name] (the "Company")

Written Resolution of the Shareholders Pursuant to the Companies Ordinance (Cap. 622)

We, the undersigned, being all the shareholders of the Company entitled to vote, hereby pass the following resolution as a Special Resolution:

IT IS RESOLVED THAT: The Company be deregistered and dissolved pursuant to Section 750 of the Companies Ordinance, and that the directors are hereby authorized to take all steps necessary to give effect to this resolution, including the disposal of any remaining assets and the filing of Form NDR1 with the Companies Registry.

Shareholder Name: [Name] Signature: __________________________ Date: [Date]

Final Review Checklist

Before you sign these:

Consistency: Ensure the "Date of Cessation" in these minutes matches the date you put on your letter to the Inland Revenue Department.
Signatures: If your company has a Common Seal, you may use it, though it is no longer mandatory for most HK companies.
Record Keeping: Keep the originals of these minutes in your Company Minute Book. You don't usually need to send these to the Registry, but you must have them if the Registrar asks for proof of member consent.

Guide to the Online "Notice of No Objection" (Form IR1223) Application Process on the eTAX Portal

Applying for the Notice of No Objection (NNO) is the most critical hurdle in the deregistration process. While many people still use the paper Form IR1263, using the eTAX portal is faster and provides a digital trail of your application.

Here is your step-by-step guide to navigating the online process for Form IR1223.

Phase 1: Preparation (Before Logging In)

Settlement: Ensure all Profits Tax Returns have been filed and all tax bills (including the final one) are paid.
Fees: Have HK$270 ready for the non-refundable application fee.
Access: You will need an eTAX account (TIN and Password) or an iAM Smart account with digital signing capabilities.

Phase 2: The eTAX Portal Workflow

Follow these steps once you are logged into the GovHK eTAX Portal:

Step 1: Locate the Service

Select "Business Tax Portal" or "Individual Tax Portal" (depending on your login). Look for the menu item:

Applications > Request for Notice of No Objection (IR1223)

Step 2: Enter Company Details

You will be prompted to provide:

Business Registration Number: The first 8 digits of your BR.
Company Name: Must match the Register exactly.
Applicant Status: Confirm if you are a Director, Member, or Nominated Person.

Step 3: Declarations

You must check boxes to confirm that:

The company has ceased business for at least 3 months (or never started).
The company has no outstanding tax liabilities (including Profits Tax, Property Tax, or Employer's Returns).
There are no ongoing tax enquiries or audits.

Step 4: Digital Signature

Sign the application using your eTAX Password or iAM Smart+.

Step 5: Online Payment

Immediately after signing, you will be redirected to the payment gateway. You can pay via:

PPS
Credit Card (Visa/Mastercard/JCB)
Faster Payment System (FPS)

Phase 3: What Happens Next?

Acknowledgment: You will receive an instant electronic receipt. Keep the Transaction Reference Number.
Internal Review: The IRD will check your file to ensure no "loose ends" (unfiled returns or unpaid penalties) exist.
Issuance: If everything is clear, the NNO will be mailed to your registered correspondence address within about one month.
Expiry: You have 3 months from the date of issuance to file this notice with the Companies Registry (Form NDR1).

Common Rejection Reasons

Unfiled Employer's Returns (BIR56A/56B): Even if you have no employees, you must ensure the "Nil" return was filed if the IRD issued one.
Outstanding BR Fees: If your Business Registration fee for the current year hasn't been paid, the IRD will block the NNO.
Wrong Cessation Date: If your bank records show transactions after your stated cessation date, the IRD will issue a query letter.

Checklist of Common "final" tax Questions the IRD Ask during Review

When you apply for a Notice of No Objection (NNO), the Inland Revenue Department (IRD) doesn't just check if you've paid your last bill. They perform a "mini-audit" of your entire tax history to ensure no revenue is being lost before the company vanishes.

If your application isn't approved immediately, it’s usually because the IRD has issued a Query Letter. Here is a checklist of the common questions and issues they raise during this review.

1. The "Final Return" Gap

The most common delay occurs when there is a gap between your last filed tax return and your actual date of cessation.

[ ] The Question: "Please provide a Profits Tax Return and audited financial statements for the period from [Last Filing Date] to [Date of Cessation]."
[ ] The Fix: You must file a final "Cessation Return." Even if you had zero income in those final months, the IRD usually requires a final audit report unless the company was officially dormant.

2. Disposal of Assets

The IRD wants to know if you made a profit (which is taxable) by selling off company equipment, inventory, or property before closing.

[ ] The Question: "How were the company's remaining assets disposed of? Please provide a schedule of asset disposals and confirm if any were sold to associated parties."
[ ] The Fix: Prepare a list showing the sale price of furniture, computers, or vehicles. If you "gave" them to a director, you may need to account for their fair market value.

3. Outstanding Employer’s Returns (BIR56A/56B)

Even if you haven't had staff for years, the IRD often finds "ghost" obligations in their system.

[ ] The Question: "Our records show that Form BIR56A for the year [Year] has not been submitted. Please file immediately."
[ ] The Fix: Check your eTAX portal for any "Nil" returns that were never clicked through. You must file these even if the staff count was zero.

4. Verification of "No Liabilities"

Since you declared the company has no debts, the IRD may cross-reference this with your last balance sheet.

[ ] The Question: "Your last balance sheet showed a 'Director's Loan' or 'Amount due to/from related parties' of HK$XXXX. Please confirm if these have been settled or waived."
[ ] The Fix: Ensure all inter-company and director loans are zeroed out (often through a "Deed of Waiver") before you apply.

5. Bank Interest & Final Income

[ ] The Question: "Please provide bank statements for the 3 months leading up to the cessation date to verify no further business was conducted."
[ ] The Fix: If the bank account earned interest or received a final "tail" payment from a client after your "Date of Cessation," the IRD will move your closure date forward and demand tax on that income.

What to do if you get a Query Letter?

Don't ignore it: You usually have 21 to 30 days to respond.
No new fee: If you resolve the issues listed in the letter, you do not have to pay the HK$270 application fee again. You simply return the "lower portion" of their letter with your answers.