Sole Proprietorship

a22162
Apr 15, 2023
3 min read

Updated: Jul 1, 2023

Sole Proprietorships - Advantages of Sole Proprietorships and Disadvantages of Sole Proprietorships

Registration of Sole Proprietorship

The Business Registration Ordinance (Chapter 310) stipulates that anyone who engages in a sole proprietorship business must apply for business registration within one month of the commencement of the business. The Inland Revenue Department will not accept applications for registration of business that has never existed or has not yet commenced operations.

New applications for registration of non-resident sole proprietorships will not be accepted. They will not be able to prove that they actually started a business in Hong Kong, as non-Hong Kong residents who land in Hong Kong as visitors are generally not allowed to set up or join any business during their stay in Hong Kong, and cannot prove that they have indeed started a business in Hong Kong.

Business Name

When you register a business, you may register a business name. You should take one of three options:

(a) register a Chinese name only;

(b) register an English name only; or

How to Register

To register a sole proprietorship, you must:

1. Fill Out the Prescribed Application Form Form 1(a); and

Obtain a Business Registration Application Form:

Email to taxbro@ird.gov.hk, complete Form IRBR194, or request in writing by post to the Business Registration Office or by fax (2824 1482). The application form will be sent to you by post. Please state your name, mailing address and the type and number of application forms required.
Visit the Business Registration Office to collect.

2. Show your ID Proof.

A copy of the owner's Hong Kong identity card. For non-Hong Kong residents, a copy of passport or identity card issued by the relevant government agency.

If the owner is not residing in Hong Kong, he/she must appoint a Hong Kong resident as his/her agent for business registration. In this case, please complete and submit Form IRBR177 or submit a letter of appointment stating full particulars of the agent including his/her name, Hong Kong Identity Card number and residential address. A copy of his/her Hong Kong Identity Card must also be attached to the application form.

For a sample application form, please click here.

Submit an Application:

Submit in person.
By post.
Submit online through GovHK eTAX.

Standard Response Time

Application Channel	Standard Response Time	Delivery Method
In person to the Business Registration Service Counter of the Business Registration Office	Issue within 30 minutes of receipt of a properly completed application	Go to the counter to collect the Business Registration Certificate
By post	Sent within 2 working days of receipt of a properly completed application	Business Registration Certificate sent by post
Through GovHK	Issue within 2 working days of receipt of a properly completed application	The applicant downloads the e-Business Registration Certificate through GovHK

Fees and Levies

Pay business registration fees and levies.

The levy is imposed for the Protection of Wages on Insolvency Fund. For details, please visit the website of the Labor Department.

What are the Characteristics of a Sole Proprietorship? What are the Pros and Cons of a Sole Proprietorship?

A sole proprietorship is a business run by one person who makes all decisions, although the owner may hire employees. A sole proprietor is personally entitled to all profits and is liable for any debts incurred by the business.

Advantages of Setting Up a Sole Proprietorship

A sole proprietorship is the simplest and most flexible business structure.
A sole proprietor has full control and full decision-making authority over policy, profits and capital investment.
Closing a business is easy.
Business profits will be taxed at the sole proprietor's marginal tax rate, which may be lower than the corporation (limited company) tax rate. Also, business losses can be off set against other income of the proprietor (see topic - Taxation for more details on profits tax).

Disadvantages of Starting a Sole Proprietorship

Sole proprietors take risks that can lead to personal bankruptcy.
Death or prolonged illness of the sole proprietor will bring about the end of the business.
Due to the limitations of a one-person business, a sole proprietor may not be able to raise additional capital from outside sources to expand the business.

Connect with Us

Registering a new sole proprietorship business in Hong Kong? Contact us.