Difference Between an Accountant and a Bookkeeper

 

This article is originally found here: https://www.globalfromasia.com/accountingandbookkeeping/

All too often we can’t wait to get our Hong Kong limited open.

You’ve been enjoying the Global From Asia podcast and blogs here on the site. Now you are looking into what are the ongoing costs.

We had a popular post for the Upkeep for HK company, today we are going to focus specifically on:

What is the difference between an accountant and an auditor?

Drink so coffee (or tea) and don’t sleep on me here. Yes, this stuff can get dry – but the more we understand it, the better business owners we can be!

Accountant Definition

What is an accountant?

Think there are 2 cases.

Case one is the accountant as a bookkeeper. He or she will receive all your financial statements, either by paper or online access. They will setup your books and chart of accountants. You will then watch in awe as they classify your transactions in different income and expense accounts.

Bookkeeping should be upkept throughout the year. Ideally real time. Of course there are many of us with not tons of activity on a daily basis and we can’t afford to have a full time accountant. So I recommend weekly.

It’s not just for the work, but also for you as a business owner. To look at the numbers, the reports, the summary and see your business as a dashboard.

So this type of accountant is a bookkeeper.

The second option is the accountant as a tax form filing specialist. They specialize in a certain geography / government. Let’s say for here its Hong Kong. They know what all the different tax forms are, how to fill them out. Also, if they have experience, they will be able to tell you how to best keep the forms filled out. How to optimize your tax strategy.

This type of accountant is I believe what most of us think of when we hear a tax accountant. Having a good grasp of that government’s tax law and advising clients how to file for their personal and/or businesses.

Auditor Definition

Auditor, for many Americans (myself included) will cringe. We all hear about an IRS tax audit. The mental picture I get is a group of government officials in suits pounding on your office door to do a sudden check on your books. The business owner rushing to shred all the documents before they break the door down.

Do you get such a dramatic mental picture as that?

Well, that isn’t what we’re doing here – at least in the Global From Asia – Hong Kong tax sense. An audit here is one you pay a Hong Kong CPA (certified professional accountant) to check your books.

This auditor is the same as those who are rummaging through your shredded documents but this time you pay them to do it. Or at least you’re required by the Hong Kong Internal Revenue Department (IRD) to do so.

They will not enter your transactions into an accounting system or excel. That you should have done already. What they will do is check over your financial statements such as your profit and loss statement and balance sheet. They’ll see if it makes sense. Such things as your margins, your expense account sizes in comparison to your revenue numbers. Are you hiding something.

They are to snoop around in your financial statements, and your transaction history looking for things that may not add up.

This is their job. And they are using their expertise – AND LICENSE – to do it.

You may ask yourself, why would they dig into it if I’m the one paying them. Wouldn’t they want to keep me as the paying client happy?

You would think so – but the Hong Kong government gives them a license. Their job is on the line. If they don’t do their job and the IRD checks it later and feels the CPA was negligible, they jeopardize their license.

Make sense?

An Accountant Can Also Be An Auditor

You can use the same person to do both of these tasks. They will accept it, because it means more money for them!

It may make sense too. They will understand the books as they have been working with you on entering the transactions and speaking to you throughout the year on questions you have. You should have a good regular communication flow with your accountant. Alert them of new products, services, and other financial related changes in your business. Taking a new business loan? Might be a good time to alert your accountant, so they can add that as a new account in your bookkeeping system.

Will You Save Money If You Use An Accountant As Your Auditor?

I’m sure you’re wondering, will you save money if you combine your accountant and auditor? I would say yes. There are a few ways you can say it will save you money:

1) They can give you a lower bundle price than separating the services.
2) They can save time in the audit as they know the books already.
3) You will spend less of your own time re-explaining the situation 2 times.

But, you also need to remember, for a Hong Kong company audit, you need a Hong Kong local accredited CPA. Hong Kong, as we have found out from these blogs in the past, is not the cheapest. Check out cost of living in Hong Kong article for examples. So of course those costs will reflected in your pricing.

You can use an accountant anywhere in the world. you may save money on the accounting side if you outsource or have your own staff do it. Then you only use a local Hong Kong CPA to check over the books and submit the auditor’s report.

Doing that may save money as a total bundle price – but dollar for dollar – the coordination and back and forth of your own time may drag you down a bit.

It comes down to how well organized you can be.

What To Look For In An Accountant for your Hong Kong Books

So we discussed the differences, now what should you look for in an accountant. I’ve seen some people I have worked with who use an American based accountant to do it.

You can use an accountant based anywhere in the world.

While we can provide this service and would love to work with you on your case. Yet to be clear, your accountant can be someone you find on Upwork. You pay to have someone do your transactions entry in Xero or Quickbooks. Also we’re a Certified Quickbooks Advisor in Hong Kong, so look for that from others you may hire.

Some tips in looking for your accountant:

  • Multi-currency experience.

    The beauty of Hong Kong for your global business is the multi-currency accounts. But for accountants, that is an added complexity. Ask your accountant if he or she has ever done bookkeeping for someone who has a wide range of currencies, and multi-currency bank accounts.

  • Do you have multiple entities in other countries?

    Do you also have a USA company or mainland Chinese company? Maybe you have an outsourcing center in Philippines. Who is doing the accounting there? What is the relationship of those companies to this company? Will you have those books done by this same accountant, or will you have a separate bookkeeper for that country? This is something the accountant you are looking to hire will need to know.

  • Do you have a lot of transactions?

    Are you an online based business with a lot of Paypal and merchant account transactions? Especially in B2C, you will have a lot of small purchases. Do you expect your accountant to have experience with these e-commerce payment systems? Many accountants are not familiar with this and you should keep on top of this before it gets out of hand.

  • Do you expect them to be “online” based or “offline” based?

    As mentioned in point 3, many accountants still haven’t fully embraced the internet and computers. Don’t laugh! At least in Hong Kong, many still are getting a grasp of keeping on top of their email inbox! In your communication with the potential accountant, see what types of communication methods they prefer.

  • Can they work direct with your online banking systems?

    When doing the transaction entry, can they work direct with your online banking systems? Again, technology. I imagine if you’re reading this blog post – then you are tech savvy. More than many of the accountants you may find out there! I am not trying to make a jab. Spoken from experience, do you expect the accountant to be able to login to your online banking with their own logins? Will you be OK with sending them a bunch of PDFs? Heck, maybe some will even want you to mail them the physical paper statements!

This is just a small list. Of course you have to trust them! And you have to agree with the way to communicate. Don’t get into the deal to only get frustrated with them later on when they are slow to respond to your emails. The only way I can reach a lot of accountants is to call them and schedule an appointment at their office in Hong Kong!

The Traditional Flow of Accountant And Auditor in HK

So let’s put this into context. You have a new Hong Kong limited company, and it’s B2B import export trading. You opened the company and then got approved for an HSBC Hong Kong bank account.

Your agency got you to sign up for their bookkeeping service, and you may send them your bank statements. You don’t have too many transactions, so you just send it to them monthly when you get the statements.

They enter the transactions into their accounting software. Many of them do not use online based accounting software and it will be locally stored on their computers in their office. A lot of times it isn’t even on a computer but instead written down on paper! Yes, this blog post is being written in the year 2016!

After about a year, you fly into Hong Kong to do some banking updates, maybe go to a trade show or 2, and check in with your accountant. You hand them a stack of receipts and your paper statements that the bank has been sending you. If you elect to pay the extra fee for the paper statements rather than e-statements, or you can print them out.

They prepare the books, and the accountant may have a few questions about some transactions in your business. You also want to make sure that your accountant understands all parts of your business, and also any kind of shareholder loans or special cash accounts, etc. If they are good, they will give you some ideas on how to better maximize your tax preparation, and other tips to optimize your company financials.

The first year you have a few extra months to file your audit, so let’s say you wait until the 18 months past. The accountant can also act as the auditor (If they are an accredited HK CPA) and they will prepare the auditor report and profit tax return. They will present it to you and show you your tax liability. You’ll then accept it by signing off, and then submitting everything to the Hong Kong IRD (Internal Revenue Department)

Then you go about your normal business life for the next 12 months, until you need to repeat the process above.

Moving to More Online Based Accounting Flow

So, we’re all lovers of the internet age. We are reading this guide online, off our mobile phone, listening to a podcast while in an airport in Dubai.

The internet is good.

So we work with an accountant who is more online based. We find one online, not based in Hong Kong, and work out a monthly payment plan. Maybe they offer packages. You signup, and get a renewing credit card transaction agreement going.

Talking to an account rep on email, they tell you to pick an online accounting software of your choice. Xero, Quickbooks, or the many others. You will also need to get a plan that works with multiple currencies, so they are normally a bit more than the basic software. You’ll get setup and link your online banking (HSBC HK supports Quickbooks), Paypal, and other systems. This can be tricky, and hopefully the accounting agency can work with you to make sure it all syncs up.

Once the initial setup is going, you have them enter the transactions manually that may not come from Paypal and online merchant accounts, such things as petty cash. You’ll also probably have times you need to explain certain transactions so they are classified correctly.

The year goes by, and you need to prepare for your HK audit.

Your Hong Kong company secretary will email you that you received a profit tax return from the HK IRD. You’ll have a few months to prepare your books and prepare the auditor’s report. This can be done with the referral of the company secretary, or you can use another accountant, CPA – auditor. Up to you.

The auditor will check the books, and ensure that you have properly accounted for revenues and outflows and he/she is willing to sign off that the books are legitimate. This is the risk of their certification and relationship with the HKICPA – Hong Kong Institute of Certified Public Accountants. If later the books seem “Cooked” – I’m sure the HK tax department will question the auditor on why they didn’t find this issue at the audit step.

Once you agree with all the books, the auditor report, you’ll need to sign and submit the profit and tax return. Write the check, and you’re done.

How Much Does This Cost? Comparison

So let’s think about how this all comes together. There are a few different things you need (recommended to get)

  • Accounting software.

    In today’s online world, and the fact that you’re reading this blog post off your computer monitor instead of a printed newspaper, you need software to balance things. Most choose Xero or Quickbooks. Maybe also better to ask your bookkeeper what they are familiar with. Cost – 20 to 40 US dollars a month. If you have an international business, you’ll need the more expensive multi-currency account options.

  • Bookkeeper.

    You can outsource this, with a HK accounting firm, with your own staff, or you can do it yourself! It is best to have someone on call in case there are questions or issues that arise later. Plus when there is a transaction you are not sure how to classify, the bookkeeper and accounting specialist is there to help out.Cost. Depends on how much activity you have. Let’s say from the $150 USD to $400 USD a month. Again, you can always opt to do your own bookkeeping, or have someone in your organization do it.

  • Audit.

    Yes, this is where people wonder how much will it cost. And online you won’t find anywhere that has a standard table of prices for a Hong Kong auditor’s report. Price depends on the amount of transactions, how many revenue streams, how good your books are kept, and how familiar the auditor is with your type of business.Cost – Depends on how many transactions, how active, etc etc. But I know you want a range. Low is 900 US dollars and high is up to $2,500 USD. The higher range is when you’re in the millions of dollars in revenue and it shouldn’t be as big of a cost as a percent of your profits. The lower range I have found is harder for the smaller businesses still finding their traction.

  • Signing and mailing the profit tax return

    This will need to be filled out and signed by you, or one of the directors.Cost. The courier fees from Hong Kong and back. This needs to be mailed to your Hong Kong address, and if you’re living and working overseas, it will need to be signed by you. Or you can always take a trip to Hong Kong for this process. I always recommend meeting your company secretary, accountant and auditor yearly. Make sure you are comfortable with everything. Check in with the year in the past, talk about the future year.

Remember – Accountant Can Be Anywhere, CPA For Audit Must Be in Hong Kong

So we have drove this topic home for you. You can do your bookkeeping and accounting data entry from anywhere in the world. This person should have experience balancing company books, general ledgers, and online accounting software.

You, as the overachiever entrepreneur, may want to learn to do this yourself. I respect that. Heck, I remember learning it on Sunday afternoons back in 2004 with my first e-commerce business! Taking a Quickbooks training seminar in NYC and trying my best to classify everything. It is a good skill to have, to understand the inflows and outflows of your business.

Yet I can imagine it may not be your favorite task to do. Find someone in your company, or a trusted accounting firm to take care of it for you.

But, as skilled and knowledgeable about this as you are – you cannot do your own audit. A Hong Kong licensed CPA must do it. And, I know it is frustrating – the price is not black and white. Budget around $1,500 USD for it, a bit more if you’re in the multi-millions in US dollar revenue.

Have the books as “Clean” and prepared as possible for the auditor. The price will be lower than if it is just a big pile of financial statements.

How About Your Experience?

How has your experience been dealing with accountants and auditors? Of course I’m more focused on Hong Kong today, but even if its in America or other places- any tips for dealing with these consultants?

I’d love to hear it, as well as other readers – so please leave your comments below!

Also, our company offers bookkeeping services and audit reports – we’d love to work with you!

New Tax Laws for Foreigners in China

This post is originally found here: https://www.globalfromasia.com/china-global-tax/

China is the world’s largest manufacturer and it has the second largest economy next to the United States. For this reason, China plays an important role in the global economy. Unsurprisingly, many expats relocate to China for business purposes. China’s financial capital is very attractive that many expats move in for incredible opportunities. From a survey conducted by HSBC, an expat in China earns $170,970 average gross personal income per annum, compared to the global average expat income of $99,900. Interesting, right? However, taxation in China is very complex that many expats find it difficult to comprehend. Just recently, a draft amendment to the Individual Income Tax Law was proposed and expats will surely be affected when the basket of changes take effect. What’s in the draft law? And what are the new tax laws coming for expats in china? Read on to learn more.

China’s Draft Amendment to the Individual Income Tax Law

1. Revision on determining tax residency status. Foreign nationals who have physical presence in China for at least 183 days would become liable for Individual Income Tax (IIT), unlike before when non-residents have one full year year before he/she be subject to IIT. Its purpose is basically to protect national tax rights and interests. Whether the income is sourced inside China or not, the tax residency status will be based on how long an individual resided in the country.

2. New tax system, rates, taxable income brackets

Current IIT Law Draft Amendment
Categories Tax Rates Categories Tax Rates
Income from wages and salaries 3%-45% 7 brackets of progressive tax rates
Comprehensive
income
– 3%-45%
7 brackets of progressive
tax rates
– Adjusting the taxable
income brackets of lower
tax rates (i.e., 3%, 10%,
20% and 25%)
– Taxable income brackets
of higher tax rates
unchanged (i.e., 30%,
35% and 45%)
Income derived from
remuneration for personal services
20%- 40%
3 brackets of progressive
tax rates
Income derived from
remuneration for manuscripts
20%
Income derived from royalties 20%
Income derived from
production and business
operations by individual
industrial and commercial households
5%-35%
5 brackets of progressive
tax rates
Business operation
income
5%-35%
5 brackets of progressive
tax rates
– The minimum threshold
applicable to 35% tax rate
increased to RMB
500,000
Income derived from
contractual or leasing
operations of enterprises or institutions
5%-35%
5 brackets of progressive
tax rates
Category removed with relevant income
incorporated into comprehensive income or
business operation income respectively
Income from interest,
dividends and bonuses
20%
Unchanged
Income from lease of property
Income from transfer of
property
Contingent income
Other income

Source: PwC Global

3. Anti-avoidance Rule. Anti-tax avoidance rule was introduced in the draft law – wherein authorities are strengthening tax collection especially to individuals having cross border transactions and tax plans. Its main purpose is to avoid multinationals to transfer or move profits to affiliates in low-tax havens and to tighten the IIT’s overall application and enforcement.

4. Additional special expense deductions including children’s education, major illness medical expenses, continued education and housing loan interest and rent. Its purpose is to reduce the amount of income subject to income tax therefore raising the taxpayers’ income and boosting household consumption.

5. Tougher stance on foreign companies. Foreign companies should pay special attention to changes affecting the timing of the tax levy on foreign employees, foreign labor costs, contract profitability, and budgeting requirements, as well as the rippling effects they have on withholding and tax equalizations.

6. New Tax Brackets that would benefit middle and low-income groups.

Current Bracket (RMB) Proposed Bracket (RMB) IIT Rate Effect
< 1,500 <3,000 3% Widened
1,500 – 4,500 3,000 – 12,000 10% Widened
4,500 – 9,000 12,000 – 25,000 20% Widened
9,000 – 35,000 25,000 – 35,000 25% Narrowed
35,000 – 55,000 35,000 – 55,000 30% Unchanged
55,000 – 80,000 55,000 – 80,000 35% Unchanged
> 80,000 > 80,000 45% Unchanged

Source: China Briefing

Apparently, high-income earners don’t really benefit so much from this amendment. So, basically, if an expat in China earns USD170,970 average gross personal income per annum or around 95,000RMB per month, no matter where that income was sourced and regardless of where the payment is made, he/she would be subject to 45% IIT tax.

China is indeed a booming economy with unending opportunities. The proposed tax reform simply relieves the tax burden of small and medium sized enterprises as well as middle and low-income individuals while optimizing the business environment through higher consumption.

Disclaimer: if you’re an expat in China, it’s best to consult a taxation specialist in China to help you more understand the country’s upcoming overall tax amendment that is expected to take effect on January 2019.

Neat HK: A Solution for the Hong Kong Banking Nightmare?

Looking for a Hong Kong online business bank account that you can connect your Paypal and Stripe / Braintree merchant account to? Wouldn’t that be amazing, without the utter nightmare Hong Kong business owners are going through now begging these archaic banks to allow them to deposit their money.

Here at Global From Asia – we know the pain our entrepreneur and hard-working global business owners have been going through. As digital nomads and e-commerce sellers and FBA business owners, we feel the pain ourselves. This is why our clients for our corporate services enjoy working with us – we understand you.

And we know the biggest pain point for almost 2 years now has been – such a basic need – a business bank account solution in Hong Kong.

One with credit cards – for you and your staff. One that can link to your Paypal and Stripe.

We’ve been testing so many and talking to so many – and today we’re talking about one we’ve been following for years.

Neat.HK Business Banking for Online Business Owners

So I am focusing today on their business banking product – Neat Business Account. I know exactly what you guys are looking for – and here is a list of their features:

* Unique Account / IBAN number – you will have your own dedicated account number with Standard Chartered. This isn’t like some other solutions where you have a sub-account and need to put in your TT (telegraphic transfer) banking notes your sub-account number. This is a dedicated account number ONLY FOR YOU And your business. I’m not sure the technical way they got this – but this is the amazing part – that allows you to do the following

* Connect /Verify your Paypal Hong Kong – we have a Paypal Hong Kong guide that gets a lot of attention on how to verify your Paypal. You need a “unique” or dedicated IBAN number. This Neat Hong Kong business solution give you that – unlike other online / virtual banking solutions I have come across.

* Connect / Verify your Stripe HK or Braintree merchant account – similar to Paypal, you need a unique bank account in your company name in order to get Stripe and any other merchant account setup. Don’t worry – this will work here too. We have a full list of merchant account comparison here that is popular as well.

* Issue Company credit cards – You can order credit cards! Yes – finally – you can see a company credit card in your company name here in HK without having to sign your life away and deposit your life savings! Seriously, readers know it is hard to get a Hong Kong credit card.

* Deposit paper checks – many ask how to deposit checks (yes, Hong Kong does still use quite a bit of paper checks). This works too. You need to go to Standard Chartered Bank – in person – and deposit. Can’t do it at the ATM.

* English, Online Banking – and of course, it has online banking. Well, that is actually something we need to write as a bullet point, as some banks we are forced to work with in our partner corporate services agency, don’t have online banking. Or it takes forever to get issued. And the banking is in English.

I think this has huge potential, and I may finally be able to rest well at night when we get new clients for a Hong Kong company (read our Hong Kong registration guide here) setup and – yes – their request to get a local HK bank.

Big Plus – Don’t Need To Come To Hong Kong To Apply

Here is the big – big one – that I know our readers at Global From Asia will love – you can apply and get approved online. So now, once we get this moving smoother – we can help clients open a HK company and HK bank account without needing to fly here.

Can you say…

Game changer!?!

Wow, Hong Kong may be back open for business. It’s been a rocky road since March 2016 but we may be out of the ice age and entering normal business climate.

How I Came Across Neat

I met David Rosa, the founder of Neat.hk a couple years ago when they were in their early stages. He visited me in my TST office and we chatted about the struggles of banking in Hong Kong and Asia in general. I had been doing my podcast already for a couple years then and was helping clients open up companies and banking. I explained the utter nightmare it was to beg a bank like HSBC to please let us deposit money with them.

At that time Neat was focused on the consumer banking side (individual accounts) but he said once that was going he’d work on their business banking solution and let me know.

I also have gotten to know others on his team, and he had been merging with other local Hong Kong fintech startups I had been following.

It’s true – Global From Asia is a great blog and media source for Fintech in Hong Kong and Asia. So I am always getting startups trying to solve this nightmare banking issue find me and send me their new products and solutions.

It is my biggest pleasure to be able to blog about this and give everyone hope. There is light at the end of the tunnel and I really hope this disrupts these archaic banks who destroy small business owners livelihood.

Let’s give power back to the SME and let’s leverage online banking – who needs to visit a corporate banking branch anyway?

Can You Trust This New Fintech Startup?

As I have been telling clients about this new banking solution – some are still a bit nervous. A startup holding your funds is a big ask, not as simple as a social media app where you share what you ate for dinner.

True, I always have to disclose you need to use any financial solution at your own risk. But they are recognized in Hong Kong as an accredited Fintech company and work inside Cyberport. I should get him on the podcast as well.

Ready to go and get this new Hong Kong Business Banking solution? How To Signup?

So I probably have you on the edge of your seat (I hope!) and I have you excited to apply.

If you are starving and about to die of starvation as you have a HK company already and just need a freaking bank account – you can browse over to Neat Business Account and get on their waiting list. I do have a special code that can help you get expedited but am not allowing to link it publicly so if you’re a client of our corporate services division (Unipro) then talk to our client services department to get that going.

Don’t have a HK company yet and now feel more confident you can get a HK company and bank account together – then let’s work together. Check out our HKVIP package and let’s do some business together.

This may have just re-opened the doors to doing business in Hong Kong for online business owners. That plus the corporate tax rate has been dropped to 8.25% (from 16.5%) for SMEs with less than 2 million HKD in revenue. Ice age in HK may be past us, let’s hope and we will keep you updated as this progresses.

Ears On The Ground

Here are some messages we have been hearing on the web that we believe is helpful

have you succeeded with HSBC ? [Surprise] A lot of variables will come into play, especially fiscal residency and company’s “establishment” location. Generally speaking, will be harder for countries like me France to apply in today’s banking conditions. Anyways, NEAT business is good although they are launching and still developping. However pay attention -> they have merchant limits as they are NOT a bank, they can only hold funds under a 2million HKD limit. This means, if you generate large amounts of revenue, you won’t be able to store all of your funds with NEAT, you will need like a traditional bank account for savings for example. I currently work it out this way : 1/ I use sendwyre to do as much as I can with supplier payments and other online payments then send the remaining to NEAT 2/ I use NEAT for other purposes like the mastercard to purchase stuff online, also will do HK based transactions or other operational stuff I may need on a week to week basis. 3/ I have a traditional bank account I was able to open after almost a year of issues and 3 banks denied. This one is not being used right now and I unfortunately pay fees to keep it opened. However the aim is to keep this bank account in order to have a back up plan in case NEAT goes bad + it allows me to grow my business where when I will cross the 2million HKD in balance on NEAT, I start sending over to my bank. Remember -> you may have sometimes over 2million HKD for just couple weeks , in that case NEAT won’t accept your funds. So long term wise, you need a traditional bank too and play around those limits.mobile online forum

Input from Neat, March 2018

Here’s an update from Andre in our GFA Community Wechat group who has this update on the Neat bank situation for HK:

“Ok guys so answers from neat: still no multi currency accounts, cannot currently deposit cash, to withdraw cash standard neat charge of 2.5% is charged, the main partner bank is standard chartered. So currently it’s best just for users purely doing online business.”Andre

Can I wire in USD or other foreign currencies?

Yes, you can wire incoming currencies no problem.

Can we transfer money to EU banks?

For wiring out, you can only send money within HK. But you can use a cross border payment company such as Aurelia Pay.

Check our blog on cross border payment companies.

What’s the account limits?

2,000,000 HKD (a bit over $250,000 US dollar) as of March 2018.

A question from a Client

“I have a question, we set up the neat account and everything went smoothly and the account is open and active now.however, it shows the account only accepts incoming wire.

Is there anyway you can help us with that? I tried looking for information on how to contact the bank directly but they only have a q & a with 15 questions.

the main reason we wanted an account was to pay our supplier in China to expedite the process of importing our product to USA. Can you please give me some information and also if you can let me know how we can open account with a better bank.”

We suggest using a cross-border payment service provider in the middle.

Information You’ll Need to Apply

Here is a copy/paste of their latest application form

This form collects information about your company so that we can complete the application without the need to travel and visit our office.

We will gather information about:

  • Your company
  • Directors
  • Shareholders
  • Ultimate Beneficial Owners (natural persons who ultimately own or control the company)

In order to complete the application you will need the following documents:

  • Valid Business Registration Certificate – example – (or equivalent for companies not incorporated in Hong Kong)” – example
  • Photo ID of Directors and Ultimate Beneficial Owners

Neat HK will also help you to generate a Board Resolution that authorise you or one of the directors to open an account with us on behalf of your company.  The form is pre-filled and requires just a signature.

NOTE: Please be as accurate as possible – this will speed up the review process and increase the chances of your application being successful.

P.S. You can save your application work at any time and come back to it later on. Just click on the “Save” button and input your email.


Input from Neat, March 2018

Here’s an update from Andre in our GFA Community Wechat group who has this update on the Neat bank situation for HK:

Ok guys so answers from neat: still no multi currency accounts, cannot currently deposit cash, to withdraw cash standard neat charge of 2.5% is charged, the main partner bank is standard chartered. So currently it’s best just for users purely doing online business.Andre

What is Neat HK?

Neat is a mobile current account that makes everything accessible and at ease. It only takes 10 minutes of your time to have a Neat account. You do not have to worry with your local and international purchase, with over 50 currencies available with Neat, they got you covered!

With Neat, you can manage your money anywhere, receive salary and make payments, and send money to your friends.

There is also an available Neat Card for free. It is a prepaid MasterCard issued by ePaylinks. Browse the following incurring fee before you avail a Neat card.

What are the fees needed to acquire Neat HK?

There are no reflected monthly or annual fees and for acquiring a Neat Prepaid Mastercard. However, a lost or stolen card of Neat HK will cost HK $50 for a card replacement.

Each ATM withdrawal with a minimum fee of HK $25 will have an incurring fee of $25. Transaction refund is for HK$4. Those merchants in Hong Kong who are under an international brand is included with 1.5% fee in HKD Transaction Foreign Merchant. When you inquire for your balance on an ATM, there is a fee of HK $4.

Also, a consecutive six months of inactivity will be charged HK$12.5 a month. Unless, the balance is zero.

How to get the Neat HK application?

Neat application is available for both iOS and Android devices. You can just download the app at their respective app stores.

How to get a Neat HK Card?

To have a Neat HK Card, complete the registration process on the Neat Application. The only requirement you need is a passport or a Hong Kong Identity Card.

Is there a Business Account offered by Neat HK?

Yes, there is a current business account offered. There are number of benefits for your business when you use Neat HK for your business!

  • An increase in productivity will be achieved with Neat Business HK. They offer you tools that can help you operate your business efficiently. The dashboard can give you the insight and control of the progress of your business finances.
  • Just like the personal subscription, business account is a quick setup. You have the access of your bank account anywhere and anytime.
  • The offered business account is timely. There are integrated features that automatically organize admin tasks. This feature will help you focus more on your business.
  • You will be assigned with a dedicated Hong Kong bank account number. Neat supports many e-commerce platforms. This allows you to receive payments and manage disbursements.
  • More so, business accounts offers a feature that can easily pay invoices and employees.
  • There is an expense card available to enable your employees make purchase online and offline, and withdraw cash at ATMs.
  • Now, lost receipts are not a problem anymore. Its feature has an ability to add pictures of receipt.

This business account is still developing. There are two features to be added on its update: powerful reporting and automated accounting.

How to apply for Business Account?

Neat Business Application

You have to fill out the Neat Business Application, information about your company are collected. The catch is, you do not have to travel to Hong Kong to apply for a business account. Filling out this application will only take you 10 to 15 minutes. If you have some things to do, you can save the application any time and finish it later.

Informations regarding the company, the ultimate beneficial owners, shareholders, and directors. The said ultimate beneficial owners are those who naturally owns or controls the company.

The following documents are needed to complete the business application:

  • Valid Business Registration Certificate (see example)
  • Passport of Directors and Ultimate Beneficial Owners

Neat also helps you produce a Board Resolution that will authorize you or one of the company directors to open a business account in behalf of the company. The form will be pre-filled and it will only require a signature.

Before you plan to fill up a business account application with Neat HK, please check whether your company meets the compliance requirements.

List of Restricted Nationalities

  • Afghanistan
  • Bosnia and Herzegovina
  • Central African Republic
  • Democratic People’s Republic of Korea
  • Democratic Republic of the Congo
  • Eritrea
  • Guyana
  • Iran
  • Iraq
  • Lao People’s Democratic Republic (Laos)
  • Lebanon
  • Libya
  • Somalia
  • Sudan
  • Syria
  • Uganda
  • Vanuatu
  • Yemen

List of Restricted Industries

  • Adult related
  • Antique Dealers
  • Arms Dealers
  • Auctioneers
  • Cryptocurrency Dealers
  • Defence System
  • Foreign Exchange Dealers
  • Gambling and Casino
  • Jewel, Gems, and Precious Metals Dealers
  • Nuclear Power
  • Pawn Shops
  • Plane Dealers
  • Products and Services Illegal under Hong Kong Law
  • Pyramid Selling Schemes
  • Stock Securities Companies

If you think you meet the compliance requirements, start filling out the application.

What are the features of Neat Business?

Neat Business is yet only dedicated to Hong Kong dollars current account and a local bank account number. However, the company plans to offer a multi-currency account wherein it will support a multi-currency account.

Payments made from anywhere around the world will be received to the business account. Any outgoing payments from local third-party banks in Hong Kong are also supported. However, the outgoing payments to international banks is still about to be offered.

It is also planned that Neat HK and Xero Cloud accounting should be integrated. This is to enhance online banking through seamless accounting and account reconciliation.

Why choose Neat?

Neat is a highly secured mobile currency account that you can fully trust, either you will use it for your business or for your personal use.

You can manage, operate, and send your money anywhere in the world.

Neat may be developed at Hong Kong, but you do not have to go to their office to acquire an account and a card. More so, there are no requirements needed for personal use. Receive payments and send money to your friends

Neat HK is a revolutionized and patented account opening process. .

Get your mobile app at the Apple Store or Google Play!

Tailor-made Perfection

 

Something that is often associated with China – and with Shenzhen in particular – is tailor-made clothes. Many people visit Shenzhen from Hong Kong and further afield specifically to get top quality and reasonably priced clothes made to fit. One of the best tailors to be found in Shenzhen is Calvin’s Tailor Shop.

Situated in Commercial City, Luohu, on the 5th floor, Calvin’s is easy to find as it’s not far from the escalators. Here Calvin will greet you in English or Chinese, depending on your preferred language. This sets him apart from many other tailors in Luohu as he will understand everything anyone, whether Chinese or foreign, would want.

Calvin comes from a family of tailors going back three generations. Originally from Shanghai, he has worked as a tailor for 25 years and has had the same shop in Commercial City since 1999. He will guarantee anything he makes for you; however, his clothes are made to such detail that customers rarely – if ever – need a second fitting.

Sewing handmade clothes.

You have different options when choosing how your clothes will be made. You can either bring an item of clothing you want copied or a picture of the item of clothing you want and Calvin will reproduce it. Alternatively, if you’re not sure exactly what style you want Calvin can make items based on designs he has in store. He understands which styles and fabrics will suit which body types and skin colours and is an expert at recommending the perfect cut.

What sets Calvin apart from the numerous tailors you can find in Shenzhen is not just the outstanding service and attention to detail. Calvin also provides personal service to travellers: he will visit you in your hotel to take your measurements and show you a selection of fabric to choose from, and then your handmade clothing will be delivered to your hotel 24 hours later. Perfect if you are making a whistle-stop visit to Shenzhen, and amazing considering the usual turnaround time is one week. Don’t despair if you live elsewhere, or if you don’t have the time to wait in Shenzhen for 24 hours, as Calvin can arrange to have your clothes delivered anywhere in the world purely for the cost of the delivery.

Calvin’s business has grown since he first started fixing hems and sewing buttons when he was only 17. He now has 18 reliable staff working for him, many of whom have been working for him for over 20 years. This means you don’t need to worry that Calvin will be too busy to give you personal service, and you can expect the same professional service and standard no matter how many items you want made.

Men’s suits and shirts are Calvin’s favourite things to make as this is what he started with all those years ago. Men’s shirts usually cost around RMB 200 and suits vary in price depending on the quality of the fabric, ranging from RMB 750 up to RMB 2,500 for imported fabric from Italy or England. Ladies’ suits are also a specialty of Calvin’s with prices from RMB 650 to RMB 1,200. Calvin can also personalise your clothes by embroidering your name or initials on the cuffs of your shirts or inside the jacket to add that extra touch.

Whether you want a high-end suit or a one-off outfit for a special occasion, Calvin’s Tailor Shop is the ideal place to get perfectly-fitting quality clothes at a reasonable price.

Business Hours: Open 7 days a week 10am-8.30pm

Place Name: Calvin’s Tailor Shop

Place Address: No.5049 5/F,Luohu Commercial City Shenzhen (Luohu metro station, exit C) 深圳罗湖商业城5楼5049号 罗湖地铁站C出口

Phone/WhatsApp/WeChat: +8613682435489

Email: tailor-calvin@163.com

Website:  www.chinesebesttailor.com

 

 

Buying a Hong Kong Owned Chinese Company Out of the Box

We have heard a lot about buying a shelf company in Hong Kong, this is common talk in the blogosphere. But have we heard about buying a Hong Kong company that has a Chinese WFOE (Wholly foreign owned entity) with it?

Today, we will dig into this, why you would consider it, and what you need to do

Getting More and More People Approaching Me To Buy / Sell Their HK/ China Business

As the Global From Asia blog gets out there more and more, we get emails from people for all kinds of things. One has been people who are looking to buy or sell their businesses here in Hong Kong and China. It is a pretty complex process, and there are a few different case studies we can cover in future blogs.

One I received recently is interesting. The client has a couple of Hong Kong company businesses that each own their own Chinese WFOE company, all setup and operating. He would be open to selling and transferring it to a new buyer.

He sees that there is more and more discussions about buying companies here. Getting plugged in fast with the China market for those who still haven’t tapped in yet.

Why Buy a HK / WFOE Combo?

So as part of the sale, it would not include the customers or supplier database. It would be the structures set up with their licenses and banking accounts. So you’re not buying this business for the customer assets or any IP – but instead to:

  • Save time. Getting banks in HK has become slow and tedious. China is also, and has been like this for quite some time.
  • Business in a box. All the banking arrangements are setup, and the licenses you need for an import / export company are ready to go.
  • Aged company. These are older businesses. Having some years already put away for the company history always helps out. Use it when applying for financing or other “intimate” business relationships.
  • Get all the licenses you need, right away. Many people want to do business in China, but aren’t sure if they are getting all the licenses and paperwork they need. This will make sure you have it all, used for years that way.

How Would a Transfer of a Hong Kong Company with a Chinese WFOE work?

Ok, so you’re interested in this and still with me here – great!

Because the Chinese company is 100% owned by the Hong Kong company – all the activity would happen at the Hong Kong level. You would become the new owner and director of the HK limited company. Then you would automatically own the Chinese subsidiary because it is owned by the HK parent company.

There would be transferring of bank account signers on the Hong Kong side as well as the Chinese side, and that would do in person.

There would also be some updating of the legal representative in the WFOE side, which the seller can help you with.

So, you will then be the owner of an optimized and functional trading company. That is, without the months of headaches and the current issues with banking.

How Much For What You Will Get

You’re now asking yourself, ok, how much? The price won’t be less than if you started one from scratch – but this shouldn’t be the reason you’re doing this. This is to get an operational and functional import and export business without the headaches.

This is for trading and manufacturing WFOES with full import-export rights. This means you can use it for VAT rebate facilities and even domestic sales.

The price is negotiable for how much involvement you need from the seller, and we will take serious inquiries if you contact us.

The price range is starting at $200,000 US dollars to $350,000 USD. The range is dependent on your specific terms and requirements.

Sound Feasible?

I’d love to hear your feedback and comments on buying a full on HK/China trading company operation. This is for serious business owners who are doing serious business in their home countries and want to plug right into the Hong Kong and China market fast and seamlessly.

Will keep people posted on the progress, in the meantime please leave comments or questions about this in the comment section below.

Staying Motivated in Our International Business Endeavors

This article is originally found here: https://www.globalfromasia.com/businessendeavorsmotivation/

It happens to us all.

We hit a breaking point in our business endeavors. As a business owner, many don’t see the downs in the roller coaster ride. And often it is our emotions more than anything else.

What do we do when we hit a bit downturn in our global business?

This is a big challenge, and there are tons of answers depending on your specific situation. Today I hope to give you some tips and inspiration that have helped me in the down times.

Downtimes Can Happen in your Business Endeavors & Don’t Blame Yourself

Businesses go up and down. There are bad days where the stars weren’t aligned, potential customers were angry at the rain or snow, things happen. Try your best to remember that with good times, there will also be bad times.

Here is one of my favorite quotes for dealing with a bad day:

999 Dolly Parton Quote – to get the sunshine we need to deal with the rain.

So when you’re in a bad state of mind and business is down, remember that the bad times you get through will only make you stronger. And if every day is a good day, then by definition they would be an average day! We need to get through the bad to appreciate the good.

So, don’t be too hard on yourself. The trick is to get through the tough times, as most people fail – or choose to fail – at those times.

Don’t Freeze Up – Keep on Truckin’

There have been some days where business systems were down. In a previous SEO tool company I was a partner in, the system was down for a day! The customer service was blowing up!

Those times, especially in a small business where a lot of work is already overloading the few people in the organization, you want to just freeze up and take a walk.

But this is what separates the good from the bad. The winners from the losers. Face the problem head on. Be honest with your clients, your team, and yourself.

When I lose money in a business decision, I try to remember – this is a one time expense. You can’t predict the one time bad expenses that come up. That is part of business. But you can control that you deal with them, and that you learn from them. And you improve your business systems for the long term.

On the other hand, if this business issue keeps coming up, it is NOT a one time expense and you need to address it immediately. That is your job as a business owner – to look at the big picture, step back and see the workflow of the company, and plug holes.

Look At Your Costs, Budget For The Tough Times

We should all be budgeting. Planning our recurring costs, and looking to growth.

It is our job to leave room for errors. For unexpected mistakes. If we don’t have some kind of safety net in the form of cash, then we’re in trouble.

Bill Gates saved a ton of cash on the books. 999 He did this so that he had enough money to pay for the staff for a full year without any income. That is extremely safe. But by having this safety, it allows us to think more long term, and handle the hiccups that come in our business.

Maybe you can’t afford to have a year’s savings to cover your costs without sales, but try to give yourself a few months. That way when you have these bad days, or probably longer… you can rest a bit more at ease.

Believe me, I have been at times where I was close to running out of money every week. It is so hard to focus when that is the case. Try your best to give yourself some runway.

Be Zen – Step Back While It’s Happening & Reflect

Controlling my emotions is something I learned while doing business in China. Heck, maybe I would have learned it if I had stayed in America. But in China when I got frustrated at business, most of my Chinese associates would tell me to work on controlling my emotions.

This has been a key difference in business practice I have noticed between East and West.

Westerners, we are much more open and straightforward about our emotions.

In the East, it is about not showing your emotions. Being calm and cool on the inside.

While which one is better is up for debate, I do like the idea of reflecting on how you are feeling. Look at yourself in the third person. Be a fly on the wall in the room, looking down at yourself. Why are you feeling the way you’re feeling?

I love to take walks when I’m stressed and overwhelmed. It kind of resets my mind. While walking, I try to analyze the situation and what I am thinking. Why am I upset. If the worst outcome happens, what is the worst result?

Normally when you think in this way, you can be more confident and cool when “getting back in the action”.

Cut Back On Things – Simplify

Here is where I have been weak most of my life. I love to do so many things. I love to learn. To be involved.

But this is like being a pack rat.

And your mind gets cluttered.

You need to write down all the things you’re doing and cross some of them out. Whether this is your personal life, your education, or your professional careers.

I always think of a story back in my college days.

I was in a fraternity, well I was rushing at the time. I was the stressed out “Mikey” with my backpack full to its seams and rushing from class to meeting to class. Josh, one of the older brothers, called me into his room at the fraternity. He saw I was so overwhelmed so he asked me:

“Write down all the things you’re currently involved in”.

I wrote down tons of things, like student government, investing club, and yacht club. He looked at Yacht club and asked me “do you know how to yacht”. I said no, but I was on the boat a couple times, I was the secretary so my role was not to run the boat, but to take notes and keep the meetings in order. He laughed that I was secretary of the Yacht club and had never sailed a boat.

So after looking at the rather long list, he took a thick black magic marker and ran lines through over half of the list. I cringed when he crossed off some of them.

After he finished crossing off a lot of them, he gave me the sheet back and said.

“I want you to come back next week and report back that you have quit all the groups I have crossed off on the list. Ok?”

I was so afraid to quit something I had joined. But I followed the instructions. I went into the groups and clubs he crossed off and told them I was too busy to help anymore and had to cut back on extracurricular activities. They accepted.

Within just a couple weeks, I noticed I had more free time! I was able to de-stress a bit. And the funny thing is, I didn’t feel like I was missing out on anything.

Thanks Josh!

Hopefully you reading this can list out all the things you are doing. Ask someone like Josh to review it and cross out for ya. Or if you are mentally strong enough, cross them off yourself.

Simplify Your Multiple Corporate Structures Around the World.

Now we’re getting a bit more relevant for this Global From Asia blog! We all are so excited to have an international business. The sexiness of having companies and operations in China, America, Brazil, London.

Yes, having global corporate structures and teams around the world is sexy! So exotic. James Bond style.

But when times get tough, upping all these company structures is exhausting. Both on your time, your brain, and your wallet.

I have had to bite the bullet a few times and close some companies within a year or two of setting them up. A UK company was one of them. It took us about four months to get it setup, between the company and the bank account. Mailing documents over the Atlantic Ocean a few times.

But we weren’t really leveraging it enough. A eBay account and warehouse weren’t enough reasons to justify the costs to maintain it all.

We went through the process of closing the operation down. Think some of the stock is still in a buddy’s garage in Ireland (this event happened back in 2008!). Or maybe I told him to give away some of those home bar goods as Christmas grab bags at his company.

It was a tough thing to go through. But once things happened and it was “back to being simple” the business went a lot smoother.

Like many things in life, simple is usually better.

Therefore, when business gets overwhelming – write down – or re-write from scratch – your business processes.

Keep Your Eye On The Ball

So many distractions in our life and our business. Ironically, just as I was writing the last paragraph my wife came in making a lot of noise and totally got me off point.

The trick is to keep your “eye on the ball”, or think about the goal. I have been writing more and more, and now I am documenting how many words I write, at which time, and what makes me more effective. I have found that writing blog posts like today’s helps reach people, help many people out, and also get new clients.

What is helping you get things done? I am quite sure there are a lot of things that get in the way.

Normally it should be about getting sales and additional revenue to your business. Making more money is always a good goal for any capitalist. So write down those activities that get to that goal.

Too many ways to make money, that means too many channels. Pick the ones that have the most ROI – return on investment – meaning either in your time or your money put in, the most benefit comes back.

Focus On The Business – Not Complete Business Structures

So many people talk to me about having an offshore company here, and a operating company there. All too often, they are talking to me about this when they are pre-revenue.

So, they are making things complicated before they even have any money coming in!

Did Google and Apple worry about their offshore structures when starting out? They never worried about it, as once they got big enough they hired smart MBAs and CPAs to take care of all that.

Stick to your core business – making sales of the product or service you are offering. And get to the point where you can hire an expert to take care of all the global corporate structure formations later on, when you’re on your yacht in Tahiti.

Think Long Term Over Short Term

You’re a business owner, and most likely, you’re a major shareholder as well as a major director of the company at the same time. That means you will get the biggest payoff later on.

The beginning is always the hardest. You need to outlast all the competition. You need to fight when everyone else is crying mercy.

Losing money in the short term may be hard, and sleeping on a folding cot in your office is not comfortable, but you’re a warrior. These sacrifices now will pile up and become an unstoppable machine in the market to take over your industry.

You may get in situations with staff where you need to pay out some damages due to cost cutting. You may have a bad client that doesn’t pay a big bill. You may get a lawsuit from a competitor.

These times suck for an entrepreneur and business owner. The world feels like it is upside down. I’ve been there, and you’ve probably been there too.

For me, the best way to get through it is to think long term. That these are one time events, that I can get past, learn from, and prevent in the future. It toughens you up, and you just got to get through them to enjoy the long term benefits of business ownership.

If you’re always stuck in the day to day of your operations, it will be hard to think long term and some of these events feel like the end of the world. Its tough, but we need to step back, look at our business as a whole, and make it happen. If it was easy everyone would do it. Its these tough times that define the winners from the losers. And if you can stick to your guns and get through this, you’ll be better in the long term.

How About You, What Are Your Tips?

I’d love to hear your tips for getting through those tough business days. Especially for those running a global business, trying to keep things in order can feel like plugging holes. A lot of these things haven’t been put in the text books, and that is what gives us the opportunity to get ahead in business and in life.

So I hope you enjoyed this guide. I’d appreciate you leaving a comment below with your feedback and ideas. Let’s make this a source where people can come to when they are overwhelmed in their international business endeavors!

Can You Get a Job from a Hong Kong Company Overseas?

This article is originally found here: https://www.globalfromasia.com/workingoverseas/

Do you have a job from a Hong Kong company full time? But living in America most of the time?

When did this insanity start?

Life used to be so simple. We would all stay in our own countries, have our address in the same town as the company we worked in, and pay taxes to that city / state / country.

Nowadays it seems so complex.

But it is awesome. And I get to hear great questions from readers like today’s post.

Let’s share the question here:

(Disclosure: we are not tax professionals, just making a conversation and thought process for your own situation and to ask your own tax professional before making decisions)

Today’s Question

The last two years or so I have been consulting for an American pump manufacturer. Helping them with supply chain and other issues in China, Hong Kong and even Vietnam and India (haven’t been to India physically though).They are now talking about hiring me full-time. It seems that for budget bucket reasons, they want to hire me via their 100%-owned Hong Kong trading company. I would be the first employee there. I really just have one big question set:

How much time would I need to spend in Hong Kong physically to be counted as an employee? And, of course, pay Hong Kong’s beautifully lower income tax rates. My wife and kid are now in California and I would want to spend time with them but if I could do that AND spend time in HK (for the lower taxes) that would be ideal. I am going to be going much more often too — so might as well place me as an employee over there.

Mike – I would really appreciate your time and thoughts on this. Let me know
(Reader’s name removed upon request)

Factors To Consider

As almost all advice, please do you own due diligence. I’m not a lawyer, and am sharing as best to my knowledge and research can provide. Disclaimer, don’t blame me if I am wrong!

Are You American?

I think first question is, are you a US citizen? Believe this will make things more complicated.

Especially if you are living and residing in California, the most expensive state in the United States. They will want your tax income. I believe you are still seen as a California resident, and have to declare this income to the state and pay taxes on it.

Tricky one, as it’s not a US based company.

Where Do You Spend Your Time? Where Do You Deliver The Work / Value?

So, where are you going to be most of the time? Still in California? If you are in USA more than 330 days a year, you fail the exemption status for foreign earned income.

If you are to be outside of America, especially California, for more than 330 days, as an American, this foreign earned income could be exempt from taxes.

But I can’t imagine the US tax department liking you getting paid offshore and sitting at your home office in California most of the time. Make sense?

The Hong Kong Company is Giving Your Proper Employment Contract

They intend to hire you full time, right? So then I would assume you would get an employment contract from them, in Hong Kong.

As an employee in Hong Kong, you would need to then get a Hong Kong ID card. That isn’t a bad thing, it has a lot of perks and advantages. But HK immigration will want the company to see if the company can hire someone in Hong Kong locally first. That is just normal immigration things, Hong Kong is seriously overcrowded and they are getting strict on who they allow to come into the region.

In Hong Kong, to get a job from a Hong Kong company, you’d need to get a proper employment contract as well as a HKID card.

Then, of course as an employee, you and the Hong Kong company hiring you would need to pay the associated taxes in Hong Kong. Which, you mentioned are much lower than in USA and most other parts of the world.

Hong Kong employment tax rates.

How Will The Hong Kong Company Pay You? HK Bank?

How will this company be paying your salary? I would assume you have to have, or setup, a personal bank account in Hong Kong. Then they would setup payroll and have the funds deposited to your bank account either every couple weeks or monthly.

Will you need to access these funds right away? Will you use these funds to pay for your cost of living in California, USA? If so, I would then imagine you’d have to wire transfer the money from Hong Kong into your American bank account.

That money would then be treated as income in America? You will put those transactions in your personal bank statement. At the end of the tax year you’d have to figure out how to classify that to your tax accountant.

But, to stress, you can’t hide your money in Hong Kong from the US tax authorities anyway. You were never supposed to, but nowadays it is impossible. So you’ll have to declare this income to the IRS and explain that it comes from Hong Kong and that you’re hired by a Hong Kong company.

If you are doing it this way, you’ll be paying monthly bank wiring fee, and then declaring taxes in America as, a sole proprietor? Not sure to be honest.

How Big Is This Company?

The next point to look at, how big is this company? And when I say company, I mean the entity registered in Hong Kong. Doesn’t matter if this company is a massive conglomerate registered in the UK. What matters is how big the company is in Hong Kong.

That means, how much revenue. How big is the “real office” (not a serviced address or virtual office). How many full time staff, located in Hong Kong, and a legal hiring with employment contracts are there. Also, there is a difference between how many local Hong Kong people have jobs as a percentage of how many foreigners have jobs.

Any company that has a lot of locals hired, and is doing a lot of payroll tax is contributing to the local economy. Governments love job creations – for their people.

So these kinds of figures will help in your case as a foreigner in a Hong Kong company.

This is a Local Hong Kong Limited Company (Not Offshore Elect)

I am assuming that this Hong Kong domestic company (as opposed to offshore elect) and paying the 16.5% corporate tax rate on earnings. If you think you can get the 0% offshore election option and you can still get a local job in the company, you’re a bit mistaken.

You can’t have your cake and eat it too.

If you’re an offshore company, that means you have no local Hong Kong operations. One of those factors being a Hong Kong employee – which you are trying to become.

What’s Your Salary? Above or Below Market Value?

Another thing the Hong Kong government looks at, as well as any government, is it is a fair salary? That means is your salary what a local Hong Kong person would be in this same position? If you’re the director of the company trying to give yourself a lower salary to avoid taxes, may not work.

Other cases are if you give a lower salary to yourself or your foreign staff in exchange for support on the employment visa. Some people are willing to take a lower salary just to be able to stay legally in Hong Kong. But this will also raise flags and be problems.

You need to pay what the market will bear for someone in your exact position, in Hong Kong.

Has The Company Tried To Hire a Local?

Are you trying to use this salary and income as a way to immigrate to Hong Kong? There may be instances where the immigration department wants to see if the company has put out a job advertisement to place this position in the job market. That means, give a chance to the local Hong Kong market to get this job if they are capable and willing to accept that salary level.

You may say, why does that matter, the owner and director of the company picked me! Again, this depends on the case of how hard it would be for the company to find a local person to do the same role as you. Maybe you’re so special that no one else in Hong Kong can do this job? There are of course cases where that is true, especially in computer programming and technical roles. There is a big shortage of supply in the job market for this job speciality.

So if you’re working in a position that is in short supply in the Hong Kong job market, you’ll have a better chance of this Hong kong salary scheme you’re working on.

What’s Your Long Term Goal with this Job?

So you need to ask yourself, you’re living in California, you’re American. Your family is there too, you’ll be flying back and forth between the 2 continents. Where do you want to spend your time?

Do you want to immigrate to Hong Kong? Bring your wife and kids here, go through the education system here? Or is this just a temporary income stream at the current employer. You want to use it to get more cash, save some taxes, and build some international experience on your resume.

Nothing wrong with either case. But of course, if your long term plan is to relocate to Hong Kong, going through these hurdles will be more logical. If it is a short term play, you may re-consider all the paperwork and hassles your employer and you will have to go through.

Do You Need / Care About a Hong Kong ID?

Another thing, from the email I got – it seems there is no interest in getting a Hong Kong ID (HKID).

A HKID is a pretty valuable thing to have, wherever you are in the world.

As a local resident in Hong Kong, you will get access to the medical system. Sure, public hospitals are not as good as private – but if you’re in a bind, you can always rely on public hospitals taking care of you.

Related: We talk about Hong kong medical options and insurance plans here.

You’ll also be able to cross into Mainland China much easier. Take it from me, as someone without a HKID, my friends who have it zip past me on the borders. If you’re an international business person going between USA, Hong Kong, and Mainland China – you’ll like to get this ID card if you can.

What Do you Think? Get The Job contract in Hong Kong?

So that covers my points. What do you think?

There are other options for how you’re compensated. You can always be an independent contractor and get paid in cash / wire transfer. You’ll file with your US taxes as an independent contractor and your US tax accountant will be able to classify this.

Disclosure, I am not a tax specialist, and this article is a general guideline and free help for those curious on the topic.

Feedback, comments, and hate mail is welcome!

Amazon + Hong Kong – Match Made in Heaven

This article is originally found here: https://www.globalfromasia.com/hongkongamazon/

Are you an e-commerce expert, or maybe just getting started out? You should get serious and check into leveraging the power of Hong Kong. For your global business, and Amazon USA sales and supplier center’s headquarters.

Today we’ll dig into why Hong Kong is such a great place to base your Amazon business.

Notice – This Is for Everyone Except US Citizens

This article is only applicable for those who are non US citizens. If you’re a USA citizen, Amazon will enforce that you use your US personal tax ID or a US company.

The rest of the world, you can choose where to establish your company and have your Amazon sales go. Just keep that in mind. When you are setting up your Amazon seller central account, it will ask if you, or anyone in the organization is American. If it is 10% or more owned by a US citizen, Amazon will tell you that you must have misunderstood the form. You’ll get sent back to the beginning of the setup process and open a US-based Amazon account.

Benefit 1 – Corporate Tax is 16.5%, And Can Also Apply For Offshore Status

So, as a global business owner, you can choose where you setup your business. In Hong Kong, even the “normal” corporate tax is at a global-low of 16.5%. There is an offshore elect option that you can file. (Plug- we can help you with offshore status) If you qualify you can get a 0% exemption.

So ya, Amazon sellers can enjoy this lower tax.

Benefit 2 – Still The Same as a USA Based Amazon Seller

If you’re selling on Amazon USA marketplace, they don’t make the sellers look any different, based in America or not. So you don’t have to worry at all about your sales and marketing being at a disadvantage because you’re not registered in US.

Many people don’t understand this and think they need to be American or they need a USA based company to sell on Amazon USA. Nope.

If you’re interested in digging in more, we have a good podcast with Wilson Blues on selling in Amazon USA from Mainland China. This applies to not just Mainland China, but Hong Kong and other places as well.

So if you’re European, you could just sell from your European company in Amazon USA. But the trend I see is a lot of European entrepreneurs re-structuring their businesses over to Hong Kong. For their Amazon businesses, as well as many business types in general. So why not just start fresh with your new Amazon business? 🙂

Amazon handles the payments to Hong Kong by Payoneer and will deposit it to your Hong Kong bank account.

Enjoy USD Accounts and Multi Currency Accounts

Here’s another big benefit- multi currency bank accounts. A ton of people. The Australian dollar currency volatility is crushing Australia business owners. They don’t have a choice to get a multi-currency account. (Not sure if that is true for all Australians, there must be some multi-currency banking somewhere in the country, no?) So they are getting destroyed when Amazon USA sends them their sales proceeds.

When they register in Hong Kong and get the bank account all setup, they can then get the payouts in USD. This means no more currency risk, and they can convert to any currency they so desire, when they are good and ready. Maybe you can pay in Chinese Yuan to your Chinese factory, or keep that in USD too.

Tons of entrepreneurs I work with are so happy they don’t need to deal with the currency of their home country. They are international business people, traveling the world. They don’t want to worry about the risks in the country they were born in having currency fluctuations.

In today’s world, we are free to do business anywhere we like, and Hong Kong allows us to choose the currencies we hold our cash in. Should be like that everywhere, by default. But until that day, Hong Kong is a good place for you to set up!

Easy to Buy from Chinese Factories

For decades business owners from around the world have benefited from Hong Kong when doing business in Mainland China. Counterintuitive I know, many of us think we should just go direct to Mainland China. But Hong Kong is where it’s at, and even Chinese factories have HK businesses with bank accounts.

So rather than wiring the money from your home country of Europe, Australia, etc, you can save money! Just doing a HSBC Hong Kong bank transfer to your supplier’s HSBC HK account. Free transfer, settles there in an instant.

Easier Legal Contracts

Like buying from Chinese factories, it is also easier to make business deals with them. Because they may have a HK company, a contract such as a sales contract, NDA, or even an invoice is easier to arbitrate if both companies are in the same country!

And even if the factory is only set up in Mainland China, there is a special relationship and understanding between HK and CN. It’s just closer, and the factory will respect you more. Plus they will see you are more serious and long term committed to Asia, China, and business on this side of the world.

As most buyers are still just using their home country’s business structure, you will stand out from the rest! Take this extra time and do it right – factory owners will take your business more serious!

Banks Are Fine With E-Commerce Business Models

We all worry these days about banks approving our accounts and keeping them in good standing. Don’t worry about the banks flagging you as a high risk business if you’re selling on Amazon USA. Banks in Hong Kong know this is a gold mine, because it is!

Come to your bank account interview and application day with your Amazon sales records. Show them the volume you have been generating and the revenue you have. Show the screenshots of the product listings and that you have your own brand.

I’ve helped a lot of Amazon seller clients who have set up their bank account with HSBC and not had a problem. Just be confident and transparent about your business model, Hong Kong is the right place for you to set up your global Amazon business.

It makes sense to do it here – buying from China, selling in USA. This is the trading business of the past, just now re-built for the new technology age.

What Do You Think? Will You Establish Your Amazon Empire in Hong Kong?

There you have it, brain dump of why Hong Kong is the right place for your Amazon USA sales business. As I meet these sellers on at least a weekly basis. I am confident to say that this is the right destination for your long term e-commerce business.

What are you thinking, do you have a company setup yet? A lot of clients started selling on Amazon through their personal accounts and it is getting bigger and bigger. Take that big step and make it formal. It will feel a lot better and REAL.

Or you already have a company setup in your home country for this Amazon business? Restructuring is a bit of a hassle, but you can get through it. Start the HK company and re-work everything around Hong Kong, step by step. The Amazon sales, the supplier orders, a new Paypal HK account.

Any questions or concerns, please leave a comment below! And if you like this article and want to setup in Hong Kong, I’d love to work with you.

Hotels To Stay in Hong Kong (From Backpacker to Baller)

This article is originally found here: https://www.globalfromasia.com/hongkonghotels/

Welcome to Hong Kong! The first thing a new client asks us is – what is a good hotel to stay at in Hong Kong? With so many choices and price ranges, it is a difficult answer to say in 1 email! So we have taken parts from various posts and made today’s guide list a full range of options for different locations and price ranges.

Related: check our Hong Kong traveler guide for some highlights.

This guide will be ever evolving, and if you have places to suggest – please contact us or leave a comment below.

Also, if it is your first trip to Hong Kong – check out our complete (and free) Hong Kong Business Traveler’s Guide.

Where in Hong Kong?

Hong Kong isn’t the biggest place – so even if you pick a hotel far from the center it is possible to get there and back for meetings and conferences.

Going to Global Sources Trade Show

Many come to Hong Kong for the Global Sources Trade Show. This is a bit far from downtown, so you need to decide if you want to visit popular bars and restaurants at night or not.

While there are some nice hotels at the airport and near the Asia World Expo (where the Global Sources Show is) – most people stay at a hotel in Kowloon or Hong Kong island.

Why? Two reasons

  • There is a free bus or Airport Express for Global Sources Attendees. During the trade show season, they worked a deal to give you a free pass to the Asia World Expo from Kowloon or Hong Kong station. Just show your badge or registration papers and you’ll get a pass.
  •  There are more things to do at night – Just like any city, the airport is not downtown! Hong Kong is the same. So if you want to get some nightlife in and nice restaurants, it’s best to find a place in Central, Wan Chai, or TST districts (as well as quite a few other central hubs).

Going to the HKTDC Trade Show

There is another trade show happening in Hong Kong as well – the Hong Kong TDC show, or HKTDC for short. This is on the main island of Hong Kong, aka Hong Kong island, so you can just take a MTR to Wan Chai station and it’s about a 7 minute walk to the HK Exhibition Centre.

Many people go to both the Global Sources Show as well as the HKTDC show. Each are a few days long, and have just a little overlap.

So if you’re looking to do both, and want to reduce the commuting and have a hotel in the downtown area – look for places in Wanchai, Causeway Bay, Admiralty, or Central. Sheung Wan is another good one.

Always Check The Address On MTR Map

So a good rule of thumb is to ask the hotel what the nearest MTR station is. Then, find the MTR map and look at it.

Downtown is the blue line on the bottom of the map. That is where the “action” is. The bottom left is the main spot, with Central as the hub. If you’re near Central, you can also take the Airport Express right up to the Global Sources show, so it is easy to get there and to the HKTDC.

A newer MTR map will show you more stops on the blue line to the left (West) of Sheung Wan (and left of Central). These are “up and coming” districts with this new metro line expansion, so you may be able to get cheaper hotels and better value for money there.

Also, if it is far up north or far to the east – that is about a 45 minute to 1 hour MTR ride from downtown. I learned the hard way “back in the day”. Plus I have had clients in town who book a nice hotel there but it is just so far from everything. You’ll save money, but spend more time in taxis or more time in the subway.

What’s Your Budget?

Hong Kong is one of the most expensive places in the world! And no matter how much you spend, you will probably have a much more compact room than anywhere else in the world! Space is such a valuable asset here it is unbelievable.

So when someone asks me for a hotel recommendation, I would ask:

  • What is your budget?
  • What are your expectations?
  • What location do you want? Central? Or Willing to Travel more?

If you want a 5 star hotel in downtown, you’re talking around 500 US dollars per night. If you can deal with a 3 star in a downtown area, you can get by at $200 USD a night. Then there are the 1 – 2 star that you can find around 100 to 200 USD a night. If you’re willing to go to Kowloon side or even further into New Territories you can get better quality at a better rate.

Hong Kong is really all about location. And size of the room.

AirBnB + Hong Kong

AirBnB. An obvious one, but less choices here as the Hong Kong government is strict about businesses listing here – https://www.airbnb.com/s/Hong-Kong. Over and over again this topic comes up – Airbnb is technically not allowed in Hong Kong and the government has forbid people to use it. You can list there, but to list, you need to be a business with a license to sell a short term stay.

To legally list on Airbnb in Hong Kong as a person / individual, the listing has to be for at least a 1 month stay. That is what the government allows for personal to personal renting.

Yet I have friends from NY and other places who have still found amazing places to stay through it, as recent as a couple months ago right in Mid-Levels in Central. Check it out, and see if you find any apartments you can rent. The risk if there is a government crackdown at your apartment is that you would get your money back and have to find a new hotel. I haven’t heard reports about it – and so I wouldn’t worry too much renting on Airbnb for a short term stay, but listing is another matter.

Yes Inn

Backpacker Looking For Value For Money?

One I am safe to recommend is called Yes Inn. This is a hostel, pretty clean, and a bunch of my friends have stayed here. They have two locations on the Hong Kong Island side – Causeway Bay and Fortress Hill. There is also one on the Kowloon side in Mong Kok (check an MTR map to learn about specific districts). You can share a room with other travelers, or get your own private room. Below is a pricing table:

Standard mixed dorm suite HKD $179-419 (USD $22-56)
Private room suite HKD $199-459 (USD $25-59)

This seems to be the best value for a bootstrapping entrepreneur. They have a few locations in Hong Kong; the better location is in Causeway Bay, but there are also locations in Fortress Hill and Kowloon. Rates start at about 200 HKD a night (28 USD). Obviously check their website for the latest prices, but in my opinion the lowest cost for the value and location you can find! http://www.yesinn.com

Butterfly Hotel

Butterfly hotel is a bit more expensive. But again, you get what you pay for. Rates from 1,000 HKD to 2,000 HKD a night (140 to 280 USD), but you have your own room, there is wifi everywhere, and they have locations throughout Hong Kong. Check out the Butterfly hotel in Central here.
http://butterflyhk.com/eng/our-hotels/on-hollywood/index.php

King’s Inn

I think this is a mix between the two choices above, both in price and in service. The rate when I have stayed here is about 300 to 400 HKD (40 to 50 USD), and you’ll have your own room. But there is only one location right in Wan Chai. The website is a bit hard to use, but then again this is why the price is more reasonable.
http://www.kingshotelhk.com/hotel/location

Next I am nervous to even mention it here – but I think a guide about Hong Kong hotels wouldn’t be complete without at least mentioning it:

Chungking Mansions is the building having about 80 low cost accommodations (guest houses) located on Tsim Sha Tsui (Kowloon district). I have stayed here at least 5 or 6 times, as well as countless numbers of my friends. You can get a room for as low as 100 HKD a night, though more realistically 200HKD. A lot of Indian restaurants that second as a hostel overnight – I have slept to the strong smell of curry at least a couple times there. An adventure to say the least. If you are looking for the lowest cost choice, take a trip over: 33-44 Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong… but don’t say I didn’t warn you first!

The funny thing is – our office is across the street! Yet none of our clients have opted in to staying there!

Want To Stay Near The Global From Asia Office?

Coming to Hong Kong just for us! Wow, we are honored. So many clients ask us what are some good hotels nearby the office. Let’s list out a few. We also link them to booking.com search results, as you can put our company address (found at globalfromasia.com/contact/) and get search results by distance.

Holiday Inn TST District

A big brand and one many Americans know well, Holiday Inn. They have one Holiday Inn that is 1 block from my office: http://www.booking.com/hotel/hk/holidayinn.html and have had people stay there plenty of times.

How much is it? Of course it varies by season and supply demand, but I would tell you about the $200usd per night range.

Sheraton Hong Kong

And Sheraton is a block away from the office too. http://www.starwoodhotels.com/sheraton/property/overview/index.html?propertyID=482

Prices here start at about $3,100 HKD a night (about $400 USD), and are high class.

Peninsula Hong Kong

Another 5 star hotel right around the corner from our office. Also has a great view of Victoria Harbour (for an extra 100usd/night fee on average). The rates here start at 4,000 HKD/night ($500usd) but it is an amazing experience.

http://hongkong.peninsula.com/en/default

Also, if you’re up to see Hong Kong from the sky, they have a helipad on the rooftop!

Intercontinental

This is a hotel I stayed in for about a week when doing a business deal with a European investor back in 2009 – 2010! It is a good hotel and also a bit more reasonable price than some of the other hotels with a room rate starting at $250 USD / night.

Still not for the backpacker’s budget, but for a business person who wants a good mix of class and value, this is an option. It is just a few more blocks away from MTRs, but still right on Victoria Harbour on the Kowloon side with some amazing views. I enjoyed working in the lobby with a massive 2 – 3 story tall window overlooking the harbor.

What Is Your Experience With Various Hong Kong Hotels?

Hope today’s guide on accommodation in Hong Kong is helpful! This could be a book – there are so many hotels and places to stay, this is only a brief overview to give you some ideas of price ranges, locations, and levels of service.

It is probably going to cost you around $150usd a night for a “normal” hotel room, can go as low as $50usd, and as high as $500 – or even more. As everything in Hong Kong, the sky is the limit!

Now it is your turn! Please share your experiences and recommendations in the comment section below. Let’s help each other out!

Cheers to our international business success!

Hong Kong Visas & Immigrations with Stephen Barnes

Listen to the podcast here: https://www.globalfromasia.com/hong-kong-visa-immigration/

Today we sit down with Stephen Barnes from Hong Kong Visa Centre and discuss how business owners should consider the visa and immigration process in Hong Kong. Is it right for them? Will they be registering a HK Limited and planning to remain in Hong Kong, or working “offshore”?

Its a rather complex topic, and we’re lucky to have the “Hong Kong Visa Geezer” break it down piece by piece to help get our heads around it and deal with it properly!

Topics Covered in this Episode

  • Brief introduction of Stephen Barnes and his Hong Kong Visa Service company
  • Entrepreneurs in Hong Kong and out of Hong Kong, thought process of considering a Hong Kong visa
  • Investment Visa, what it is and who its for.
  • Comparing an Investment visa to an Employment visa to a Student visa, and a Tourist visa. Putting it all together, which one is for who, and why.
  • Those Hong Kong companies in Mainland China (Like me) or in Southeast Asia or other countries, how they are treated
  • Diving Deeper into the Investment visa for entrepreneurs and small to medium sized businesses
  • Newbie tip for a Foreigner in USA or Europe looking to make the move to Hong Kong to startup.

People / Companies Mentioned in this Episode

Episode Length: 21:44

Podcast Transcription

Below we had this podcast converted to text, as it is a top listened episode, enjoy!

Introduction: Welcome to the Global From Asia podcast, where the daunting process of running an international business from Hong Kong is broken down into straight up actionable advice and now your host, Michael Michelini.

Mike: Okay. Thank you everyone for tuning in to Global from Asia episode 4. I’m here with Steve Barnes from Hong Kong visa center. Thank you for coming, Steve.

Steve: Mike, it’s my pleasure entirely.

Mike: Okay. Great! So let’s just jump right in. Maybe you could introduce yourself and your company to our listeners today.

Steve: Steve Barnes, been in Hong Kong for 27 years, started immigration practice in Hong Kong 20 yrs ago. I’ve been practicing ever since.

Mike: Okay, great! Yeah, I met you actually at a seminar where you were sharing your knowledge and appreciate you being on podcast for everybody today. It’s a hot topic, visa and immigration…

Steve: Yeah.

Mike: For expats here in Hong Kong. So I think a lot of our listeners are sometimes in Asia where they are coming through Hong Kong, doing their either startup or their entrepreneurial endeavors as a small business or medium sized business. What do you kinda advice them for immigration or visas in Asia or in Hong Kong specifically?

Steve: Well, I’m just telling that my expertise is Hong Kong. I’m gonna limit my comments to Honey Kong, it is an immigration opportunity for anybody who want to established a joint business here but effectively, if you’re a foreign national and you want to reside in Hong Kong to promote, pursue your business activity, you need to make an application for an investment visa, which is an employment visa a credit cases on you undertaking an active investment in Hong Kong and probability test. Together this institution show that you are in a position to make a substantial contribution to the economy of Hong Kong. Now, in many ways, everyone asking how long is visa strings, right? But there are certain things that run a bit advice around every investment visa application that goes on to get approved. The things that you need to show through your planning and through your, through early months of your operation that you are in a position to create local employment opportunities. Don’t get any local jobs on day 1. If you have a business plan that you put into immigration department for investment visa application and there is no opportunity to locally create a local employment, then you’re going to travel together and the second thing that the immigration department are looking for, a suitable business premises and there is a premises that kind of vibe for who you are and implementation direct going to time of your plan. You can kick off with a mere virtual office, which you borrow to cheap place, but the expectation is, then your course, sooner or later, once your business plan arrived at point where you’re hiring your first employee. That first employee will have some more sensible to report, to work to each day, because you can’t expect this person to going that, fulfill their employment duties where employee from your kitchen table or a spare bedroom so no matter how economically to have any kind of bring some quality time, place for your employees to work, you need time to spare and prepare the pre-requisite for a proper engine course. The 3rd leg of approvability still is actually divided into two parts, the first is cash and the second is resources. Cash million dollar question everybody asked me is literally how much cash you need. It all depends on the circumstances. in my experience, if you have less, less than 500,000 Hong Kong dollars, you may find that your application could be compromised, so deem to be weak especially with the other aspect than your plan is a little bit marginal but if you got a half a million or more, it’s reasonable to achieve that you can go on, to expect the consideration of the immigration positively approved rather than negatively think if you haven’t enough cash. So half a million can do it but I’ve seen in application they approved less cash as well but it’s not hard and fast. The trick is to understand that you shouldn’t be really thinking that the immigration department gonna buy into your startup laying type activity which is fine without at least having some cash because you know, laying doesn’t mean cashless, laying means having a money and spending the right kind of money so that’s an important consideration. The max and the more have the issue, it is swiping very smartly got to eye level funding so that’s always good. So that deals with cash and the other element is resources, Now resources are usually all the kind of things that are driving you to make a decision to pursue investment will come in the first place. So if you got a bit of code and you already developed, you wanna use new investment in Hong Kong to be able to build on that. The fact you’ve got a basic version of your product written already. It’s a resource for first of your application if you’re coming to Hong Kong and youre general trading, and you’ve got some kind of clientele that are already in place, that’s all good. Any other resource will allow the immigration department to objectively conclude that your business, if you use those resources together with the cash that you’ve got will eventually go on to results in a solidly and commercial enterprise, that’s the challenge.

Mike: Okay, got it. Thank you so much, Steve. So I just like to recap. He mentioned 3 points. That you’re going to employ local Hong Kong residence or Hong Kong people in the business.

Steve: Anybody in Hong Kong includes lawful employable but without further promiscuous of the immigration department

Mike: Lawfully employable.

Steve: Those people are account as well for persons for the purposes of local employment

Mike: Okay, got it. And that was not to be immediate but yeah to have convincible, clear playing that you will do that. I mean what time of year, 1 year?

Steve: That’s what your plans is, right? I always say to clients, “dont think about structuring your business around immigration, think about structuring your business and ask yourself actually what does this business works for immigration purposes and you will find that there is a quite close-call relation doing business that you will expect to be successful`and those businesses which immigration department approved.”

Mike: Got it. Okay. And then second point is the office, for when you’re employing the workers that is suitable location.

Steve: Suitable environment for them to work. That’s correct, yes.

Mike: And the 3rd is the cash and the resources. I think I just like to kinda some like convert to dollars when we talk, so he’s saying, of course it is always hard, I knew everyone asking how much money.

Steve: Let’s say $75000 – $80000 US dollars into Hong Kong business bank account. Interesting there is you don’t actually need to have all the money in the business bank account. You can have enough money in the Hong Kong business bank account to finance first 6 months of cash flow, and the rest of the funds is you can attest in your personal account anywhere in the world. So you can show you’ve got the money ready to deployment into the business. You need loan those funds by the way then efficiently through at least 2 years it means before you make out a purchase so the best part would good confident proof that you are not just borrowed money and shot fine it back which is always just the perks of visa application. They all know the tricks. They’ve done it.

Mike: Yeah, I can imagine. Okay. So those are the 3 main points. I kinda a lil bit follow up the resources, so code, I mean your degree, or like education…

Steve: Yeah, your service, yourself is also a resource, your background, what you bring into, you got to have a good track record and business in the past, if it becomes successful, they come through all those types of businesses. All that stuff.

Mike: Okay. So then I think some people used a trick of employment visa even though maybe they are not familiar or for a small business. I know you don’t that more greyer.

Steve: This is an old guess not. People think that you can somehow separate ownership from your business vehicle and become a third party and also an employee, You can’t. So during the currency of the application if its a new business situation, you’ve come to this interaction, that the existing composed interaction they’ll going to look to say who the owners and director of the channel is are. i would say that you putting yourself as an employee but you’re actually own the company and director of the company. You expected on how you dresses up. They are going to comply the investment visa probability test here. that’s the hard to test of substantial contribution to the economy rather than the lesser test which is do you personally possess special skills and and expected knowledge that are not already available in hong kong . So your personal skills in the contacts of business that your shares it will be seeing merely as a resource and they will apply an investment visa approval test on you but if you’re making the application for an employment visa, and you don’t have an interest in the business and then address you will just apply special skills and obviously, experience to anyone move so much to the ability of the business to substantial contributions to the economy of Hong Kong.

Mike: Got it. So there’s a 3rd option I heard of, student visa?

Steve: Well, student visa will get you on ground of Hong Kong but you not lawfully employable, you can’t join a business of your own based on Hong Kong, you can only study and thats it.

Mike: Okay, okay. Thank you for that. Lets, so we talked about, this is kinda recap, I think there’s a three even four I mean, technically there’s a tourist visa, to make on your passport. I am on my US passport holder. I have 90 days stay.

Steve: Yeah.

Mike: So I actually never legally work in Hong Kong. I’m an offshore Hong Kong company.

Steve: RIght.

Mike: So, I sometimes visit Hong Kong, sometimes working up a coworking space, gather some meetings. I’m okay, right?

Steve: Well, they say, it’s all about residing. So if you, as I know you are living in China but you spent most of your time in Hong Kong and pursue some business you establish here and your status is visitor, if your intentions to reside, it’s crystallize, then visiting days are just actually suitable in various before, because you’re effectively directing, controlling, employees of your company and visiting is not what it intend to do. the visitation is supposedly to come, interaction with Hong kong as a regular visitor and you gonna depart again. So, when you end up spending a great deal of time in your visiting days status instead in reality your intention is to reside is crystallized then you need to change your status from visitor to investment that you’re running in Hong Kong.

Mike: I understand. So, yeah. I mean, it’s actually complicated for me, so we talked about it, i think the correct way is, I, as entrepreneur and I wanna reside in Hong Kong as an investment visa.

Steve: Absolutely. You need to incorporate a company, get a business registration, you need to have a really good business plan which doesn’t actually need to be reflective in form of document cause in many ways immigration department normal one want to register their business plan that you might have write to an ipad. So if you’re self funding your business, there’s no formal need of business plan that might be a good practice to crystallize your thoughts and the immigration department will look at your stories as whole. They need to see that you got all the resources that you just discussed. They need to be satisfied that there is no security objection to you being granted decision to reside in Hong Kong to employ your business plan. When you have a good story, you carry can the arguments, you can tickle the bosses and you got the right level of money and there’s no security reason for you not being granted a permission you’re looking for, there’s no reason to expect, the immigration department will give you what you need.

Mike: Okay ,time frame normally?

Steve: 6 – 8 months.

Mike: 6 – 8.

Steve: 4 – 6 months, I’m sorry.

Mike: 4 -6 months.

Steve: If you’re not a resident in Hong Kong, you live somewhere else like, you do, when you want to make an application it’s going to take 4 – 6 months. If you presently reside in Hong Kong and you’re actually working for another employer and you want to stop working for another employer and start up for yourself, you still need to pass in investment visa probability test. Thus an existing residents that application dealt with different section of immigration department. It applies the same criteria but it’s a different team that handles the work. And because you’re an existing residents, that thing will finalize your application 6-8 weeks not 4 -6 months.

Mike: Okay, got it.

Steve: Make sense?

Mike: Yes. Thank you so much. So yeah, to kinda recap. Even if, so if you are working for a company in Hong Kong and you’re a resident of Hong Kong, when you wanna start your own business, apply for an investment visa, it’s a little bit shorter a month, two month and a half, still have to the money in your control.

Steve: Yep.

Mike: Either a company account or personal accounts.

Steve: Yep.

Mike: But if you’re doing it offshore or like me on China or others in Southeast Asia or West or as a visitor, so then if I came on 90 days stay and i’m staying in a hotel.

Steve: You can apply for guest status while you’re here but the immigration department dont allow the fact that you have a pending investment visa application to somehow advantages you in relation to 90 days of your stay. You have to leave before the 90 days are up and make a re-entrance some station if you want to comeback as a visitor before the immigration department approve your investment visa application.

Mike: Got it and really, really viable information, Steve. So again, I like to always ask on this talks. One kind of tip for newbie listener. I think a lot maybe don’t have the 500,000 Hong Kong Dollar but they are educated hustler entrepreneur. What kind of information would you give them?

Steve: Well, bear in mind that the visa class by definition called for active investment. So the fact that you may be a viable entrepreneur and you can you know, duck, dive and wave above by the best of it, that’s all well and good but you gotta understand that immigration department applies to the security of you that are mandate to make sure that they don’t approve foreigners who set up business here that have access to red label broker credit terms that you can find in Hong Kong and basically you know spend your way to disaster, trail of Hong Kong creditors on your way so even though you may have,maybe you made a license peripheral stuff to crack on with it, with very little capital using all year, argument and natural skills the immigration department don’t actually do not place a great deal creations on that. You still have to have a body of cash behind you to support yourself while doing this.

Mike: Got it. It kinda gives me a followup question. So if I answer investment visa issued, do I have more advantages on business?

Steve: Well, once you get investment visa, the immigration will approve you initially for 12 months to undertake the work you’re planning to do to promote that business as reflected in your business planning that you’ve told the immigration department is going to do on how you gonna spending your time in the context of that company and that company so you can get approval but just to do that business nothing else. Now, if opportunity put the things developed that perhaps you need to private half way through you often do something else because 1st activity is not working, that’s okay. Bear in mind that some point you even have to report that to the immigration but you won’t have to report that, the point where you privative but if, as they usually do this type of start up scenario, they grant you an approval subject to business reviews at the end of the first 12 months, so then the first 12 months immigration department will going to lift up the full and everything you’re doing in the business so if you privative in the meantime you have to explain to them. The more importantly they’re looking to see that through the lackluster performance that you have in fact been engaged in the activities that they can objectively conclude, willing to you to make a substantial contribution to the economy of Hong Kong. So you get the approval to performance, saying ok, we like your story, we believe you, see to it at 12 months mark, 80% of new business situations do not very well capitalized, tend to get approve subject to business reviews 12 months will lift up. If they do not subject to business reviews, if they really like your story from get go, then you will get what I call a freeing clear approval which means that the 12 months mark, the process to get your first extension is really just manage to get bags and you can expect that you’ll can go on to get 3 limits of stays and then you go and get numbers 1- 2, 2 -3 years pass which gives you a potential full 8 years in Hong Kong, to managing, directing, control that business. At the seventh or most people do taking constant history in temporary residents here, they want to application for permanent residency and up there absorbs same responsibility to have keep working in that business because this is a permanent residency and actually you can employ or engage your own business without further reference in the immigration department.

Mike: Got it. Wow! That’s a lot of information. So just to recap, after you get an investment visa, even if you passed, another 12 months later you’re gonna have to fly, go back,

Steve: There’s an 80% chance that they will subject your initial approval to business review.

Mike: Okay and then if you passed that usually, you have 2 years.

Steve: And if marginally, strike through that 12 months then you’d expect to business review, if you have created local jobs if you don’t have much cash in the tank. If you have been able to meet your revenue projection whatever it is, you know, just be in reasonable milestone in the first 12 months. If you have achieved that, you may find immigration department really extends you up to 2 years but then they can give you 12 months and that is subject to business approval again at the end first 12 months. But if you have a good story and slippy on the text phase and halfway supply of cash there’s no reason to expect that they respond and they will say no based in my experience.

Mike: Great! Okay. Lastly, there’s a lot of listeners that wanted to contact you. We’ll put your website upon the website too but what’s your…

Steve: Oh! We have a number of websites. We have a website which is called the HongKongVisahandbook.com and that’s basically our foundation content. It’s a DIY definitive guide to Hong Kong process. No singing, No Dancing completely free of charge, no registration required and textbook if you will, although it got videos, screencast, podcast, templates, the whole shooting match, all completely free of charge, hongkongvisahandbook.com. Tthen I do daily immigration content of the site blog called hongkongvisageeza.com and I post on that 4, 5 actually on my mind 7 times a week i don’t usually plan this so that feeds you sorts of updates of information, all completely free charge.

Mike: Great! Yes, it’s really great and we will linked that on golbalfromasia.com/episode4.

Steve: I have a, I’m gonna be Shenzhen, a week on Friday, you might put on your show notes at the boathouse. I think.

Mike: Oh, yeah.

Steve: I’m giving a talk. Oh! Not Friday, Thursday it is.

Mike: Okay.

Steve:At the boathouse, yeah.

Mike: Yeah.

Steve: So perhaps if you put the link in your show, the people listening to me, I’ll talk about my favorite subject live.

Mike: Okay. You’re very passionate and you’re also good Internet Marketer. Your blog and your content and your handbooks, you also know a lot of listeners are Internet Marketers too. So we like the, you are also up in the game.

Steve: Our marketing was built in by design and our product is driven from marketing of inspector.

Mike: Great! That’s definitely the right way to do it. So alright. I guess if there is any last points right before we end here.

Steve: Right. I wanna, just so basically, carries anyone that is thinking about Hong Kong to understand that Hong Kong is very open. W are set and very welcoming and what might have been your early experience from the immigration agency if been to either Thailand or China, don’t expect that you’ll have that kind of experience in Hong Kong. We have very rule of law, incorruptible public service at the immigration department. We have a customer service mandate, very open, accessible and friendly but there’s a lot of stuffs that you can have access to because the immigration department play the role of gamekeeper and coucher at the same time at their website is designed to inform and not give you advice and the immigration department shows to inform and decide not to advice. So a lot of people look at Hong Kong immigration department website, they look at investment visa category and they say “Oh just get to put these document, fill this forms and i’m home and hopes.” It doesn’t work like that. There’s a 4 -6 months interrogative process where you have to show that you can make that substantial contribution to the economy of Hong Kong and if you can do it, clean and honest enough, you got the money, you got the will, you made a right entrepreneurial stuff, you have 95% chance of getting what you’re looking for and that’s how it works.

Mike: Great! Okay. Thank you so much. I’m sure we, I enjoyed you talk a lot. Thanks, thanks a lot.

To get more info about running a business via Hong Kong please visit our website at www.globalfromasia.com that’s www.globalfromasia.com. Also be sure to subscribe to our iTunes feed. Thanks for tuning in.

Hotels to Stay in Shenzhen for Your Business Trip

This article is originally found here: https://www.globalfromasia.com/shenzhenhotels/

Looking for a hotel to stay in Shenzhen?

I remember those first trips over to Shenzhen, China all the way from America and I had no idea where to stay. Lucky for me I had some friends in Hong Kong who had contacts in Shenzhen (I mis-spelt it Schenzen back in 2007!) and they helped arrange a hotel for me.

They also warned me not to answer the door at night! I was so scared.

Shenzhen has improved so much and there are top notch hotels to choose from in the city – a bit overwhelming.

So today, I’m writing this guide for someone like me – on their first trip to China and having no idea which kind of hotel to stay in!

This post first started for our Cross Border Summit as attendees asked for hotels near the venue, and that is how it will start. We will add more hotels as we go along, so check up on this same post in the future!

And as always, if you have recommendations or feedback on certain hotels, please leave a comment at the end of this post!

Now let’s go through some hotel options, go!

Hotels Near Shekou IT Torch Park (Netvalley)

These hotels were near our first Cross Border Summit conference in Netvalley. These next few hotels are within a block or two from our summit, and will “take care of ya”. Mention Cross Border Summit and you’ll receive a discount as well.

Here’s a list of the names, then you can scroll down to find the details for each of these.

If it’s not on this list, then it is a bit further (taxi ride) away, which may or may not be an issue for you.

Cross Border Summit 2018 Hotels

These are the 2 closest hotels to this year’s Cross Border Summit 2018

Day Hello Hotel

This is a private hotel, but a well decorated and right in the middle of the Netvalley complex.

Located at No. 1059 Nanhai Road, Nan Shan, Shenzhen
Tel.: 0755-26800000
Fax: 0755-26890999

Self-booking Pricing:

DAYHELLO HOTEL
Room Type Rack Rate(RMB) Global From Asia Rate
Buffet Breakfast

Superior Room
608 (normal)
438 (GFA rate)
One Breakfast ticket

Deluxe Room
708 (normal)
538 (GFA ratE)
One Breakfast

Executive Room
808 (normal)
638 (GFA rate)
One Breakfast

Address: No.1059 Nanhai Road, NanShan District, Shenzhen China
酒店地址:深圳市南山区南海大道1059号
Tel: 0755-26800000

Ino-Le Inn (i-Noble Inn)

This is a new hotel I’m not familiar with, but exactly across the street from the venue. Its its own building, and the management has been pretty friendly with us as we discuss hotel rooms with them. The pricing is:

Self-booking Discounted Pricing:

Room Type /Rack Rate(RMB) /Global From Asia Rate / Buffet Breakfast

Superior Room 608 / 388 One Breakfast
Deluxe Room 708 / 458 One Breakfast

Address: No.6 Industry 6st Road, NanShan District, Shenzhen China
酒店地址:深圳市南山区工业六路6号
Tel: 0755-26766833

Website: bemytour.com/sz226

7 Days Inn

This is a big chain throughout China. Some friends even have VIP member cards. Its a budget hotel for business travels. Rates currently range around 200 to 300 Chinese Yuan (about 50 to 65 USD) per night.General Membership Pricing:

Regular Twin Bed 229 RMB (without breakfast)
Business Twin Bed 282 RMB (without breakfast)

The closest one to our summit would be at the Crossing line of Nanhai Avenue and Industry Seventh Road, (gong ye 7 road)
Nanshan District, Shenzhen 518054, China

There are a couple of these near the venue, and plenty throughout Shenzhen (currently 19 in this city alone) and the rest of China!

Hilton Shekou


A top of the line hotel, my friend and podcast guest Steve Marsh says this should be a 6 star hotel if there was a rating! Right in the heart of Seaward in Shekou, top of the line rooms, pool, etc.If you are good at searching for deals the price can be as low as $150 USD a night.This is about a 5 minute taxi ride from our venue, and will be by far one of the highest class there is in town!You can find details and bookings can on their website.

Motel 168

This one feels like the equivalent of Motel 6 in America. I feel like there should be a sign “we’ll leave the light on for ya”. When I first came to China, the 168 meant that there was always a hotel in there that cost 168 RMB. This is back in 2007, that was about $25usd at a 7.4 exchange rate. And the more premium hotel in this chain called Motel 268, meaning rooms started at the 268 rate. Pretty easy to remember and clear before entering.

The number 168 also represents “work” in Chinese. So this chain is also targeting the business traveller.

Nowadays this has turned into just a number in their brand. Tates have increased about the 168 rate and people are still filling the place up! I’d say it is fine to stay in, but will have the simple essentials.

Hanting Hotel

Another big chain throughout China. Like 7 Days Inn and Motel 168, it is for the busy business traveler who is on a budget. Rooms pretty straightforward and basic. They have locations across Shenzhen and other parts of China. I do have friends who have VIP cards and get deals at these places.

They don’t seem to have an English website that I can find.

Hostel in OCT (Overseas Chinese Town)

This one is popular with a lot of entrepreneurs I have known who are passing through.

OCT is a pretty artistic (can we call it hipster?) area in Shenzhen, and will allow you to
You can find their website can at http://www.yhachina.com/ls.php?

Residence G Shenzhen

The latest lifestyle Serviced Apartment and Hotel – Residence G Shenzhen has debut in Shenzhen on 25 March 2017. The property is complete with a two-floor dynamic community hub; G Club. Part restaurant, part community centre; G Club is the first space of its kind in a hotel or residence in Shenzhen’s Nanshan District. Residence G Shenzhen will cater to the needs of business travelers as well as families looking for a modern hotel or fully equipped serviced apartment with ideal location. The complex will host 178 stylish rooms and serviced apartments ranging from studios to 3-bedroom residences. The rooms and apartments feature modern European design, range from 32 to 174 square metres and combine functionality with high-tech style including complimentary high speed WiFi and user-friendly Internet Protocol televisions with E-readers.
Address: 4078 Dongbin Road, Shenzhen 518054, China
Tel: (86) 755 8663 7888
Mobile: (86) 180 7884 6665Website: residencegshenzhen.com

Check Shenzhen Party’s hotel Listings

And of course, our friend and ally, Shenzhen Party is another good source for English information. They have the latest hotels in Shenzhen, China. So if this short list doesn’t help you out, I’d suggest you hop on over to their website and browse around. They work hard to add all the hotels as they come (and go)

Plenty of Local Choices

The tricky part is – if you’re on a real budget, where to stay can get complicated. There are a lot of great deals, but they don’t have English websites, and you can’t book in advance – at least not overseas.

What I did was I had my Chinese assistant book for me before I flew over. She searched for hotels near the factories and venues I was looking to stay, and reserved. Many times the hotels won’t need money up front, and will hold your reservation for most of the evening.

Though it was a funny story: one of my earlier trips (think my second trip to China) I had a delay with my flight and finally got to the hotel at about midnight. They didn’t hold my reservation! They didn’t think I was showing up – I think they waited until about 9pm, then released it for other guests. So just find out the terms and conditions of the reservation and how long they will hold it for you. Especially if you’re flying in from overseas – flights are often delayed. Plus you can get a bit lost finding the place, so have a back up at least or a local Chinese assistant to help you out.

Your Favorite Shenzhen Hotel? Any Tips?

Now it’s your turn! Have you stayed over in Shenzhen before? Where did you stay? Was it a good deal, good price? Helpful staff. I’d love to hear all your feedback and ideas. We will work to add good hotels to this list and help new travelers to this unique and growing city called Shenzhen

To our mutual international business success!

Can You Apply For A HK Bank Account Online?

Want to open up your bank account remotely for your Hong Kong company?

Today, let’s go through this. It’s such a hot debate going on, let’s use this post to make a difference!

You Can’t Open Your Bank Account Without Being in Hong Kong

The quick answer is, you need to be in Hong Kong to open your bank account. They want to meet all the directors and significant shareholders of the company to know who the client is.

I’ve talked to almost every bank in Hong Kong over a 2 day full time effort, and all needed the directors to come in person.

But there are some ways around it, I’ll dig in a bit today.

HSBC in Mainland China Works

So for those entrepreneurs in Mainland China with Hong Kong companies, you’re in luck. They will allow you to apply for a Hong Kong business account from a HSBC in Mainland China.

There are fees, and in 2016 these fees are going up. From what people have told me who did it, it’s about 2,000 Chinese Yuan range. They choose to come to Hong Kong instead, as that is about the same fee as an airline ticket.

So maybe you need to come to Hong Kong anyway. Let’s say your passport visa is running low on time. So make a visa run and then also apply for the bank account.

Don’t have a reason to come to Hong Kong and you’re in North China? It may make sense to pay this extra fee to do a remote bank account opening. I’d love to hear people’s experiences in the comments of today’s post (thanks in advance!)

HSBC Premier Customers

So, I’m putting this in here because this is one I hear over and over. As far as my research and network of people tell me, it is not possible in today’s environment, (yes, we’re in 2016 now), to open a Hong Kong business bank account from non-HK or non-Mainland China HSBC branches.

In the past years, people told me that premiere level (minimum deposit of 1,000,000 USD) could open bank accounts in other countries. Maybe that was for personal and not business, and maybe that is still active up into today. But I have asked bankers, who have become somewhat of my friends, and they assure me you cannot open a business bank account for HSBC HK outside of Hong Kong or China.

Again, please prove me wrong! You can leave a comment below or send us an email.

DBS Hong Kong Has a 20% “Application”

Few have mentioned that you can apply for DBS bank online. So I was like, heck let me try this. They call it an application, but in my opinion it’s more like a lead capture form.

They asked me a few questions about me and my business, and once I did that, the site said they would email me later for more details about applying.

Not sure if my case was that horrible, but I never got a response back! Still seems to me I need to go there in person. And now their new SME bank application fee (upfront, no refunds) is 10,000 HKD! Insane right?

Anyway, so that is what DBS calls applying online.

Why Is It Not Possible To Open An Account Online or Remote?

So you may be wondering why it’s not possible to apply online.

There are 2 possible reasons:

  •  They are afraid of fraud

    The financial industry has been getting tougher and tighter lately. Government regulators are slamming banks with fines. If they feel the bank didn’t do a good enough job in verifying the banking client (KYC – Know your Customer). It’s the job of the bank to ensure the client isn’t a terrorist or a money launderer.

    The banks need to make sure they don’t “slip up”. If they let a “bad egg” who says they’re a trading company for t-shirts get by but in reality is doing drug trades, slip through the cracks. Uh-oh, bank is in a big problem.

    So what’s happening is the government regulators are pushing the job of being a policeman to the banks. Seems kind of smart for the government. They don’t need to hire more people to dig into the banks and can instead put the responsibility and overhead onto the banks.

  •  They don’t want to invest / embrace technology

    Another reason is, I’m interested in opening a bank in Hong Kong. I talk to tons of people frustrated with the current banking options there and lack of customer service.

    In a normal business industry, a new tech company could come along and disrupt the old players. But banking, in Hong Kong at least, is so sealed – when has a new bank opened here? I’ve heard it was in the 1970s!

    So what is the incentive for the banks to innovate? They’d need to spend a lot of time and money. Plus they’re not good at the internet, they’re better at crunching excel formulas and clearing cash trades.

    As far as I understand, the Hong Kong banking association allows digital signatures for online banking. That means that at the least, for account maintenance items such as updating details on your bank, you are legally able to do online. But most banks still want you to come in person or mail a hand signed document to do that.

Some Have Opened Banks Outside of HK (Offshore)

So one thing I have been learning is that some who don’t get a HK bank end up using their HK company to open a bank account in Europe or in an offshore island. Seems a bit strange to me, but it is a business account and not a personal account, so the owners limit their liability in the business. Would need to dig more into this, some use it to receive money from customers in those regions / countries.

A Tip – Add New Owners / Directors Later On

So what some do, to avoid having to have all the owners come to Hong Kong to open the bank account, is keep it simple to start. Maybe one or two directors when filing the new company and applying the bank account.

Later on, once things are operating and stable, then you can update your company documents and add the new shareholders and directors.

This is one tip that has saved a lot of travel time and headaches for many clients.

Sure, those owners not on the original company documents are taking a risk. But they also need to be aware if they can’t all fly to Hong Kong together, this is the most reasonable option. You can have a personal contract between the owners that can help ensure you will get your shares in a future date. You should trust your business partners that much anyway.

This Is What We’re Working On – To Make It Easier

As Global From Asia has converted from a podcast and blog into a full service agency, we have picked up more and more cases like this. We are building one big strong case and talking to the Hong Kong government about it.

In order for Hong Kong to stay ahead of the game in the global business space, they need to work on being more online friendly.

If you want to get involved, please let us know! Hopefully this blog post can spawn some new ideas and get some change to happen!

Why Do you Think It’s So Hard To Apply For Banks in HK Online?

So I’d love to hear from you! Please leave your comments and thoughts in the comments section below. Let’s help each other to figure this puzzle out.

I’m curious if you have had any problems applying for a new HK bank account. What happened, why did you get declined? Let’s help each other and see if we can fix this for the long term.

Best of luck on your global business domination! Original: here

Setting Up Your Bookkeeping in Hong Kong

This article is originally found here: https://www.globalfromasia.com/hongkongbookkeeping/

Many entrepreneurs cringe when they hear the word bookkeeping and accounting in Hong Kong. To be frank, I used to, and in some ways still do. But rather than running away from it and hoping it will go away – it’s best to suck it up and take charge.

Today we’ll go through the thought process of organizing your bookkeeping for your HK Limited company.

Get a cup of coffee, jot down some notes, and get inspired. Now let’s go!

What Your Business Type Matters For Bookkeeping

Not all bookkeeping is the same. There are a few different criteria to consider:

  • Products Business, Service Business, or Mix of Both? Are you a business that earns money by selling products (hard goods), or are you making money by providing a service. You can sell online or offline, as in bookkeeping terms it doesn’t matter (of course the technical method for online and offline is a bit different).
  • B2B or B2C? Buzz words you probably hear quite a bit. B2B means you are selling from your business to another business (business to business). This means that your customers (oftentimes I call them clients when they are a business account) are companies, not an individual. B2C is the opposite, you’re selling to end consumers, often called retail customers. These people are individuals making decisions for their own benefit and use, or as a gift for a special someone. You might say “well, I do both B2B and B2C”, so don’t get stressed out, but be aware that you are doing both.
  • What Is Your Industry? Various industries have a lot of different ways to have their businesses operate. Normally when you do accounting, it will only really let you put in 1 or 2 different industries in the system.

Create a Chart of Accounts

Cringe. Yes, this is overwhelming for newbies. But this is the center of your business. Here is how your accounting and business will flow. Many accounting software packages will help auto-generate them based on your industry and other questions you answered above. Yet I would still recommend working with your bookkeeper to ensure nothing is missing.

Here are typical accounts that you would list on a chart of accounts:

Income

Services
Parts / products sold
Sales write offs

Cost of Goods Sold

Materials
Labor
Outside services/Subcontractors
Supplies
Small tools

Expenses

Advertising
Marketing costs
Inventory used for promotion
Automobile Expense
Bank Service Charges
Cleaning
Contributions
Depreciation Expense
Discounts Taken
Dues and Subscriptions
Insurance
Subaccounts:
Auto Insurance
Business Liab & Contents
Disability Insurance
Life
Medical

Interest Expense
Licenses and Permits
Maintenance & repairs
Meals & Entertainment
Merchant credit card fees
Office Expenses

Subaccounts
Computer expenses
Postage and Delivery
Office Supplies

Other Office Expenses
Payroll Taxes
Professional Fees
Rent
Salaries -Office
Salaries – Officers
Telephone
Travel
Utilities

Other Income

Interest Income

Other Expenses

Don’t stress too much if you miss something or want to remove something later. Of course it’s ideal to have it all set from the get-go, but you can go back to this as your business develops.

Add Your Products & Services

Once you have the chart of accounts setup, now it is time to add in the data you’ll be working with to buy and sell. This is a strategic event and you should do it before you start to enter all your transactions.

You can use the template spreadsheet in Quickbooks and download it to your desktop. There you can match up the products in your shopping cart or your service offering page. The more details you put in here the better, as it will save you time from entering it one by one each time you put in a new transaction.

List Out Client and Supplier Accounts

Next you will want to write out your customer accounts and supplier accounts.

Now this is when B2B or B2C comes into play. If you’re doing B2C, yes it’s a lot of transactions! You will not manually type in each individual’s name, address, and contact details in your accounting system. That is insane! So you can call them “Retail customer” as a general journal entry. Another way is you will integrate your ecommerce or POS system to your accounting software.

If you’re doing B2B, you may want to spend time putting in your bigger clients company name, contact person, address, email, and phone number. This way when you create an invoice to charge them for a product or large product order, it will auto-fill. And you can also run reports to see who your top clients are, as well as those who are late on paying you.

Do the same thing for supplier side. This is again up to you how detailed you want to get and how many suppliers you want to input. If you are buying from a supplier on a regular business and the monthly or yearly amount is significant, take care. I would recommend to invest the time to put their full company contact details there.

You can also use an Excel spreadsheet and then if you have software bulk import it to save time.

Start Entering Transactions

Now that you have the charts setup and the client/supplier information prepared, next you should start to put in some transactions.

This is where the magic happens! There are a few ways to get you transactions into the system:

Manually Create Invoices and Purchase Orders

This is the traditional way, and if you’re a B2B business, might be the main way you will enter your business transaction flow.

When you want to receive money, you will create an invoice. You can then export it as a PDF and email it to the client. Many times accounting software has the ability to send the email right inside the system. As you have the customer information already entered in it’s easy! The invoice will auto-complete their contact details in the invoice.

If you have products or services already created, you can then choose them from the dropdown menu. Either it will auto-fill the price and description, or you can manually type in what you need.

On the supplier side, for the most part it’s the same thing, except you make a PO (purchase order). If you have their contact details and what you’re buying pre-defined this is fast as well.

Once you make the payment, or the client pays the invoice, you can mark it as paid, and it will balance in the accounting system.

Import via CSV (Excel Spreadsheets)

Most online banks now allow you to export your transactions. Normally they let you do as a PDF, as a Excel, or as a CSV (comma separated values) file.

Most accounting software systems work with CSV format. Let’s hope your online banking system supports it.

You’ll then download the file from the online account and the import it to your accounting system.

You may need to make sure the “mapping” is correct. This is where the “First Name” field in the excel spreadsheet connects to Fname in the other system (it’s what the database calls first name, for example).

It is nerve-racking at first, and normally it will ask you for your confirmation before doing the import. I’ve had some messy times trying to undo imports when the mapping was wrong – so be a bit alert, especially the first couple times you do this.

Automatically Pull From Online Banking & Merchant Accounts

Are you a B2C business, selling on Amazon, eBay, or other e-commerce shopping carts? There is no way you can have the time to have a team member entering in all these transactions. That’s because you’re doing high volume (you and I both hope!) and making tons of money selling lower priced items.

This is where the magic of technology comes into play!

You’ll look into integrating your business with an accounting software solution. Check if it works with Paypal, eBay, and whatever e-commerce provider you have. The more the better, so that you can avoid having to deal with

Make Sure It’s In Sync

Once you do link up the various third party integrations, you’ll need to check on a regular basis to make sure they stay connected.

Why do they disconnect? This is for your security, and different systems have different lengths of times. The better ones will let you set the length depending on which service you integrate with – for example 30 days, 90 days, 1 year, or indefinitely.

But alas, all these systems integrating together each one has their own preference. Just be ready to get an alert that you need to re-authorize the connection. Your bookkeeper may help check it for you, but it is still best you as the owner and director check it on a monthly basis, or even more often.

Pick Reports You Want To Read

Now, time to reap the rewards of keeping your books in order – reports! Quickbooks and any accounting software loves to take the data you’ve been entering it and give you a bunch of summary reports to see.

Some of the more popular reports you may access:

  •  P&L (Profit and Loss)

    This is the most important one in my opinion. This will take the total amount of each transaction classification and then take a total for the time period you are running the report for. Looking at this report will see if you have made or lost money during that period.

    It’s hard to hide a loss here, if you’re sales are less than your expenses, it will be an ugly and scary red loss or a negative number.

    But this is why having books will help! Double click on one of the numbers and it will run a report of all the transactions there. See where you’re spending your hard earned dollars. Knowing where your inflow and outflows go is essential in the success of your business. Don’t delegate this to anyone, this is the key role of a business owner.

    Tip – I like to run this report for the past 12 months, and to have it divided up by month. That way I can quickly see which months the business is making money, losing money, or has high / low margin times.

  •  Balance Sheet

    Another critical report, this shows you how much cash you have in the bank. How much debt do you owe? Who owes you money. This report will show you how much money you would walk away with if you closed up shop today. That is, paid off your debt holders and took out all the money from your bank. There is also Shareholder’s Equity, which you consider as intrinsic value of the business. It is taking A-L (assets minus liabilities) and becomes the third part of the balance sheet.

    This report will show you how “strong” your business is if things start to get difficult going forward.

  •  Aged Receivables

    Do you let your clients pay you later? Such as Net 30 terms, which means they pay you a month after they receive the goods. Then you should keep a report like this bookmarked. Here it will show you which of your customers are late paying you and maybe get you off your butt and making calls to remind them to send the money in! The longer it waits, normally the lower the chances are of you getting it. Business moves fast, and maybe they will shut down – the more old receivables on this report, the more nervous you should be!

  •  Expense Reports

    Here is where you should look at the monthly breakdown. Check which vendors are getting a lot of your money. Also look at the report by type of transaction, such as office expenses. Maybe don’t be such a detail freak that you count how many reams of paper you bought, but at least be aware what your average cost is on those accounts. And question some people sometimes, keep them in check. Make sure your team knows you are running these reports and analyzing the numbers. Also shows them you are being responsible and care!

  •  Budget vs Actual

    A cool feature of accounting software is you can put in your monthly budgets. If you have an expected amount of money you’ll be spending each month, or a target for your sales team, put it in here. In this report, you can get a better idea if your company is staying on track of what it said at the beginning of the year. Way off track? Schedule an executive meeting scheduled ASAP! Decide do you lower your forecasts going forward or is the team able to bring things back up to where they predicted?

I’m sure you’ll have more reports you’ll want to run. Each business is different. The main idea is you should have a good grasp of what money is coming in, what’s going out, who owes you money. Check on a regular basis and ensure you are on track from what you predicted at the beginning of the fiscal year.

Keeping Things In Order For a Smooth Auditor’s Report

Another benefit of keeping on top of your books throughout the year is when you get your Profit Tax Return from the HK IRD, you’ll be ready. Just run the latest reports from the software and submit to your HK CPA auditor.

Not many people enjoy digging into the numbers, but we need to take responsibility as business owners. Hope today motivated you.

Any Questions or Need Help?

So that’s all we have for today. Get to it, and start entering those transactions into your favorite accounting software. Need help? We offer full bookkeeping services and you can check out our plans and pricing.

If you enjoyed this article, feel free to leave a comment below. Let us know how you are keeping on top of your books.

10 Things You Need To Know About China Sourcing

Looking to make your first order from a Chinese factory?

Or maybe you’re currently doing it and still crossing your fingers that it is going along well.

We know how nerve racking it is, and hope to help you today.

Here are some 10 tips we have learned over the years from our own experiences and talking to experts in the field.

Make Clear Specifications

If you want to avoid problems with a Chinese factory, then look professional from the beginning. If you come to them looking like an amateur, then they will underestimate you.

What can you do?

Be prepared!

So do as much upfront research and work on your product as possible before approaching a factory. Is it a pre-existing product, an enhancement, or a brand new innovative product? Each one of them requires different level of specifications, but the more homework you do the better. And the ideal is to have a sample of the product in your hands and sending it to the factory, they can look at it and give a full and complete estimate.

But please be careful and make sure this factory is trustworthy before sending over your hard work.

Don’t Focus on Price Alone

If a factory can tell you are looking at price and price alone, then in my experience the good factories will step away and the lower quality, more desperate factories will step forward. I’m sure you want the best quality product with a top supplier, so don’t show them that you are a cheap buyer.

If you want a cheaper price, they can go as low as you want to go.

But don’t expect a nice and shiny new toy…

I can speak from firsthand experience, in my early days in China I kept pushing down the price of a wine corkscrew, and the factory finally “broke” and agreed to my price. Unfortunately for me, the metal was a cheaper one that would rust quicker and I had many returns on my e-commerce website for the next year or so.

Be Patient

If it’s your first time to buy from China, don’t rush it. And this article isn’t going to make you an expert, sorry to say. Give it at least six months I’d say to do your first order.

Think about it.

Between:

* Finding the supplier
* Shipping samples back and forth
* Negotiations
* Making a sales contract
* Sending a deposit payment
* Quality inspection
* Shipment to your facility

Just listing these out I’m thinking this is longer than six months!

Always Get a Sample – Production Sample!

This is where people get impatient and rush. They get one sample that is “kind of close” to what they want. They are based in USA and Europe and tired of spending the 80 US dollars for UPS to ship the samples back and forth each time, so the factory convinces them this is a “basic idea and they will change X, Y, and Z” to make it the way you want.

So then get them to make that sample and send it back!

Yes, it is exhausting but if you cut corners at the beginning, it will cause bigger headaches later on.

Do a Test Order

Buy from a couple factories a lower quantity.

The best time to get to know a factory (or anyone in life or in business) is to do a practice run with them. This is when their true colors come out, as often during the sales process all the promises in the world are made, now is the time to see if they can execute.

It’s Sometimes OK to Use a Trading Company

Many people always talk about going “factory direct” and “cutting out the middleman”, and yes, while you may keep more of the money yourself, there are sometimes extra value add services they can do.

Another reason to use a trading company, they have a network of factories, so you can do a lower quantity across multiple product categories, while a factory has higher minimum order requirements and then you’d need to coordinate with all of the factories yourself.

Use Third Party Services

Similar to potentially using trading company, there are a wide range of third party service providers out there. From quality control, CAD design, sourcing, to logistics, the more of these you use yourself the better control of the entire process you will have. Normally the factory will tell you not to worry about these things – as they have their own partners they work with or they don’t do these services at all! But of course if you pick your own third party vendors you can rest assured they will help you more ensure the factory is doing things in your best interest.

Location Matters

I remember when I was first searching for a factory while home in USA. I had no idea where these factories were located and I thought they were all in the same vicinity. Yup, I didn’t comprehend at the time China is a massive place, and various “clusters” of factories form in certain cities – for example Ningbo is where a lot of gifts and home decor is made, Shantou for toys, Shenzhen for electronics. Learn where these clusters are, and then determine if you can source all your various products and components in that area. Why? This will reduce headaches long term when consolidating shipments and doing just in time (JIT) scrambles for unexpected situations.

It’s Better To Lose / Waste Money At The Beginning Than At The End

Many people look at R&D and they think, yes, this is a worthwhile cost to design a new product. But I think they don’t classify things correctly – I put a ton of various costs as R&D – flying to the factory, sample shipments, buying samples from various potential factories. We can’t cut corners on these upfront investments, and we need to look at them like this – investments – not expenses. As like any investment, the value increases over time, and the knowledge, awareness, and correct suppliers you find at the beginning will save you countless hours and dollars in the long term.

Sadly, when we make the right decisions it isn’t as easy to see as when we make the wrong ones. But if you’re not having headaches in the years ahead, count your blessing and thank yourself for making the right investments and decisions at the early stages

Make a Contract in English and Chinese

This one I wish I knew when I first started buying from Chinese factories. And you can’t just find one on a Google search and tweak it, this is something that will be with you for years to come. Find a qualified lawyer, on my podcast we have Mike Bellamy sharing some of his legal contacts there to use. Or go through recommendations in your own network. While if you’re a smaller buyer, a contract may be hard to enforce, at the minimum it sets the rules of engagement from the beginning and reduces miscommunication later.

Conclusion

So I hope today’s rather brief article helped and got your brain flowing here. It’s a daunting task, sourcing from China, but we need to stay motivated and do it step by step. If you’re currently buying from wholesalers in your home country (like I was) take it one product at a time until you’re confident and comfortable to expand.

This was a guest post I wrote originally on JumpStart Magazine.

This article is originally found here: https://www.globalfromasia.com/sourcinginchina/

Should You Live in Shanghai or Shenzhen?

This article is originally found here: https://www.globalfromasia.com/shanghaiorshenzhen/

So you’re thinking to move to China? Or maybe come to a visit – and 2 cities are sticking out for you – that is Shanghai and Shenzhen.

Which one should you choose?

It’s such a heated debate with expats over beers, I thought today I’d take a crack at writing it up a bit! Let’s just go through each factor and see who is the “winner”! Though the winner will depend on which of these points are more important for you!

Cost of Living

Shenzhen is cheaper than Shanghai. Costs have been skyrocketing across China, with rents doubling or tripling in the years I’ve been here. Yet I think for the same living standard and central location in Shenzhen, you’d pay much more in Shanghai.

Of course this main cost is rent. Let’s just say for a 2 bedroom in Shanghai the cost is about 10,000 CNY and that same place and location in Shenzhen would be 7,000 to 8,000. Of course this is going up and up as the economy gets hotter. Yet as a general rule of thumb from my experience housing is about 30% more in Shanghai.

Borders with China

For those entrepreneurs and other hustlers who come to China on a longer term stay and don’t have the proper work permit / residence visa, I feel your pain! You will need to leave China most likely every 30 days, or if you have a good visa, every 90 days.

This adds up quick in travel costs and travel time.

If you’re based in Shanghai, this will require a flight somewhere. Maybe you can come down to Hong Kong (or some come to Shenzhen for the cheaper flight then take a bus to Hong Kong), while others fly to Korea or Philippines, etc. Its up to you- but you need to take that exit stamp on your passport to not overstay your Chinese visa.

Overstay your China visa? Just a fine per day for each day you’re late, but then the second time it is more serious. Customs may ban you from entering China going forward, which I can say has happened to a few people I know. So don’t risk overstaying your visa, it can cost more than just fines.

So back to the comparison of SZ and SH. Shenzhen has over 7 border entry points to Hong Kong, and going across any of them counts as exiting China for your visa. I won’t get into the political reason of “but isn’t Hong Kong the same as China” argument – it is a different “region” (SAR). So this will count as exiting China.

A ton of expat entrepreneurs I know, myself included for a couple years, got by this way. Just crossing into hong Kong every 30 days. Not a bad thing at all, go shopping, maybe do some banking or other Hong Kong company related business. Maybe a customer too, can stay overnight. You can also file for a new China visa from Hong Kong, and do an express one that you can get back the next day.

Do You Like Snow or Sweating?

Here is a decision you need to make – what weather do you like? There is a ton of hot days in Shenzhen and it never snows, ever. I’m typing this up in December so it is a bit chilly today and I have a sweatshirt on – but you’ll never have snow or ice.

Shanghai doesn’t have a ton of snow, but it will get chilly and there will be snowfall in the wintertime. Not like a risk of an avalanche or blizzard but it will pile up a bit.

Yet here’s a plus for the cold times in Shanghai – apartments have heating systems installed! Shenzhen, none! So you will need a space heater for a couple months in the year here in SZ or extra thick blankets.

Both cities have pretty hot summers, well Shenzhen has EXTREMELY hot summers. And humid, you’ll be sweating and maybe changing your outfit once or twice a day.

So not sure which weather you prefer, some like the different seasons and then others like the warmer climate.

Selling Into China

Shanghai is the place to be if you want to do China market entry. Not exactly sure how that came to be, but it is known as the “cosmopolitan” center of China. Everything comes in there for marketing and design. Its full of creative marketers. They can help you do everything from creating the marketing campaign to customer service to e-commerce building and distribution.

Tons of people ask me if I know people in Shenzhen who can help them sell in China – but most of these full service agencies are up in Shanghai.

Maybe that means there is opportunity for Shenzhen. Shenzhen is more known for hardware and electronics. As well as export e-commerce, which we’ll hit in the next point.

Electronics + Export E-commerce (B2C)

Shenzhen is the king of electronics. Apple via Foxconn has been making iPhones here for years and there has become a complete front to back industry here. From marketplaces to manufacturers to prototyping, Shenzhen has it all. Anything is possible here in Shenzhen for your hardware project.

I meet a lot of Kickstarter campaign entrepreneurs coming here for their manufacturing. They will be coming here often. Some who take it to the next level even open their own office here.

On top of the electronics and hardware, there is the exporting via B2C (business to consumer) e-commerce. Because there is a ton of e-commerce via electronics, the hubs for e-commerce has now spawned into Shenzhen. When people buy iPhone cases and backup batteries, via eBay or wherever, a ton of the time they will ship it direct from Shenzhen. Right out of the electronics market, most likely Hua Qiang Bei.

Learning Chinese

I have to admit, my Chinese language skills aren’t too great. My excuse maybe is because I’ve been down in Shenzhen. Because this is a melting pot, there are tons of Chinese dialects, especially Cantonese. And a lot of immigrants that don’t know how to speak Mandarin well, or correct. I have had friends from north China come down and say how hard it is for them to communicate. Yes! Even though they speak decent mandarin, the taxi drivers or shop owners don’t hear it well and don’t speak it well.

So if you’re looking to study Chinese, sure you can study down here in Shenzhen. You will most likely enroll at Shenzhen University, but I’d recommend going up north. So Shanghai could be a good place, there are tons of chinese learning centers there.

Another side note, for whatever reason, Chinese in Shenzhen have been shy to try to speak Chinese to me. They immediately think I don’t speak Chinese and speak in English. Or they just don’t even make any attempt at all – without me even opening my mouth. When I am in Shanghai or other north china cities, the “general public” speaks Chinese with me straight away.

Why?

I’m thinking because more foreigners speak Chinese there. Maybe here in South China because people do a lot of manufacturing here. Foreigners just come for short trips to visit factories. So over and over again the Chinese public sees the foreigner can’t speak any Chinese. So they become accustomed to just making that assumption.

Pretty frustrating for me who is trying to learn Chinese,so take that into account when deciding which city to live in.

Shanghai is a City Your Friends Back Home Know

Even though Shenzhen is a city with around 17 million people, my friends back home don’t know the city when I tell them. I have to say it’s across the border from Hong Kong. Then they get it.

Shanghai is so famous around the world. And it has that big city image. People know it is a hustle and bustle city with tons of opportunities.

Maybe this is something you could care less about – but Shanghai definitely has more “sexy appeal”. When telling people where you live and work, they seem to show more awe and interest.

Fashion Center is Shanghai

If you’re doing fashion or design, you deal with Shanghai. There are all kinds of events with models and designers on a regular basis there. Not a bad gig right? Shanghai has been building that reputation up for generations. It is well established as a global fashion center.

It is also known as a pretty classy place. Even foreigners there can’t get away with being in tshirt and jeans at bars and clubs. I always notice the difference when traveling. In Shenzhen everyone seems more casual attire and in Shanghai people dress to impress, from morning till night.

Not sure which one is more appealing to you – but image is important in Shanghai when you go to business meetings.

Shanghai Closer to Beijing + Rest of china

Shenzhen is down south. South China is just, how do you say, different from the rest of china. It was Canton, it has Cantonese. There is Hong Kong, and Southeast Asia nearby.

You’re just not in the center of action. Just like an earlier point about selling into China – a lot of that you will do in Shanghai. The distribution is more engrained there.

Plus in Shanghai you can take a fast train up to Beijing no problem, so if you have a meeting there the next day – it’s possible. Whereas in Shenzhen, sure you can get to Hong Kong or Guangzhou quick but it’s more for product based business. The real action for domestic Chinese business is up in Shanghai and Beijing.

My wife moved down to Shenzhen for example, and she still had to always go up to Shanghai and Beijing for business trips. You do things face to face in China, and if you’re selling local -you then need to do a decent amount of travel.

More Expensive, But More Money

While shanghai may be more expensive, you can also earn more money. Salaries are higher, and consulting projects have bigger budgets.

So while the costs are higher, the chances to make more money, local is where it’s at.

Compare that with Shenzhen, and you make most of the money from the export market. So that means a lot of e-commerce, online B2B directories. You won’t get as much sales as an agency or consultant in Shenzhen.

But, Hong Kong is just across the border, and there are a lot of chances to get bigger contracts there.

Less “Guanxi” Requirements in Shenzhen

Was a thing I liked a lot about Shenzhen when I came here. My Chinese friend Huck said it too. He said, there isn’t this “relationship” requirements like in other Chinese cities. It is a melting pot in Shenzhen, and everyone is new – the city is only 30 years old.

So you don’t have these multiple generation family business conglomerates. “Normal class people” need to dig through every time to get some bigger project done. But in Shenzhen, no one knows anyone else. So they have to put down these traditions and get back into finding genuine business relationships based on price and the ability to deliver.

A bit of a stretch here and hard for me to explain, but does that make sense? Sure, it isn’t everywhere in Shanghai or other established cities, but of course there is more “roots” from being there for so long.

Shanghai Nightlife is World Class

Shanghai has the most amazing clubs and bars in the world. It was Lady Gaga who said she loved that city when she visited, and it is a center of party mayhem.

Shenzhen is catching up, with more and more clubs and bars, for the most part in Coco Park area. But Shanghai has them everywhere, every district, you can find amazing clubs and bars.

Not just nightlife, there is more culture too. More history for being around through so many different phases of Chinese history and culture.

Shenzhen being so new doesn’t have this nightlife built up nor the long history and places to visit. They are working hard at it though.

Thoughts? Which City Do you Prefer – Shenzhen or Shanghai?

Have you been to one or the other, or both? What do you think?

I’d love to see your comment below! It can also help give some other readers some perspectives besides mine alone!

Was I too biased on one side or the other? I have no real interest in swaying you on either side, so I didn’t mean to – both have their good and bad, just like anything in life! But if you think I was out of line, please let me know by also commenting below! Cheers!

Using Hong Kong For Your Import/Export Company

Looking for the right place to establish your import and export company? Hong Kong definitely should be one of your top choices! Let’s dig into why, what you’ll need, and how to put in place your business.

What Actions You Do For An Import and Export Company

First, what do you do with a trading company, or an import and export company. Breaking it down today into functions so that you can best find where to establish the corporation.

You will be:

  • Buying (Sourcing) products

    Sourcing is the common word here. You’ll be hunting through B2B directories like Alibaba and Global Sources. You will be going to trade shows and visiting factories. Building up a network of relationships with quality suppliers for you to buy in volume from. This will be for mass production. They will be doing production in at least 1,000 pieces (MOQ, minimum order quantity). You will order and pay an initial deposit so that they can get the materials and start the process. Most likely the countries you will be buying from are Mainland China and Southeast Asia. Maybe some India in there too.

  • Selling These Sourced Products

    Most likely you won’t be the one taking the end shipment. Instead you will immediately sell these products you sourced and then made your commission or your cut. You will be in charge of finding the quality suppliers. The big key is ensuring the manufacturing goes smooth and the products are of acceptable quality. Arrange the shipment to port and you’re paid. Most of the time your buyers are in the West like USA and Europe.

  • Office and sourcing staff

    You will employ, full-time or part time staff to help you manage the business. They could be in your customer’s market such as USA or Europe. They also could be on the ground in China working with the suppliers and logistics. If you are just starting out you may have freelancers helping out here plug holes. Soon you will get your volumes up big enough to have your own in-house team.

  • Travel and conference expenses

    You will be investing a lot of money in traveling and trade shows. You will need to often visit suppliers in China, and buyers in your target market. It is key to keeping your business stable and the main selling point and differentiator is your relationships.

Am I missing something?

Benefits of Hong Kong

A trading company and hong Kong are like 2 peas in a pod. With the rise of China, so has Hong Kong risen. And many companies, both in China and around the world, establish trading companies here to bridge China to the world.

Why?

  • It has English on all corporate and banking documentation. It leverages the British influence it learned as a British settlement.
  •  Foreign currencies – no problem! Having a multi currency bank account is normal. No need to have to force exchanges of all your incoming remittances to USD or Chinese Yuan. You’re free to operate in the currency(ies) that make you comfortable.
  • Chinese suppliers also have hong Kong companies and banks. A big one here is that a lot of times you can save big headaches by just transferring from your HSBC Hong Kong bank to their HSBC HK bank account. Same day, no fee, almost instantaneous. (See related post on Chinese suppliers also like HK companies)
  • Can operate in Chinese Yuan (RMB). Only Mainland china and Hong Kong have permission to hold this restricted currency. Pay your factories direct in the currency the operate in and hedge the foreign currency risk of USD/CNY

There are plenty more, but I’m sure you’re aware. These are the specific benefits for an import and export company.

Main Features You’ll Use

So what do you need to operate an import and export company via Hong Kong? Here we go:

  •  Bank Account

    Yup, you don’t have a business without a bank account. Unfortunately it has been getting harder to get a bank account (read related post). But once you have it, this is where you’ll be doing you’re buying and selling from. Most likely you’ll use HSBC – and most of your factories will have it too.

  •  Paypal

    I don’t recommend using Paypal to buy and sell from factories. Yet you may use it for purchasing small things online and paying freelancers. See our related post on Paypal Hong Kong guide.

  •  Accounting Software

    Well every business needs it. I’m a Quickbooks Pro Advisor in HK, and I do feel it stands out here as it integrated with HSBC online banking – see full post . You should also use this software to create purchase orders for suppliers and invoices for buyers. Keep track of all income and outcome here to manage your P & L (profit and loss).

  •  Credit Card

    You’ll want a business credit card to separate your business purchases from your personal. While it may be hard to get a “true” credit card, you’ll need to put up a security deposit. You’ll use this to book your travel expenses and other online tools and systems.

I think that is it! A trading company is pretty straight forward. You find your suppliers, line up your buyers, make sure the production goes good. Then the magic of getting paid, and keeping the profit and paying out to the supplier. Some Paypal too, but try not to get paid in Paypal as you’ll lose a lot of money on the exchange rate.

Keep Your Books Simple & Up To Date

Keep all your invoices together. Use a system. And then when your audit comes up, things will be straightforward. A B2B (business to business) trading company won’t have a ton of transactions. So the auditor shouldn’t charge too much.

Also, run monthly reports to check your profits. Many times when I did sourcing I wasn’t watching my expenses and only looking at my profit margins. Things creep up and by staying on top of your expenses and other fixed costs, you will know your monthly break even.

Hong Kong is your Top Choice For Trading Businesses

This to me is a no brainer. If you’re buying and selling between China and the world – Hong Kong is your number one choice. Check with your suppliers, and see what banks they are using. Then you have a company with a bank account doing your deals. You may still keep a company open in your home country for local operations there (staff, office, local salary). Keep a trading company over in HK for the B2B deal flow and quicker wire transfer turnaround time.

What do you think ? I’d love to hear your comments and feedback in the comment section below!

Why You Need a Hong Kong Company Credit Card

This article is originally found at here.

Company or thinking about registering one? Do you buy things online too? For your company, not personal. Right.

Then you’ll need to get a business credit card.

First, There Aren’t Debit Cards, Just EPS/ATM Cards

In Hong Kong, they don’t have what we know of as “debit cards”. It would make life a whole lot easier for us though, and I may not even need to make today’s guide post.

A debit card is a card that has the Visa / Mastercard logo on it, and you can buy things online just like a credit card. The difference is it takes that cash out of your bank account that the debit card associated with it.

Nope, not available in Hong Kong, for what reason, I’m not sure.

So you will get a “card” when you get your bank account, but it won’t have a Visa / Mastercard logo on it. Instead it will have no “credit card” logo on the front.

What logos are on it? If you flip it over, you’ll see:

  • EPS
  • Unionpay

Now, EPS is electronic payment system. This you can use to buy things at merchants who accept EPS. This I have only found at shops inside of Hong Kong borders. You then swipe this card and enter your ATM PIN code and they directly debit the cash from your bank account.

UnionPay, this one is a Chinese version of Visa / MasterCard. But in the case of the bank account card you get with the new account, you can’t use this as a “credit card”. Instead, this means you have to find an ATM network that has the UnionPay logo. There is where you can use the ATM to withdraw cash from your bank.

Unionpay network is expanding everywhere, but please keep this in mind and look for ATMs that have it. Also, make sure you turn on the overseas ATM limit, so you can withdraw cash when outside HK. And also make sure you have HKD (Hong Kong dollars) in the checking or savings account. This is because you can’t take cash out of other currencies at the ATM, anywhere in the world. It will always take out from the HKD account (yes, even if you’re in Thailand and have Thai Baht in the account).

OK, well we’re getting in a bit deeper than I planned for the “default” card explanation. Just remember you get this when you open your bank account in Hong Kong, but you can’t use it to buy things online.

Get a Credit Card So You Can Buy Things Online

Yes, so if you open a Hong Kong company and live overseas, you’ll notice later that you can’t buy things online with your bank card. As we just covered, it will not have the Visa / MasterCard logo on it.

Next you will then apply for the credit card, so you can buy things online – in your business name. I’ve met many blog readers and podcast listeners who get the bank account opened, fly back to Thailand, get approved. Which is great. But then they realize a couple weeks later they can’t use the card to do online business.

So if you’re doing business around the world, you’ll need to find a Hong Kong based credit card for our business – as 99.9% likely you’ll need to buy things online.

Related – we have a podcast about getting credit cards for your HK company with Chris Gormley.

The other option. If you have a company overseas for your operations there, you can keep your expenses in that company and on that company credit card. Then keep the Hong Kong company as a trading company, only for bank transfers.

Try To Keep Your Business Expenses Separate From Personal

Another reason you’ll want a Hong Kong credit card is that you have a personal credit card for your own life. Yes, you have a life and aren’t a walking company. That would be weird.

Bookkeepers and accountants hate it when you mix up your personal and business expenses. Governments hate it even more. If you do ever get an inquiry from the Hong Kong IRD (Internal Revenue Department), let’s just hope you don’t. If talking about your business expenses and start whipping out personal credit card statements – watch out. That can be the beginning of a long, long back and forth discussion.

This is another reason why you should get a business credit card. At least, have a separate credit card for your personal expenses and another credit card dedicated only for your business expenses.

The Credit Card Will be in Hong Kong Dollars (HKD)

Whether you like it or not, Hong Kong works in Hong Kong Dollar currency. Sure, the government locks the HKD to USD at about 7.78 HKD/ 1 USD. But when you buy something, you’ll see it on your credit card statement as a HKD amount. Well it will show the USD amount (or whichever foreign currency) on the left column, and on the right it will show the HKD amount.

So yes, you’ll pay in HKD, and then if you have USD in your bank, you’ll need to convert that to HKD to pay the bill. That means you can do 2 foreign exchanges for 1 transaction, the first for buying the goods in USD, and the other for converting to HKD to pay the HKD denominated bill.

While this sounds like a lot of FX exchanges (and spreads to pay banks), this will still help you keep all your income and expenses in 1 company account. Will make accounting and bookkeeping much easier, and keep all business activity in one company.

The other option is, have a credit card in another country and wire money over to pay it. Or have multiple companies in multiple countries and pay the bills from one company to another, etc etc. You get what I mean, that is another overhead and expense.

There Is An Annual Fee, But Can Get It Waived

There is an annual fee for the HSBC card. It’s about 125 USD. Yes, you can get a refund if you call and ask. Just put a reminder to do so!

Points and Benefits

There are points added to the account but nothing like US credit cards. I got like a wallet one time or something. The big benefit I use is the free airport lounge pass at HK airport – take a shower, get buffet, grab a nap. Not sure how often you come through HK international airport?

Main Benefit

What’s the benefit of picking up the card? I’m assuming I’ll get a debit card with the bank, do you use the CC for expenditures to make it easy on accounting? or rack up some nice points for anything?

The benefit of the card is to keep your company expenses in the company accounts. The points aren’t as good as in USA and other countries, but you do get to go to the HK airport lounge free when traveling. There are points but not so great.

Need a Security Deposit

The credit card we recommend is a secured credit card. That means that you need to put a deposit of the matching amount the balance is. The lowest amount if 10,000 HKD (about $1,200 USD). If you want to have a higher balance, you need to have a higher security deposit.

If accepted, they will mail it to your correspondence address 3 weeks after they approve your bank account.

the credit card security deposit: Is that locked into the credit card and I only get it back when / if we close the account? Or does this deposit somehow become ‘available funds’?

The security deposit cannot be for operations. You can get the deposit back by closing the card. After requesting to close the credit card, it will take 60 days to release the security deposit. Which will then post to your HSBC HK HKD account. So keep that bank account open!

The “security deposit” on the credit card itself… I’m not familiar with the mechanics of this. Does this mean it’s a card that you “load up” with cash and have access to the cash you’ve “loaded”? I.E. You put 10k on the card, and can spend that 10k. Or, is the security deposit permanently “held”?

The security deposit will not be able to be used for operations. It is essentially locked in a time security deposit account accruing something like 0.0001% interest. You can get the deposit back by closing the card. After requesting to close the credit card, it will take 60 days to release the security deposit, which will then be posted to your HSBC HK HKD account.

Unsecured Credit Card Is Possible

Don’t want to lock up your cash in a time security deposit? Yea, we understand.

The banks do offer unsecured credit cards – but that application process is a bit more stringent.

First, what’s an unsecured credit card? It is a credit card that most people are familiar with! Its where you apply, and then get a credit line for X amount of money. Say its only $1,000USD. This means that the client can spend a thousand bucks and not pay it back. Sure, it will hurt their credit score and they won’t get approved for another card – but it is possible the bank could not get that money back.

So its unsecured, they don’t have your house, or cash, or other assets to claim (take) if you don’t pay it back.

So in Hong Kong, this is riskier – it’s not USA and they don’t look at your American credit score. They don’t know who you are and if you don’t pay it back, maybe you’ll just never come back to Hong Kong and they’ll have no way to even “mark your account” in a credit system.

This is why it’s more difficult, in general, to get credit in Asia. There aren’t these credit bureaus with established systems like in America.

So you can try to get an unsecured card in Hong Kong – but you should have some kind of track record in Hong Kong. And almost 100% sure you will need a Hong Kong residential address. They just feel safer if you live in the Hong Kong boundaries.

Cancelling Your Secured Credit Card

So, it’s always good to think ahead, to think with the end in mind. So what happens when you want to close the account? I hope you’re not starving and waiting for this security deposit to come back.

It will take 60 days to credit back to your account. Yup – 2 months. So there are ways to speed it up a bit, pay some fines and get it in a month. But still a long time. So you’ll need some patience.

Best to just not expect to be able to use this security deposit for quite some time.

Hope This Helped! Consider Letting Us Help You?

We hope this guide helped you out today. These are questions our banking clients always ask us, so why not share it with everyone.

If you want us to work alongside you through this credit card application process, we have a service just for you! Check it out.

Also, have you applied yet for a credit card? Any issues or questions, we’d love to hear from you in the comments. Let others learn from some of the issues you’ve had!

Tap & Go Prepaid Credit Card in Hong Kong

This is the site:
http://tapngo.com.hk/chi/index.html

In terms of shopping or paying, there is no greater thing than a cashless transaction – it is fast, easy, and accurate in terms of paying the exact amount; it has made online shopping easier, and it is safer. Since Hong Kong banks do not offer debit cards, and you may find credit cards a little too complicated, there’s another option called Tap & Go.

Tap & Go is basically an e-wallet / prepaid mobile MasterCard that can be accessed at your fingertips through your smartphone.

Application for Tap & Go offers 3 plans with different eligibility requirements and features

TYPE A B C
Age All ages 11 years old or above 18 years old or above
Supporting Documentation & Information None valid Hong Kong/Macau identity card or Macau/PRC passport or Exit-entry Permit for Travelling to and from Hong Kong and Macau (a) A copy of your valid Hong Kong/Macau identity card or Macau/PRC passport or Exit-entry Permit for Travelling to and from Hong Kong and Macau; and (b) A copy of your permanent residential address
Account Balance Limit HK$3,000 HK$38,000 (HK$3,000 if aged between 11 and 17) HK$38,000
Daily Aggregated Total Deposit HK$25,000 HK$38,000 (HK$25,000 if aged between 11 and 17) HK$38,000
Annual Aggregated Total Deposit HK$25,000 HK$100,000 (HK$25,000 if aged between 11 and 17) Unlimited
Maximum Account Opening One (1) per Hong Kong/ Macau/ PRC mobile number 1 5

(Source)

How to Use Tap & Go

To use Tap & Go with your mobile phone, your operating system must be iOS 7 / Android 4.2 or higher for you to be able to download the app either from Google Play or App Store.

Once you have downloaded the app, you have to purchase a Tap & Go Card through a designated branch or retailer. The easiest way to acquire a card is at 7-Eleven, which is basically available on almost every corner in Hong Kong.

To activate your account, you will have to link the card with your mobile app. In this step, you will have to submit/upload an identification card using your phone’s camera.

Here are links to more detailed tutorials on how to use Tap & Go:

1. Pay with Tap & Go
2. Top Up / Bank Transfer
3. Withdrawal
4. Paybuddy (Peer-to-Peer transfer)

Tap & Go Advantages

  1. No annual fee
  2. Can be used in 7-Eleven, 1010, csl, etc.
  3. The card is customizeable; they have a limited promo called Selfie-a-Card wherein you can choose any photo to use as the design of your card — it could be a selfie. Cool, right?
  4. Peer-to-peer fund transfer
  5. Discounts at selected stores
  6. It enables you to settle payment anywhere worldwide or online via MasterCard® contactless technology embedded in the SIM or Tap & Go Card

Tap & Go Disadvantages

  1. Fees – $300 cancellation fee if you wish to close your account within 1 year from date of activation, and the refund for the remaining balance takes a maximum of 3 months to arrive. Moreover, if you do not use the card within 6 consecutive months, your account becomes dormant; hence, you will be charged a HK$10 maintenance fee every month.
  2. Unlike a debit card, there is no interest payable on the account
  3. Not many rewards

Tap & Go for Foreigners?

Based on their website, it says that as long as you are aged 11 and above and possess a Hong Kong/Macau identity card, you may be able to open and activate a Tap & Go card. Unfortunately, as per Tap & Go’s terms and conditions, a US citizen may not be qualified to open an account. See below for reference:

1. WHO CAN APPLY FOR TAP & GO

1.1 By activating for Tap & Go, you confirm and declare that you are not a US Person as defined in US Tax legislation or a U.S. taxpayer for any other reason, in particular, (i) you are not a U.S. citizen, U.S. resident or U.S. green card holder; (ii) you do not fulfill the “substantial presence test” in the U.S.; (iii) you are not born in the U.S.; and (iv) you do not have a mailing address or contact details in the U.S

If Tap & Go does not allow Americans to open an account, then that’s another addition to its disadvantages. Overall, it’s far less complicated than applying for a credit card in Hong Kong, so to me, Tap & Go could be a great alternative for cashless and online transactions.