Just because Hong Kong is an attractive place to start a small business due to its low tax regime, doesn’t mean that you do not have to pay any tax. As a business owner, you can’t escape paying taxes. But what kind of taxes would you have to pay, and how are you taxed?

For small business owners who are planning or have already started a business in Hong Kong, it’s important to have a plan to make sure you are paying the most efficient tax possible. You wouldn’t want to pay more tax than what you are supposed to. In this article, we will provide an overview of taxable income, tax deductions, and a list of tax reliefs that will benefit your company.

What Is Considered As Taxable Income for

Hong Kong SME?

The main taxable incomes for Hong Kong SMEs are from:

• Profit earned as a business
• Salary drawn as an employee of the business

Every company in Hong Kong has to pay corporate tax, which is also known as, profits tax. This means small business owners are required to pay tax on profits, and not on revenue.

So what’s the difference? Revenue is defined as income generated from the sale of goods and services that your company sells. In simpler terms, revenue is considered as sales. For instance, you sell ice cream and the income you earn each month is HK$1000. This will be your revenue.

On the other hand, profit is defined as the income you have after you take your business expenses, debts, additional income streams and operating costs into account. Let’s use the ice cream business as an illustration again. To determine if you have made a profit or loss at the end of the month, you use your daily revenue of HK$1,000 and deduct it with your operating cost of HK$200 and employees’ salaries of HK$500. Here is the calculation:

HK$1000 – HK$500 – HK$200 = HK$300

HK$300 will be your net profit.

Salary tax is charged on an individuals’ wages. If you also receive wages as an employee of the company, director fee or bonus from the Company, you are required to file an Individual tax return and pay Salaries Tax.

What Is the Current Small Business Tax Rate?

Currently, Hong Kong works on two types of small business tax rates – Single Tier Corporate Tax System and Two-Tier Corporate Tax system.

For the single-tier corporate tax system, companies will be taxed at 16.5% on assessable profits.

But the two-tier corporate tax system functions differently. Companies will be taxed at 8.25% on their first HK$2 million. Subsequently, their remaining profits will be taxed at 16.5%. The purpose of this tax system is to lower the tax burden of most tax-paying Hong Kong’s small businesses.

Tax Deductible Expenses vs Non-Tax-Deductible Expenses

In Hong Kong, tax-deductible expenses are expenses you incur during the production of your business. So what does that mean? One good example is purchasing IT software. It has expired, and it’s time to get a new one. When customers place their orders, you utilise this software to fulfil the order effectively. As long as your expenses help you to produce profits and it’s not capital in nature, it is considered tax-deductible.

However, expenses that are not used for business purposes are generally not deductible. The government has allowed certain expenses to be tax-deductible and non-tax-deductible. It is good for you to familiarise yourself with them. Here are some of the expenses that are tax-deductible and non-tax-deductible:

Are There Any Tax Reductions for Hong Kong’s Small Businesses?

Yes.

In May 2021, the Financial Secretary proposed a one-off reduction of profits tax, salary tax and tax under the personal assessment for the year of assessment 2020/2021 by 100%, subject to the ceiling of HK$10,000.

This means small businesses will get to qualify for tax reductions on their profits. For salaries tax, this ceiling will be applied to each taxpayer. Best of all, business owners who are charged separately for salaries tax and profits tax will get to enjoy tax reduction under each of the tax types.

In this case, HK$31,250 should be the final tax amount Regency Laundry Co has to pay for the year of assessment 2020/2021.

This tax reduction will relieve your tax amount payable for the year of assessment 2020/2021. Just remember to file your profits tax returns and tax returns! Do bear in mind that this tax reduction is only applicable to the final tax for the year of assessment 2020/2021.

How Do I Reduce My Taxable Income for My Small Business?

Here are some ways you can reduce your taxable income:

• Calculate your total assessable profits
• Deduct your deductible expenses
• Deduct your unutilised items
• Deduct your donations
• Deduct your capital allowances

Total assessable profits refer to the net profits you received at the end of the financial year. This source of income should derive from any trading in Hong Kong, rental from leasing movable property, interest income, and grants and subsidies.

Likewise, deductible expenses include expenses that incur during the refurbishment or repairing of your property, equipment and machinery, and research fees.

Unutilised items refer to the loss incurred as you run your business. As much as some of us might not like to think about losses, it’s important to think about deductible losses. It can be deducted from the company’s income in the current assessment year or the subsequent year.

Charity donations to tax-exempt charities can be deducted from your assessable profits. You can claim up to 35% of your assessable profits in the year of assessment. The amount should not be less than HK$100.

In this case, the maximum approved donation amount Neptune Hardware Company can claim is HK$66,500.

Capital allowances, also known as depreciation allowance, refer to any plant and machinery you use for your business. The value of your equipment is likely to depreciate as you run your business. This is where your annual depreciation allowances will come in.

It is crucial to know your assessable profits, deductible expenses, donations and capital allowances. These components play a huge part in reducing your taxable income.

How Does Tax Relief Help My Small Business?

At this point, you may know tax relief helps small businesses to save a considerable amount of money during the tax season. Furthermore, it helps your company to expand its profit margin and strengthen your business. So utilising these reliefs will benefit your company in the long run.

Summing Up

Nobody likes to pay taxes. But in Hong Kong, there are tax reductions for small businesses to relieve their financial burden. We know as a small business owner, you may have plenty of things to worry about. If you still have questions about taxable income and tax reductions, do approach our experienced accountants today, and we are ready to assist you!

E-commerce is on the rise. For entrepreneurs, e-commerce is an exciting and growing industry. People naturally want a slice of the market.

That said, it’s easy to get lost in the crowd, and it’s hard to compete against market leaders like Amazon and Alibaba. An increasing number of business owners are looking to establish themselves by focusing on a niche and generating a strong brand presence.

If you’re just starting or looking to go in a new direction, finding a lucrative niche will make every part of running your e-commerce business easier. When you need to register your e-commerce company, we can help you deal with the administrative paperwork while you focus on growing your company. This article will look at the most lucrative niches to consider.

Benefits of Finding a Niche for Your E-Commerce Business

Before discussing the most lucrative e-commerce niches, it’s worth briefly discussing why you should focus solely on a particular sector, to begin with. After all, it’s counterintuitive to think that reducing your target audience increases your chance of success and profitability.

1. You'll have to compete with fewer companies.

One major benefit of niching down is you reduce the number of competitors. More importantly, you will avoid competing directly with a site like Amazon or Alibaba, which would be very hard to compete against, even if you did have millions of dollars to spend.

When selecting your niche, it’s good to avoid sectors that have a dominant brand. For example, the Dollar Shave Club has established itself as the market leader in the home grooming sector with an e-commerce subscription model. Other companies have imitated this approach, for example, Harry’s.

After growing so quickly, Dollar Shave Club is the biggest company in this niche. It has a competitive advantage. For instance, it can source products for cheaper than you’ll be able to. Equally, it can spend more on marketing than a startup.

Most importantly, though, it is the market leader. If people think subscription razors, Dollar Shave Club probably comes to mind.

So, niche down to reduce the number of competitors. Then, if you want to grow fast, do something to make your business stand out. For example, Dollar Shave Club didn’t just sell razors. They launched a subscription service selling razors. It’s a subtle difference based on a good business plan that enabled the company to grow quickly.

2. It’s easier to design a successful marketing strategy.

If you’re going to set up an e-commerce business, you’ll need a coherent marketing plan. One of the major benefits of niching down is that it’s easier to develop and execute a marketing strategy. Moreover, it can be easier to dominate the search results for your target keywords with a clearly defined marketing strategy.

Take the example of a company in the electronic bikes space. The company Electric Bike Review exclusively does reviews of e-bikes.

That’s a clearly defined marketing strategy. It’s easier for the site owners to devise their content marketing calendar. Picking keywords is relatively straightforward. That saves time and money, which is great.

Site visitors know what type of content to expect, which helps the site build an audience.

Thanks to this simple content marketing strategy, the site is dominating its niche for relevant search terms. According to Ahrefs, it gets around 56k visitors a month. I’m sure the real visitor numbers are at least triple that figure.

The type of benefits that I’m highlighting from a focused content strategy apply to other marketing channels. For example, it’s easier to identify relevant keywords for a Pay Per Click marketing campaign when you have a clear keyword focus and limited options.

3. It’s easier to establish your brand identity.

One of the important issues I’ve been hinting at up to this point is the importance of establishing a strong brand identity. To be successful in business, you need people to turn to your business to solve their problems. For example, many men turn to the Dollar Shave Club if they want a razor.

That’s strong brand identity.

If you’re setting up an e-commerce business, you want to establish that same presence in the mind of your customers. If you’re unable to do this, you’ll struggle with customer churn. That’s a big problem for any business that hopes to grow fast.

You can slowly evolve out of your initial niche once you’ve established your business. The most famous example of a company to take this approach was Amazon. They initially started as an online store selling books. Now, well, they sell a lot more than just books.

4. It makes inventory management easier.

An important logistical benefit of niching down is inventory management. If you sell a limited number of items, you should find it easier to source goods, manage stock and distribution.

If this is your first e-commerce business model, you want to make sourcing products, stock inventory, and distribution straightforward. After all, you don’t know how well your stock will even sell.

Niching down initially allows you to take this approach. As your business grows, like Amazon, you can expand your product line. It’s not obligatory, but it’s an option.

The 5 Most Profitable E-Commerce Niches

We touched on four reasons why niching down makes sense for a budding e-commerce store owner. Now, let’s look at which niches make sense to target. There is plenty of data out there that shows what e-commerce niches are and will continue to be profitable in 2021.

1. Technology and Home Office Equipment

The COVID-19 pandemic meant that many workers moved from the office to their homes. Many had never worked from home before and suddenly needed the technology and home office equipment they usually had access to at work.

Thanks to this shift from the office to the home, remote working technology and home office supplies are in demand. According to one survey, 45% of workers who had to work from home due to COVID-19 purchased home office supplies because of this.

Of course, the immediate effect of the masses of workers who suddenly had to work from home in 2020 was a spike in home office supplies sales.

But there is no sign of remote work going away. One expert suggests that by 2025, 70% of the US workforce will be remote. The need for home office supplies and remote work tech will not only continue but is also likely to increase.

2. Home Gym and Fitness Gear

Offices weren’t the only places to close during the pandemic. Gyms also closed and forced many of us to start working out at home. The money saved on gym memberships was noticeable for many. For others, working out at home was one of the first times they started to enjoy exercise.

An article in the New York Post suggests that gyms will become “a thing of the past” because of the pandemic. Many people are starting to return to the gym, but others are more than happy to continue their home workouts.

The home fitness equipment market saw a dramatic rise in 2020 due to the pandemic, and it’s expected to continue growing. One report suggests that the market will grow to 14.74 billion USD by 2028.

Fitness equipment and gear is a great e-commerce niche as it also has sub-niches - fitness activities from weightlifting to yoga all have a distinct target audience. With an accessible website that includes excellent e-commerce photos, your business could tap into this growing market.

3. DIY and Home Improvement

Some people got fit during the pandemic. Others transformed their homes. The DIY and home improvement market is one of the most lucrative e-commerce niches. One study predicts that the DIY and home improvement retail market will grow by 143.3 billion USD between 2020 and 2024.

DIY and home improvement also have many e-commerce niches that your business can tap into. From DIY woodworking kits to bespoke garden furniture, consumers want all sorts of products and services for their homes.

One recent success story is the French start-up Mano Mano, an e-commerce business selling a range of home improvement and gardening products. It was recently announced that they had raised 335 million USD from investors to expand their business thanks to increased home improvement shopping during the pandemic.

4. Food, Drink, and Cooking

Being forced to stay at home during the pandemic changed the way many of us prepare food. It will come as no surprise that one survey found that 57% of respondents cooked more from scratch during the pandemic than before.

That has been great news for the food, drink, and cooking e-commerce market, which is expected to continue rising in the years to come. One foodie magazine even named e-commerce the ‘trend of the year’.

There are plenty of food, drink, and cooking trends to look out for if you’re thinking of choosing this e-commerce niche. Vegan and vegetarian food, ethical packaging, recipe subscription boxes, and virtual cooking classes are popular with foodies.

5. Entertainment

With movie theatres, live music venues, and sports events closing during the pandemic, many of us had to rely on home entertainment to keep having fun in our spare time.

Home entertainment covers a lot of e-commerce niches in itself. Video games, board games, TV sets, and craft supplies are a few examples of home entertainment products your e-commerce business could specialize in.

Board games, for example, are a growing market, one that is expected to have a value of 30 billion USD by 2026. Nowadays, board games don’t just include your standard Monopoly or Scrabble set. The board games industry is filled with exciting games for all age ranges that more and more consumers are loving.

Conclusion

2020 brought in many changes for e-commerce businesses. Many people turned to buying online rather than in-store. Many budding e-commerce owners saw it as an opportunity to start a business.

If you’re hoping to do that, finding an e-commerce niche is important. Without a niche, you will be competing with companies like Amazon or Alibaba. It will be difficult to acquire customers and establish brand recognition. That is why you should niche down.

This guide discussed the most lucrative e-commerce niches in 2021. You also learned why finding a niche for your e-commerce business is so important.

I hope you’re brimming with ideas after reading. Good luck!

Client: Royal Key

Name: Denis Andrei Valcu

Business Name: Royal Keys Market Limited

Line of Work: E-Commerce

East river Package: Accounting Rocking Package

Member Since: April 2021

About RoyalKey: Software for Gamers

For Denis Andrei Valcu, setting up his own business was his dream and passion. Fast forward to today, the company he set up, RoyalKey, gets most of their business through gaming channels, honing their reputation as a go-to for gamers’ software needs.

RoyalKey aims to provide accessible, reasonably priced software for everyone. From Microsoft Office packs, Windows 10 Operating System to Antivirus software, they strive to provide these to consumers at the lowest possible price.

The Challenge: Bookkeeping and Accounting Work Eating Up Hours and Revenue

However, in a short time, Valcu realised that he was overwhelmed by the volume of orders and spent a lot of unnecessary time handling the accounting and bookkeeping aspects of the business.

Another pain point Valcu faced was the price when it comes to outsourcing accounting. Most companies in the market were too expensive.

Solution: Affordable Accounting Service That Matches The Revenue of Royal Key

However, since East river provides accounting plans that match the revenue of a business, RoyalKey’s founder was able to outsource accounting and bookkeeping affordably with East river’s Accounting Rocking Package for companies with a monthly revenue under HK $300,000. Since then, Vacu has seen a positive change in business and he has been able to experience significantly less stress.

With that peace of mind, being able to gain peace of mind, he’s been able to explore other areas of growth in his company.

“I can now focus on a reward program for my customers instead of focusing on accounting and I am very thankful for that.”

Advice for Entrepreneurs Out There

Many people think that starting a business will make them rich. However, entrepreneurship is not easy at all. For those who are thinking of starting a business in this field, RoyalKey’s founder shares this piece of advice:

“One single piece of advice - persevere and just start doing the job. Even if you fail, you will fail better and learn something from it. Just don’t give up.”

Similar to almost all jurisdictions around the world, company directors are required in a company registered in Hong Kong. These appointed directors are required to adhere to the general law of the jurisdiction and the company’s Articles of Association.

In order to perform your duties or ensure your company director is doing their assigned responsibilities, we present a guide on who can become a company director, the duties of a director, consequences of not performing your duties and how to register as a director of a company.

What Is A Director?

A director is not a shareholder or member of a company. They belong on the board of directors and can have an equal or higher standing than other members of the board. What rights are the director allowed or not allowed to exercise then? This depends on the company’s Articles of Association, which should state clearly how much power a director has in running business operations as a whole.

Do I Need A Director To Set Up My Company In Hong Kong?  

To put it in simple terms, you must have a minimum of one director in order to set up a new company. Remember that in Hong Kong, it is also mandatory to appoint a company secretary. If you are the sole director or shareholder in the company, you cannot act as the company secretary. In this case, you can appoint a nominee company secretary.

On top of that, you do not necessarily have to take up the role of director for your company if you do not want to. There is an option to appoint a nominee director in your place. Keep in mind that if you wish to nominate a director, it should be done in the early stages of company incorporation.

Of course, here at East river, we strive to help entrepreneurs like yourself register and incorporate your new company, so that you do not have to worry about missing out on any important documents.

Who Can Become A Company Director?

A company director in Hong Kong must fulfil the following:

• Be at least 18 years old
• Can be of any nationality
• Not required to be a Hong Kong resident (foreigners can be directors too)

You cannot be a company director if you:

• Are bankrupt
• Have been previously convicted for any malpractices
• Are of unsound mind
• Fail to attend board of director meetings regularly
• Are convicted for fraud, dishonesty or an indictable offence before

What Is A Director Of A Company Responsible For?

As a company director, you are generally required to perform due diligence to improve and act for the good of the company. There are nonetheless some basic principles of directors’ duties you have to follow. Here are some of the most prominent ones.

1. Directors have a duty to act in good faith for the benefit of the company

A director has the duty to make decisions in the interests of all members of the company, be it, shareholders, board of directors and employees. This also means that the director should strive to achieve outcomes that are fair to all stakeholders.

2. Directors have a duty to exercise care, skill and diligence

A director plays an important role in a company and should always be exercised by a reasonably diligent person. For example, a person who has adequate experience and decision-making skills should be preferred over someone who has just stepped into the industry with no prior industry experience.

3. Directors should not delegate powers except with the proper authorisation

A director should not delegate any of their powers to other members unless it was authorised to do so by the company’s memorandum and Articles of Association. In other words, a director should be able to exercise independent judgement when using his powers to make a decision.

4. Directors have a duty to avoid conflicts between personal and company interests

The personal interests of a director should not interfere or have conflicts with the interests of a company. Keep in mind that a director must act in good faith for the best interests of the company.

5. Directors have a duty not to enter into transactions as their interests

According to Hong Kong law, directors must disclose the nature of any personal interest that concerns any company transactions. A director must not enter into any company transactions unless they are fully compliant with the law requirements.

6. Directors cannot gain advantage with the director position

A director should not make use of his/her position as a director to gain any advantages for himself or anyone else, no matter directly or indirectly. This also includes the fact that a director is not allowed to use the company’s property or information for personal gains unless it was previously disclosed to the company in general meetings and approval has been given.

7. Directors should not accept personal benefits from third parties

No matter current director or a former director, you must not accept any benefit from third parties as a reward for going through a transaction with the company in question. This applies to all benefits unless the company is informed and has consented to the transaction.

8. Directors must observe the company’s memorandum and Articles of Association

A director must act in accordance with what is listed under the company’s memorandum and Articles of Association. Remember that different companies may have different constitutions, so it is not a good idea to assume that what you are used to in your previous company applies the same way to your new company.

9. Directors must observe the company’s memorandum and Articles of Association

A director is in charge of making sure that books of accounts are kept well and present them if questioned. This includes a true and fair view of the state of affairs of the company, and each transaction performed.

For more information on the company director’s duties, check out this detailed guide.

What Powers Do Directors in Hong Kong Have?

A director can utilise certain powers given to them according to the:

• Company’s Articles of Association
• Companies Ordinance
• Common law
• Shareholder’s agreement
• Board members’ resolutions

These powers however are subject to whether there are any particular special resolutions in the company’s Articles of Association.

As a newly appointed director of a company, you should always go through the Articles of Association before signing any binding contract, just to ensure that you know what is required of you and your powers as a director.  

Are There Consequences If I Breach My Duties As A Company Director?

Every company director has the responsibility to make sure that the company is compliant with all provisions stated in the Companies Ordinance. If found to breach any provisions, there is a chance that the director and members involved will be prosecuted and fined by law.

Although the offence committed determines the maximum level of prosecution, serious regulatory offences can result in possible imprisonment.

How Do I Appoint A Director?

In order to appoint a director for your company, you can do so by passing an ordinary resolution or by the decision of existing directors. You will also need to inform the Companies Registry within 15 days of the appointment.

To complete the appointment, you will need to submit these documents to the Companies Registry.

1. The full name of the appointed director
2. Passport information of the appointed director
3. Residential address of the appointed director

What You Should Always Be Aware Of As A Director

Being a company director is no child’s play, a wrong move could result in dire consequences. In order to minimize any chance of breaking the law, a director is encouraged to regularly attend training sessions, seminars, conferences and more self-enrichment courses to refresh on his or her duties and responsibilities.

Of course, if you are a new entrepreneur and do not have the time to handle matters pertaining to appointing a director or choosing a nominee director for your new company, the team of professionals here at East river are always glad to help. If you need help on how to start a business in Hong Kong, we have just the guide you need to get started.
If you are interested in opening a company in Hong Kong and are still unclear about the steps needed for company incorporation in Hong Kong, we are more than willing to help you with the process. Furthermore, we can help with corporate secretarial tasks for your Hong Kong company while you concentrate on launching and growing your business.

Hong Kong is also a fantastic place to base e-commerce businesses as it is well-connected with the rest of the world. This means that personal data will be collected, used and processed during the business transactions.

So what does that mean for new and existing businesses registered in Hong Kong? How does a business owner help to prevent data breach and protect an individual's personal data? Perhaps, many business owners who are planning to base their businesses in Hong Kong have this question in their mind: is it necessary for my company to appoint a data protection officer (DPO)? In this article, we will share about Personal Data (Privacy) Ordinance (PDPO) and General Data Protection Regulation (GDPR) and how these regulations affect Hong Kong companies.

How Does GDPR Apply to Hong Kong Companies?

In Hong Kong, individuals’ privacy is governed by the Personal Data (Privacy) Ordinance (PDPO). It is applicable to both private and public sectors. The purpose of PDPO is to protect the individuals’ personal data from being compromised, and at the same time, provide a framework for companies that are processing data. So how does GDPR apply to Hong Kong companies?

When the PDPO was first drafted, it drew references from OECD Privacy Guidelines 1980 and the EU Directive. As such, the PDPO and GDPR share similar features. Given that GDPR was adopted in 2016, significant developments have since been made towards the data protection law.

Even though GDPR is usually applied to EU countries, it has extended to companies in Hong Kong. In other words, it applies to non-EU companies that collect and process personal data relating to goods and services sold to individuals in EU countries.

With more companies trading globally, it is important for Hong Kong companies to check if GDPR is applicable to them. This means if your company has business clients or customers who are based in EU countries, you will need to comply with GDPR and keep informed of new developments of the regulations.

Likewise, if your e-commerce business has a website that allows customers to place orders and ships products to your customers in the EU, it will fall within the GDPR’s scope. But it will not fall within the GDPR’s scope if you explicitly explain on your website that you do not intend to ship goods to EU countries or are not applicable to people living in those countries.

GDPR vs PDPO

At this point, you might be wondering if there is any major difference betweenPersonal Data (Privacy) Ordinance (PDPO) and General Data Protection Regulation (GDPR). To understand these regulations better, here are the major differences:

Is It a Mandatory Requirement To Appoint a Data Protection Officer for My Company?

Under the PDPO, there is no mandatory requirement for companies to appoint a data protection officer in Hong Kong. However, in March 2019, PCPD revised and released a guide entitled, Privacy Management Programme: A Best Practice Guide (PMP). This guide encourages companies to develop their own Privacy Management Programme, based on these three important components:

• Organisational commitment
• Programme controls
• Ongoing assessment and revision

It also encourages companies to appoint a designated DPO to oversee the company's compliance with the PDPO and the implementation of PMP. For big companies, the DPO should be a senior executive. For a smaller company, such as a small medium enterprise (SME), the officer should be the owner.

What Are the Main Responsibilities of a DPO if I Were To Appoint One?

The job of a DPO is to ensure that companies comply with PDPO and GDPR, if they have customer bases in the EU.

Aside from the above, their main responsibilities include:

1. Establish and implement the PMP programme controls such as:

• Keep a record of the company’s personal data inventory, conduct periodic risk assessment to all departments and handle data breach incidents.
• Initiate the periodic risk assessment to all departments.
• Monitor, review and provide advice to all risk assessment reports and privacy impact reports.
• Conduct training and promote staff awareness on data protection by circulating data privacy policies, guidelines and privacy-related information.
• Coordinate and monitor the handling of data breach incidents and provide advice to departments on conducting investigations.
• Monitor, review and provide advice on preparing Personal Information Collection Statement.

2. Review the effectiveness of the PMP.

3. Prepare oversight plans and review plans for PMP, and revising the programme controls, if necessary.

4. Report to senior management periodically about the company’s compliance issues, problems encountered and any complaints received regarding an individual’s personal data privacy.

What Qualifications Does My Data Protection Officer Need?

Though the PDPO does not indicate any specific qualification needed for a DPO, the designated officer should have a clear understanding of the company’s business industry and the methods of handling the personal data. He or she is also required to have some knowledge of PDPC and GDPR. The officer must be an excellent communicator who is able to work with various departments to report potential compliance issues and handle complaints from the public.

What if My Company Fails To Comply With the PDPO or GDPR?

We understand that sometimes companies may get too overwhelmed with work that they neglect on improving their data processing system. Likewise, there are some companies that may not consider appointing a DPO to oversee the implementation of PMP. Given the amount of data handled by a company, it is important to ensure that your company complies with PDPO or GDPR to prevent any data breach. Failure to comply with PDPO or GDPR will lead to heavy fines.

If your company fails to comply with the PDPO, the Office of the Privacy Commissioner for Personal Data (PCPD) will first issue an enforcement notice to the affected company to provide information requested by PCPD during the investigation. However, if the company fails to comply with the enforcement notice, the statutory fine will be from HK$50,000 to HK$100,000. For direct marketing offences, the penalties are much higher with fines up to HK$1 million, and five years imprisonment.

On the other hand, if your company fails to comply with GDPR, the fines for infringements will be 4% of annual worldwide turnover or €20 million.

Key Takeaways

1. In Hong Kong, individuals’ privacy is governed by the Personal Data (Privacy) Ordinance (PDPO).
2. The GDPR might apply to EU countries, but it has extended to companies in Hong Kong. It also applies to non-EU companies that handle the amount of data collected relating to goods and services sold to individuals in EU countries.
3. Although the GDPR and PDPO regulations share certain similarities, there are major differences between the two of them.
4. Under the PDPO, there is no mandatory requirement for companies to appoint a data protection officer in Hong Kong. But in 2019, PDPC revised and released a Privacy Management Programme (PMP), which encourages companies to appoint DPO to oversee the company’s compliance and develop their own PMP.
5. For big companies, a DPO should be a senior executive. For a smaller company such as SME, the DPO should be the owner.
6. Your DPO should have a clear understanding of the company’s industry and the amount of sensitive personal data the company handles. The DPO should also have some knowledge of PDPC and GDPR.
7. If your company fails to comply with PDPO, the statutory fines will be from HK$50,000 to HK$100,000.
8. Likewise, if your company fails to comply with GDPR, the fines for infringements will be 4% of annual worldwide turnover or €20 million.

This clearly shows that the Hong Kong government takes individuals’ personal data and holds companies accountable for the amount of data they handle daily. As such, it is important to appoint a DPO to oversee and review data protection policies.

Have more questions about other aspects of compliance that a company has to maintain in Hong Kong? Get in touch with our experienced Corporate Secretaries today!

Today, cryptocurrency is starting to be accepted as a payment method or digital currency. Since the first cryptocurrency inception, as of January 2021, there are more than 4,000 cryptocurrencies that exist. Before you jump on the bandwagon, assess whether cryptocurrencies are suitable to be used in your business.

By the way, if you are an e-commerce company or sell digital products, you might want to keep track of your transactions, even those made using cryptocurrencies. Keeping track of these would help you get a hold of where your expenses and revenue comes in to get a good hold on your finances. If you need advice from experienced accountants in e-commerce, look no further and chat with us!

What Is Cryptocurrency?

Cryptocurrency is a digital asset or money that is mainly used to buy, sell, and invest. A cryptocurrency could be created by individuals or companies, to serve a particular purpose and has no standard value. Bitcoin, for example, is priced at USD $32,641 at the time of writing, while Dogecoin is priced at USD $0.81. The value of cryptocurrencies is determined by their coins’ availability, desirability, and usability.

The main difference between cryptocurrencies and fiat money is that they are decentralized and are not regulated by any governments or central authorities.

Cryptocurrencies run on blockchain technology, which are digital databases consisting of blocks which in turn, are made up of transactions. These transactions are encrypted for security and recorded on public ledgers. Every transaction involves two public keys and the sender’s private key.

Sending of a digital coin from one person to another must be confirmed by miners. Miners audit cryptocurrency transactions by verifying the legitimacy of these transactions. A group of miner-approved transactions are called blocks.

Miners are compensated for verifying the transactions and by solving advanced mathematical problems using supercomputers. This is called hashing. As such, it is possible to transfer assets between two parties without a central authority that facilitates the exchange. Digital coins received could then be stored in digital wallets, or used to sell, trade, or invest in other coins, or even used to buy physical goods and services.

What Are the Risks of Cryptocurrency for Business Owners?

A new business owner should be cautious before accepting cryptocurrency as payment due to the volatile nature of cryptocurrency. The value of a cryptocurrency changes quickly even within a day of trading. It could even halve in value from one hour to the next. This is because cryptocurrencies are not regulated and are anonymous.

Businesses also risk their reputations if their customers’ digital wallets are hacked and their digital tokens were to be stolen. Although cryptocurrency wallet companies are trying their best to enhance security, blockchain technology is not 100% safe from hackers. There is still a risk of being hacked into where hackers could gain illegal access and spend from a customer’s digital wallet.

Advantages and Disadvantages of Accepting Payments in Cryptocurrency

As a business owner, you may consider accepting cryptocurrency payments for your products and services due to the fast processing speed of the transaction. While credit card systems take days to process and batch out, cryptocurrency is processed immediately, streamlining your business’ cash flow.

On top of that, there are more benefits of accepting cryptocurrency payments:

1. Reduced Transaction Fees

Small businesses are usually charged between 25-30 cents plus 2%-4% of the total transaction for each credit card swipe. Fees for cryptocurrency payments vary depending on whether you receive your digital coins in your personal wallet or through third-party wallets like Coinbase, but they are definitely less expensive than PayPal or credit card providers. There is no middleman collecting fees to facilitate the exchange.

2. No Chargebacks for Merchants

As cryptocurrency transactions are quite similar to cash, that is, no third party could reverse the transactions and they are final, businesses are protected from fraudulent chargebacks. The blockchain system serves as a peer-to-peer objective ledger, which means chargebacks could not occur. If a consumer demands a refund, there is no bank or card network to appeal to, and only you as the merchant could decide to reverse the transaction if he chooses to do so.

3. Broader Market

Accepting cryptocurrency would open doors to a new market of mostly tech-savvy customers, often internationally. For example, a small electronics retailer reportedly sold $300,000 worth of products to customers in almost 40 countries when he started to accept cryptocurrency.

4. Responding to Consumer Demands

Cryptocurrency is increasingly growing in acceptance and legitimacy, and there are more people who hold them and want to spend using them. From a business owner’s POV, accepting cryptocurrency would offer your customers another option to pay, especially to customers who value privacy and anonymity. This would gain you an advantage over other retailers who do not accept them.

However, dealing with cryptocurrency requires a certain level of technological know-how. There is quite a steep learning curve to understand cryptocurrency.

Accepting payments in cryptocurrency involves maintaining a digital wallet on digital currency exchanges and requires the user to have a certain level of familiarity with the cryptocurrency market.

On the other hand, the disadvantages of accepting cryptocurrency payments include:

1. Price Volatility

Business owners need to convert cryptocurrency prices quickly and regularly due to its volatility. Ethereum, a cryptocurrency coin, started at around USD $1 initially during the first months it launched, and today, it is priced at USD $1,976.

Startups and businesses could use services provided by BitPay or Coinbase to protect against volatility. These services immediately convert digital currency to its value in cash in real-time when payment is made. Holding on to cryptocurrency might amount to speculative investment and could possibly risk your revenue stream.

2. Security

Currently, cryptocurrency transactions are not 100% secured and there is no complete guarantee or security against cyber criminals from getting access to customers’ digital wallets. There is an average of USD $2.7 million of cryptocurrency assets stolen every day in 2018. To cover these risks, there are now insurers dedicated to insuring cryptocurrency risks such as Nexus Mutual, Bridge Mutual, Coincover, and Etherisc. The cryptocurrency exchange platform Coinbase, for example, keeps less than 2% of its customers’ assets online.

Regularly back up your data, keep your private keys safe, and turn on multi-factor authentication when logging onto your digital wallets. Some digital wallet companies such as Optherium also incorporate biometric face verification before granting users access to their digital wallets for added security.

3. Regulatory Uncertainty

There is no universal law governing cryptocurrency since it is fairly new. Each country has different laws, and almost have no regulations concerning cryptocurrency.

Bitcoin, for instance, is recognized in Japan as a legal payment method. Business owners would need to be adaptable if they adopt cryptocurrencies as a payment method as rules and regulations are still evolving. They need to be up-to-date with laws concerning reporting gains and losses and taxation if cryptocurrency faces regulation in their countries.

3 Ways To Use Cryptocurrency in Your Business

So how might you use cryptocurrency in your business if you’re sold on the advantages of it?

Here are 3 suggestions that we have. You might think of more ways as you grow your business and experiment.

Paying Employees’ Salaries in Cryptocurrency:

Setting Fiat-Cryptocurrency Conversion Rate and Ratio

Companies considering paying their employees’ salaries in cryptocurrency could decide on a recurring date each month to set the fiat-crypto conversion rate. They could freeze this rate as the conversion rate for their employees’ payroll, even if the actual disbursement of salary is done at a later date. The market rate of cryptocurrency could be used as the conversion rate.

Business owners should consult their staff on the ratio of fiat to cryptocurrency that the latter prefer to receive. As different employees have different financial obligations, it would be more equitable than the employees have a say in deciding how much salary they would like to receive in cash and in cryptocurrency. Employees with a bigger risk appetite would perhaps agree to receive half of their pay in cryptocurrency, while others might take between 10%-20% of their net pay in cryptocurrency.

Choice of Cryptocurrency

Business owners could offer several types of cryptocurrencies for their employees to receive their salaries. They could provide options of the most popular cryptocurrencies (like Bitcoin, Ethereum), alongside their company’s own coin, if they own such cryptocurrency. Business owners should find a coin that suits their employees’ risk profiles. The employees could then keep the coins in their digital wallets or use different tools (for example MakerCDP) to liquidate their cryptocurrency.

Paying Suppliers in Cryptocurrency

One of the benefits of paying suppliers in cryptocurrency for new business owners is the speed at which cross-border payments take place. It usually takes a few minutes compared to several days using credit card payments, for example. Cutting out the middleman such as banks and credit card companies also mean lesser fees paid by business owners.

Furthermore, cryptocurrencies would offer greater liquidity than illiquid or exotic currencies. This is especially true in foreign markets that curtail the cost-effective flow of their own currencies internationally. To illustrate, it is much easier and faster for a business owner to pay his Estonian supplier in cryptocurrency rather than the Estonian Kroon.

The challenges that business owners might face in paying their suppliers in cryptocurrency could be from their own banks. Traditional banks have invested billions in building their cross-border payment infrastructure (such as the SWIFT network). These banks would be more inclined to maintain their relevance through their legacy (old, but still in use) payment systems. They might compete with the adoption of cryptocurrency payments by offering business owners faster processing times or lower foreign exchange rates when businesses pay their suppliers.

Cryptocurrency is also still trying to shed its bad image of being used for a wide range of illicit activities, which might affect the readiness to accept cryptocurrency payments among suppliers. Cryptocurrency and its blockchain technology have also yet to achieve scalability for cross-border payments due to their lack of liquidity, and the fact that they are privately run and not government-backed. They have yet to achieve the scale of the trusted payment systems of today such as ACH, FedWire and U.K. 's CHAP system, which are distinguished by their large payment volumes, established operating rules, known costs, security, and deep liquidity pools.

Issuing Cryptocurrency As Dividend

Is It Possible for Fiat-Based Companies To Issue Cryptocurrency-Denominated Dividends?

Yes, fiat-based companies could issue cryptocurrency-denominated dividends only if they mint their own digital currency and issue investors with cryptocurrency coins. They could not issue Bitcoin- or Ethereum-denominated dividends for instance, but could issue their own companies’ dividends when they mint their own cryptocurrencies.

Can Companies Create Their Own Cryptocurrency?

Yes, they can. Most companies or startups build their own cryptocurrency using Ethereum’s technology. The startups then raise funds through initial coin offerings (ICOs), which is the IPO of a blockchain-based company. In return for the money, the startups reward investors with cryptocurrency, either as a share of profits or as dividends. However, for a company’s cryptocurrency to take off and be successful, it needs to have a strong use case, i.e. actual use or application besides paying for goods and services.

Taxes on Cryptocurrency in Hong Kong

The Inland Revenue Department (IRD) of Hong Kong has issued a note which mentions cryptocurrency, and these are some of its key points:

• A business’ cryptocurrency assets earned by trading, exchanging, mining, airdrops and blockchain forks, would be subject to profits tax if they are Hong Kong sourced profits.
• The market value, date of transaction, and amount of sales and purchases, of goods and services in cryptocurrency business transactions, must be recorded.
• Employees who receive cryptocurrency as remuneration will be taxed under the salaries tax provisions. The amount to be reported in the employee’s tax return should be the market value of the cryptocurrency at the time of accrual.
• For investors who hold digital assets for long-term investment purposes, the proceeds will not be taxable -there is no capital gains tax in Hong Kong.

Every e-commerce business likes new customers. However, it’s even better when the same customer returns.

Existing customers help in creating a solid foundation of your business that provides a steady revenue stream that costs less than the costs of acquiring new customers. Research shows that return customers account for about 15% of all transactions and spend an average of three times as much as new customers.

Instead of retaining new customers, some customers focus on acquiring new ones. However, not taking the necessary steps to retain new customers can lead to revenue loss and a decline in growth which you do not want.

By the way, as your e-commerce business grows, you might overlook the boring but necessary work of keeping your books in order. That’s when we can help. Our e-commerce accountants, who know how e-commerce business works, can help you with sorting that out. Talk to us to know more, otherwise, do read on.

What Is Customer Retention?

Customer retention is a skill of retaining customers. The strategy of retaining customers is different for every industry and also differs from company to company. Still, the important part is to provide a great customer experience to keep your customers coming back. You can start by giving a positive buyer journey through check out and beyond that will help in improving the loyalty and affinity for your brand.  So, how can you calculate customer retention?

How To Calculate Customer Retention?

You can calculate customer retention by:

• Choosing a period like a onth or year.
• Subtract the number of new customers (N) acquired in that time frame from the total number of customers (E) remaining.
• Divide this number by the number of customers at the start of the period (S).
• To get a percentage, multiply it by 100.

(CRR=((E-N)/S)*100)

For example, let’s say you want to calculate the retention rate for a particular month. You see that you had 105 customers at the start of the month (S) and that you acquired an additional ten customers (N) during that month. At the end of the month, you lost 30 customers, leaving you with 75 existing ones (E).  Following our formula, we would subtract 10 from 75 for a total of 65 customers. Divide this number by 105 to give you a retention rate of .62. (Multiplying by 100 will provide you with a percentage - in this case, 62%).  

In other words, the higher your customer retention rate, the better your position in the marketplace.

Why Is Customer Retention Important?

Apart from the fact that acquiring new customers is more expensive than keeping existing customers, other reasons make customer retention important.

Retaining customers can use your services 50% more than a new customer. They also tend to spend 33% more than new customers and help in reducing your marketing costs. So you see, retaining existing customers is more profitable than just acquiring new customers.

Retained customers are more likely to send referrals your way. They tell their friends and family, thus contributing to the word of mouth advertising. It has been seen that word-of-mouth advertising drives five times more sales than paid advertising.

This results in more happy customers who drive more sales your way, thus saving your money by decreasing the advertising costs.

Benefits Of Focusing On Building Customer Retention

Let’s see why focusing on customer retention is beneficial for your business.

1. Customer Retention Is Cheaper Than Customer Acquisition

As mentioned earlier, focusing on existing customers is less costly than acquiring new customers.

Acquiring new customers always takes lots of time, money, and effort. You’ll have to create strategies, target your primary audience, publish ads and promote your brand endlessly. It doesn’t need this much effort regarding existing customers as they already know about your brand and what it does.

To acquire new customers, you’ll have to spend five times more than to keep the existing customers. Also, there’s only a 5-20% chance of making a sale with new customers. The percentage increases to about 60-70 when it comes to selling products to existing customers.  This means that by focusing on existing customers, you can generate revenue and grow your business.

2. Valuable, Genuine Feedback

By purchasing a product from your company, new customers don’t send any specific message about your products. However, existing customers send a clear message through their purchase behaviours. The products they buy regularly can show quality and popularity while items that are only purchased can showcase some problems. Also, repeat customers give you their feedback and suggestions as they show genuine interest in your store and products.

3. Increased Word-of-mouth Advertising

Word of mouth advertising is a popular form of promotion that never fades away. Since times have changed, online reviews are an important part of the purchasing process. Many customers focus on reviews of the brand before making any purchase. That’s why review sites like Yelp! and Google’s review platform play an important role in the buying decision.

If they are happy with your products, existing customers will leave a positive review as compared to new customers. These positive reviews will help in acquiring new customers in return.

8 Customer Retention Strategies For Online Businesses

Around 67% of customers have said that they support small and local businesses. But in today’s marketplace, how can you set yourself apart from other famous e-commerce stores?

This can be solved by creating a loyal local customer base that will help you establish a strong business. Here are some ways that can help you to develop strong customer retention strategies to grow your business.

1. Create A Customer Loyalty And Referral Program

With so much competition around, you will have to prompt your customers to keep using your services repeatedly. This can be done by creating a:

Loyalty Program

Developing a loyalty program can encourage customers to use your services in the future. Usually, loyalty programs issue points to customers for every purchase that they make. These points can be exchanged for free samples, products or discounts. As loyalty programs are based on how much your customers spend with your business, they drive up the average order value.

Referral Program

A referral program awards customers for sending more customers your way. According to GWI, "41% of internet users mention that rewards are one of the top things that motivate them to promote their favourite brand online."

The Shopify App Store has various types of referral program apps that encourage customers to refer people through social media via a personalised link, text, email and more.

People who like your brand refer your services to their friends and family, and in return, they get discounts or other rewards; it's usually a win-win situation for both; you get to boost sales and increase your customer base.

2. Stand Up For Causes

Many people like to use services for those companies that share their values and stand for any cause.

According to GWI, "46% of internet users globally want brands to be eco-friendly, 44% want brands to be socially responsible, and 28% want brands to support charities."

For example, if you want to support environmental causes, you can use eco-friendly products promoting that you are actively trying to reduce your company's carbon footprints. Or you can donate a portion of your profits to organisations that clean up the environment. You can also share some of your profits with non-profits that fight for hunger.

3. Continue Building Relationships After The Sale

Show your customers that you care about them by communicating with them regularly. Here are some ways to develop relationships with your customers.

Use Push Notifications

Your real relationship with your customers begins after checkout. You can start creating a funnel to a better post-purchase experience that can help with your repeat sales. Your shop app notification should deliver order status and delivery tracking updates to your customer's phone and inform them about every touchpoint after checkout.

Aspired by push notification, customers can find recommendations from your store every time they use your app or check out your newsletter. This means that you are helping them to decide on your next purchase even before their last order has arrived.

Send Post-purchase Emails

Make the best use of email marketing. This means that you can keep the conversation going after visiting your website or making a purchase.

According to GWI, "sharing helpful information is one of the top motivations for brand advocacy—globally, 32% of internet users reported they are more likely to promote their favourite brand online when something is relevant to their own interests."

You can send out informative newsletters to your subscribers. It's a great way to show-tell about different products they might like based on their purchase behaviour.

4. Give your customers a seamless online to offline shopping

By providing different choices to shop and buy across various channels, including in-store and online, you can provide an omnichannel experience which many people like.

Here are some ways on putting a great omnichannel channel experience for your customers:

Offer (BOPIS) - Buy Online, Pick Up In-Store

BOPIS is also known as click and collect or curbside pickup. During the pandemic, it has gained a lot of traction. Now, customers can buy online and go to pick up a delivery. This saves their time, can quickly return items, and avoid long delivery times.

Sell your stuff on social media

Many customers use social media to find out more information about a business or brand. This also prompts them to do social shopping, allowing them to make purchases directly through social media. Commonly, popular social media platforms like Facebook, Tik Tok, and Instagram allow companies to sell directly through their platforms. "GWI research shows that 25% of Instagram users, 22% of Facebook users, and 22% of TikTok users have clicked on a sponsored or promoted post in the last month."

Let Customers Buy In-store, And Ship To A Home

About 28% of buyers said that next-day delivery would increase the chances of buying a product online. Then, why don't you use the same ideas for your in-store order fulfilment strategy?

Offering local delivery to your customers is a good solution if your company has a (virtual) showroom or offers customisable products. This gives your customers an easy way to purchase what they want which isn't available in your area.

5. Streamline Customer Service Across All Channels

About 16 hours a day is spent making online purchases by the average US adult. The data have increased slightly since the pandemic of about 12:24 hours which is still high.

As people are spending more time online, their expectations from the business have also increased. This also included a regular customer support experience across all platforms.

Customer success is about forming a long-lasting relationship with your customers. This means delivering steady customer service on all channels like phone, email, live chat, social media, etc.

Suppose a customer leaves a comment on one of your social media posts asking for more information about your products. In that case, you can respond directly in the comment section or send them a direct message to solve their queries. You can also provide your contact details in your DM, letting them know that they can reach you directly if they have any further questions.

On your website, you can use live chat to engage with site visitors. Live chat helps in improving the conversion rate and customer experience by solving all your customer queries, guiding them in their shopping spree, or booking an appointment.

Using all these customer service strategies contributes to boosting brand loyalty, brings up repeat customers, and increases customer loyalty.

6. Offer Value-added Services Along With Your Products

People don't only look for items to buy, but they also look for an experience that makes their lives easier. To improve your customers' lives, you can provide value-added services along with your products. This also strengthens the bond between your customers and your brand. Some value-added services include:

• Personal shopping. Personal shopping can be done online (by sending product recommendations to your customers based on their shopping behaviour) and in-store or through virtual appointments.
• Subscription boxes. Subscription boxes allow you to curate experiences for your customers. This also prompts them to go shopping again.
• Free gifts with purchase. You can show your customers that you care about them by giving them a small freebie with the purchase and making them familiar with new products that they will want to buy again.

7. Create a shopping experience versus a purchase transaction

When customers go shopping, they expect more than just an item they purchased; they look for a shopping experience. You should get creative and brainstorm some ideas to create a unique experience for your customers.

For example, if you have a boutique store, you can offer various stylist services. You can think about different ideas to make your customers' lives easier when providing products and services and implement those services into your customer retention strategy.

8. Leverage technology creatively

There are many different technologies through which you can build a local, loyal customer base. You can create a consistent brand experience between online shopping and personal store by using other apps.

There's a popular app called Experiences which lets you host classes, tours, events in your physical location through your online store. When your customers are in your store, they can book or check out new experiences through your app.

Summary: How to Retain Customers in 2021

As mentioned earlier, many brands focus on acquiring new customers rather than focusing on keeping existing customers. Keeping an existing base is as important as attracting a new customer base. So, try to put some effort into building relationships with current/past customers. As these people already know about you and your brand, it'd be easy to retain them. And you can even get referrals from them. Some of the customer retention you can follow:

1. Set realistic expectations early.
2. Develop a loyalty program.
3. Pay attention to customers’ questions.
4. Dig into the complaints.
5. Be active on social networks.
6. Target past customers based on their activity.
7. Use email to nurture relationships.
8. Market to customers’ interests.
9. Engage in social responsibility.
10. Be honest and transparent.

For a business to run smoothly, the payroll process must be streamlined and error-free. It is easy to streamline and optimize your payroll and other back-office processes within your SMB. Did you know that this can improve your cash flow?

Although payroll involves money paid out by an organization, it is viewed as distinct from accounts payable because it involves both expenses and liabilities.

Although payroll is separate from accounts payable, you can use payroll to boost your cash flow just as you can by streamlining your accounts payable process. If you need further advice from a trusted accountant in Hong Kong on improving your payroll process, have a chat with us. Otherwise, do read on for our top 5 tips to handle your business’s payroll accurately and efficiently.

1. Be Aware of The Payroll Processing Procedures in Hong Kong

With a relatively simple payroll system and business-friendly tax policies, it is unsurprising that many businesses are looking to expand to Hong Kong. However, to make sure that you get to enjoy the maximum benefit and steer clear of penalties, it is important to have a good understanding of the subtle nuances of Hong Kong’s payroll legislation.

Familiarise yourself with Hong Kong’s payroll management so you can keep your payroll operations running smoothly. This is what you need to know:

Hong Kong’s Minimum Wage and Working Hours

As of 1 May 2015, Hong Kong’s statutory wage rate is HK$32.5 per hour. Working hours are generally from Monday to Friday, 9 a.m. - 6 p.m. While there are no regulations on maximum working hours, young persons in industrial settings are an exception. A young person is defined as someone who is over the age of 15 but under the age of 18 and is restricted to eight working hours a day from 7 a.m. to 7 p.m. in a 48-hour week.

Overtime Pay

Hong Kong does not have any law that requires overtime payment. Extra overtime pay can be detailed in the employment contract for clarity.

Salary Tax

Companies are required to report all staff remuneration on an annual basis. This means that you will have to submit an employer’s return (forms IR568 and BIR56A) to the Inland Revenue Department (IRD), declaring your employee’s salary tax, otherwise known as income tax.

In addition, you will also have to declare all new employment, terminations, death and long-term annual leave through forms IR56E, IR56F and IR56G respectively. Salary tax is imposed at a progressive 2 to 17% rate on your staff’s net pay. Your staff may also opt to pay a flat 15%, but the onus of filing an annual declaration and making direct payment to IRD falls on you. In the event of employee termination, you will have to declare through form IR56F within a month to the IRD, so that your employee can receive a letter of release to be free from debts that could be paid to the state through social contributions or tax.

Mandatory Social Contributions

As an employer, you will have to make social contributions to your employee’s Mandatory Provident Fund (MPF). The MPF was launched in 2000 as Hong Kong´s employment-based retirement protection system and is a mandatory contribution for both the employee and employer.

Both the employer and employee must each contribute at least 5% of the latter’s salary to the employee’s MPF account. The minimum monthly income with mandatory social contributions imposed is HKD 7,100 up to a maximum monthly income of HKD 30,000, and the highest compulsory contribution for each employer and employee is HKD 1,500 a month.

Leave Considerations

Under the Employment Ordinance, an employee is entitled to rest days, paid public holidays, and paid annual leave. An employee is granted seven days of paid annual leave following 12 months of service under a continuous contract, and the number of leave is increased in accordance to the completed length of service period, ranging from seven days for the first two years, up to 14 days per year for the employee’s ninth year and onwards. Your employee’s annual leave is compensated at 100% of salary.

2. Record Your Payroll Processing Procedures

Documenting your payroll process is an important step in managing payroll. With every step of the payroll processing procedure being recorded, you can then easily analyse, audit and identify weak spots in the process. After you have come up with a payroll process that is most ideal for your business, record the steps and disseminate them to your payroll employees to make sure that they are aware of their respective roles in the procedure.

Maintain a standard operating procedure for your payroll processing, detailing all the steps in payroll processing, such as the reporting and check handling procedures. It will also be advantageous for you to include instructions on manual ways to process payroll when emergencies arise.

3. Create a Payroll Calendar

A payroll calendar details the start and end dates of pay periods including pay dates.

Creating a payroll calendar in place can help your employees have a better understanding of when they will get their wages. Furthermore, your payroll staff can also refer to this payroll calendar for assistance with the execution of payroll tasks and planning. To create your payroll calendar, simply choose from the available templates online, make your spreadsheet or use an Office Suite program.

Before you start making your payroll calendar, here are some tips to bear in mind:

• Use a regular calendar to act as your guide for certain periods in the year that you may require more time for payroll processing
• Differentiate important dates using colours. These dates include early time card deadlines as a result of a holiday
• Distribute a copy of the payroll calendar to your managers and supervisors so they can share it with their respective employees.

Additionally, your payroll calendar should reflect all fiscal year pay dates for easy payment processing and reduce your employee’s confusion on when they will be paid. After you have made your calendar template, don’t forget to save it on your hard disk for updating when there are changes.

4. Embrace Automation in Payroll

Thanks to modern technology, you can take your pick from the available tools to manage your payroll processing procedures in a smoother manner. With a wide range of payroll management software in the market, you can opt for one that is most ideal to help you optimise your payroll functions.

Processing payroll requires a lot of money and time. When this function is executed manually, it is susceptible to human errors and can result in severe penalties. However, investing in a payroll software can help you automate the entire payroll process. These softwares can even factor in tax calculations, generate employees’ payslips, adhere to local legislation and provide you with up-to-date information for end-of-year tax returns. Remember to streamline your payroll management process by using the latest software for higher accuracy.

5. Outsource Your Payroll Tasks

Running your own business is certainly a feat — it is always challenging to handle everything from marketing to payroll management. However, you don’t have to grapple with everything on your own! Consider outsourcing to payroll service providers like East river, who will take care of all your payroll needs.

East river takes the routine off your hands — you get an Accountant and Corporate Secretary who learn the nature of your business. They know what to file, which reliefs you’re entitled to, and handle the documents. Just message your question in a chat, they respond daily and answer to the point.

You grow your business, we’ll do the rest. Let our accounting experts in Hong Kong streamline your cash flow so that you can get a hold on payroll, invoices, reports, and taxes. We even have accountants who specialise in e-commerce too. Talk to us today!

Have you ever wondered who pays for the free shipping when you shop online? If you are thinking of setting up your e-commerce store on platforms such as Amazon, WeChat or Lazada, let us share with you some of the ways you can offer free shipping profitably to your online customers. Turns out, it is possible to offer free shipping and have a profit margin at the same time.

To grow as an e-commerce company, you also need your paperwork and accounts to be settled so that you can deal with daily operations with peace of mind. To avoid scrambling around when it’s time to file for your returns, find out how accountants who know e-commerce businesses can help you with just that.

Why Offer Free Shipping?

In a 2019 report by Clutch, 77% of 500 customers were more likely to order an item if there is free shipping, while only 43% would buy it if shipping costs US$2.99. That means, more than half of shoppers would abandon their carts if they had to pay more for shipping!

Offering free shipping not only decreases online cart abandonment which translates to more sales and revenue, but it could also increase customer loyalty. Since more people are selling online nowadays on various platforms like Amazon, Wish, Shopee, Taobao, Lazada, eBay, etc., offering free shipping would be a differentiating factor for your e-commerce business.

It could translate to repeat purchases, word-of-mouth recommendations and positive reviews on the online marketplaces that you sell -even though it does not necessarily mean that you fork out extra expenses for free shipping.

5 Things To Consider Before Offering Free Shipping

Of course, it is not prudent to offer free shipping all the time. Especially if the item that you are sending is bulky, or when you are shipping across borders. Therefore, you need to consider these 5 factors before offering free shipping:

1. Average Order Value: The total amount purchased by your customer.
2. Average Order Size: The number of items that need to be shipped.
3. Product Dimensions and Weights: Measurements of items’ width, length, height and weight.
4. Shipping Rates by Carrier: The cost of shipping you are charged by your delivery partner or provider.
5. Shipping Radius: The distance the orders need to travel to be delivered.

If the item that a customer buys from your Shopee store, for example, exceeds the average order value or dimensions, you might not be able to offer free shipping. Listing these variables would help you make the most rational decisions for your shipping strategy.

Furthermore, having good shipping management tools would speed up the order fulfilment process and shipping. Shipping management tools like EasyShip and ShipStation automates tedious and error-prone shipping tasks by organizing packing orders, automating picklists, creating packing slips and tracking shipment processes in real-time. They help you compare the best carrier options so that you always get the cheapest shipping rates available in the market.

11 Ways To Offer Free Shipping Profitably

Offering free shipping profitably sounds like an oxymoron. It is not something impossible though. Sometimes it would be you or your customers who are paying for it or sometimes, this would be split, but ultimately when your customers reach the checkout page on your Amazon store, they would see ‘free shipping’.

Let’s see how you could offer shipping at low or no cost without hurting your bottom line:

1. Set Minimum Order Value

Setting a minimum order value that is attainable to your customers would encourage them to shop more. Find a value that is not too high that your customers wouldn’t even try to reach, but not too low that you lose money when you offer free shipping.

Display clearly on your shopping cart:

• How much do they need to spend to get free shipping;
• How close they are to qualify for free shipping after they start adding items to their cart.

Prompting the shopper each time he adds an item onto his shopping cart how much more he needs to spend to get free shipping would encourage him to spend more.

2. Include Shipping in Listing Price

Bill D’Alessandro, of Rebel CEO, a consulting firm, ran a test for a skincare product to see how offering free shipping converts web page visitors to buyers.

When customers view two options:

Option 1: $30 product cost + $5 shipping, and

Option 2: $35 product cost with free shipping

The conversion rate for option 2 was twice of option 1.

Including shipping price in listing price works well for items that are unique and not sold across multiple sites. You will recoup the shipping costs by offering free shipping when you incorporate the shipping price in the listing price.

3. Flat-Rate Shipping

You can apply a single flat rate for shipping to every order. For example, $10 for orders sent within Hong Kong.

Or, you can offer flat rate shipping according to shipping box volume. This requires a bit of planning. Assess which items your customers habitually purchase, and which items they purchase together. Fill the commonly purchased items together in an average-sized box and see how much space you have. You could then fine-tune your offerings, upsell and adjust your free shipping threshold to fill that space.

4. Offer Bundles

When shopping online on Wish, Lazada or SHEIN we may have come across bundles, or an offering of items grouped, usually at a lower price than if they were bought separately. This is a way that e-commerce sellers use to sell more products than their customers intended to buy and thus increase their profits.

Suggest product bundles at the landing or shopping page and remind them again at the end of the checkout process. This encourages customers to reach the minimum order value to be eligible for free shipping.

To illustrate, if you are selling household products, and customers purchase laundry detergent, offer them a bundle with softener and dryer sheets as a package option. You would have considered the shipping price when you offer the bundles. Your customer would likely be persuaded to opt for the bundles, which would increase your revenue or profits.

5. Free Shipping With Memberships

The most popular (and replicable) e-commerce membership program is Amazon Prime. Customers pay monthly or yearly fees to get into the Amazon Prime loyalty program to get free delivery on Prime eligible items.

In theory, the membership fee and repeat business would make up for the shipping costs. If you offer free shipping with membership, this would ‘lock in’ your customers to keep buying from your e-commerce store since they are paying a monthly fee.

6. Use Ground Shipping

Oftentimes, ground shipping is the cheapest option. Customers do not mind trading in longer waiting times for free shipping. In a 2017 consumer survey conducted by Internet Retailer and Bizrate Insights of 2,815 U.S. consumers out of 10 shoppers are willing to wait longer for a free shipment. While air cargo would be faster, it is more expensive. Ground shipping reduces shipping carrier costs and gives you better margins as trucks and vans are used instead of aeroplanes.

7. Restrict High-Margin Items Only for Free Shipping

To offer free shipping profitably, offer free shipping only on products where you know the shipping cost is low and the product margin is high. By doing so, you could offer free shipping for those items for the long term, and this method is fairly easy to implement too.

Examples of high-margin low-cost products are fashion accessories and beauty products. They cost next to nothing when bought in bulk. Although this is not suitable for all e-commerce businesses, if you can get the items close to production prices, and set prices way above cost, you do not even need to charge for shipping but still gain profits. What you have to look out for instead are competitors selling the same items at lower costs.

8. Outsourcing Fulfillment and Shipping

Outsourcing fulfilment and shipping lets you concentrate on running your business instead of racing with time to pack and dispatch your customers’ orders. You do not need to set up your distribution centre if you outsource, saving costs for you.

By outsourcing, you can scale easily and quickly. Third-party logistics providers could offer you discounted shipping rates because they ship large volumes of orders. You could pass on these savings to your customers, and they could enjoy free shipping without cutting into your profit margins.

9. Offer Local Store or Drive-Thru Pickup

Another option where you and your customers would not have to bear shipping costs is working with local stores and provide curbside or drive-thru pickups as an option. This works best for e-commerce retailers who have brick-and-mortar shops, or even online sellers who sell from their warehouses or pop-up stores. The “buy online, pick up in store” (BOPIS) trend would only continue to grow as e-commerce grows. Signifyd reported that 43.7% of omnichannel retailers in Digital Commerce 360’s Top 500 offered curbside pickup in 2021, compared to just 7% at the end of 2019. Set the shipping rate automatically to ‘free’ if your customers select store pickups.

10. Limited-Time Free Shipping (e.g. Important Holidays)

Offer year-round free shipping only if you can afford to. If you can't, take advantage of the holiday seasons to boost sales and then return to paid shipping the rest of the year. Do consult our key e-commerce dates and events calendars for the UK., Singapore, and Hong Kong to see when to time your free shipping promotions.

11. Free Shipping for First Time Customers

Besides limiting the period for free shipping, you could limit the people who enjoy free shipping. Target first-time customers by creating a one-time use coupon code for them to shop on your online store. Shopee, for example, gives $10 off for a minimum spend of $20 for the first 250 new users signing up for an account between 6 June and 7 July 2021, combining this offer with the previous’.

Item Returns - Should They Be Free Too?

The caveat to giving free return shipping is that you would be likely to receive more returns. Thus, that might not be sustainable nor cost-effective for you as an e-commerce seller in the long run. What you could offer instead are either exact cost shipping or flat-rate return shipping. With exact cost shipping, customers pay the exact return fee, but it would add an extra step of verifying the price of return shipping. Flat-rate return shipping gives visibility to your customers on how much they need to pay when returning an item. It is also fairer for you because you would split the return cost with them.

Finally, continue to test these shipping strategies to see which works best for you. You could further work on these points too:

• Fine-tune your offerings and price points, compare with your competitors’.
• Evaluate whether your profit margins are healthy when you offer free shipping on low and high-profit margin products.
• Smoothen out your shipping processes to keep your costs low.
• Refine your target audience. Study your customers’ personas, get to know their interests, engage them, and take their opinions and feedback into consideration.
  Following these steps, besides being able to offer free shipping profitably, your business would most likely do well too.

With the rapid pace of digitalisation, it is now easier than ever to connect with your customers. However, this also means that your customers are increasingly smarter and expect a seamless online transaction through the customer journey from prospect to purchase, which will eventually impact your online sales. A lack of payment methods can be costly, as your digitally savvy customers may cancel their purchases in the event their preferred mode of payment is not available.

Therefore, if you are keen on starting an e-commerce business in Hong Kong, one of the most crucial considerations in choosing the best payment gateways from among the variety of local and international ones.

If you’re here, you’re probably thinking about how to improve your business operations to keep growing faster. Well, one way is to outsource routine and administrative tasks like accounting for e-commerce companies in Hong Kong. We also specialise in automating your accounting with a human touch. Otherwise, read on to evaluate and identify the payment modes that are most ideal for your business model.

What Is A Payment Gateway?

A payment gateway is a mode of collecting payment from your shoppers with the help of an application service provider, where transactions between your consumers and your online store are being authenticated and authorised. This allows your consumers to pay via credit cards, debit cards or other payment forms in a safe and fast manner.

Your payment gateway can be either through creating your merchant account or utilising a Payment Service Provider.

What Is A Merchant Account?

A merchant account is a bank account that allows your company to accept payments in a variety of ways online and is deposited after your customer has completed an online transaction.

Some of the available merchant accounts in Hong Kong include:

• Check21
• Global Merchant Advisors (GMA)
• CardReady
• InChek, LLC
• BankCard USA
• ExpiTrans, Inc
• Banctek
• Credipayments, LTD
• InterBill Inc.

What Is A Payment Service Provider?

A Payment Service Provider is also known as PSP. It is a third party that facilitates merchants in accepting payments, whether through credit cards, real-time bank transfers via online banking, debit deposits, or other modes of payment. In short, they provide a seamless payment process for the customer and link this payment to your bank account in a stress-free manner. A PSP can tap on multiple payments and card networks, as well as acquiring banks, to help merchants reduce their dependence on financial institutions when it comes to managing transactions.

Merchant Account Vs Payment Service Provider

In a nutshell, a merchant account provides every merchant with an individual account, but these accounts are subjected to a more thorough vetting process. Merchant accounts are solely focused on payment processing.

On the other hand, a PSP has several users in a group or collection of merchants, offering a more complete payment solution for businesses with access to hardware and checkout tools.

Top 10 Payment Methods to Consider

1. Stripe

Popular among sellers in the United States, United Kingdom, as well as other Western countries, Stripe is a payment gateway known for its simplicity and a user-friendly dashboard. A relatively new player in Hong Kong’s e-commerce landscape, Stripe was launched in 2016.

Ideal for startups and small businesses, Stripe charges a reasonable transaction fee of 3.4% on each card charge, plus a HK$2.35 transaction fee. Stripe’s fees for merchants based in Hong Kong are in line with its fees in Singapore and other Asian markets.

Stripe provides both one-time payment and recurring payment options, and can even support more complex billing models depending on your business needs.

2. Braintree

As a subsidiary of PayPal,  you can leverage the PayPal network and next-generation technology to reach more buyers. Braintree is effortless to use, providing everything with a small and medium-sized enterprise would need at affordable pricing with no monthly fees or minimum ongoing fees.

Braintree offers a modernised and optimised payment experience to drive higher conversion. Like Stripe, Braintree provides both one-time and recurring payment options, at no additional cost on top of its standard pricing. Transaction fees are 3.4% on each card charge, plus a HK$2.35 transaction fee and an extra 1% charge for transactions paid via foreign currency. Companies that receive HK$650,000 in a month are entitled to discounted rates. However, do take note that Braintree charges a chargeback fee of HK$160, even if your company successfully lodges a dispute and reverses the chargeback.

3. PayPal

As a reputable global payment gateway, PayPal is a good option if you want to get your business up and running in no time. With approximately 400 million worldwide active accounts, this global leader accepts a wide range of credit cards and debit cards and even offers seller protection, two-factor authentication, and 24/7 fraud protection. PayPal offers two common checkout options of PayPal Standard and PayPal Express.

PayPal Standard is similar to your usual checkout process, which means that your shoppers will have to input their information on your site before they get redirected to PayPal for their credit card payment. PayPal Express expedites the checkout process by allowing shoppers to simply log in with their existing PayPal account, eliminating the need for shoppers to key in their shipping or billing information.

PayPal Website Payments Pro is also available for companies in Hong Kong, with a fixed HK$200 monthly fee. This allows you to accept payments with a completely customisable solution, leveraging the PayPal Payflow Gateway to transfer payments to your PayPal Internet Merchant Account. Additionally, it also provides you with the versatility to change payment gateways without having to rebuild your technical integration.

If you are looking to expand your brand internationally, PayPal could be a feasible way since it supports 25 currencies and is available in over 200 countries. However, take note that PayPal charges high transaction fees, starting from 2.9% of the total value of transactions, plus an extra HK$2.35 fee per payment. Foreign payments will incur an even higher 4.4% fee, with additional currency conversion fees. For merchants with high sales volumes, PayPal offers discounts to the same rates as Stripe and Braintree.

4. eWay

With over 26,000 businesses onboard,eWay prides itself in providing businesses with a frictionless solution to accept payments. This payment gateway allows for easy site integration and even offers a dedicated account manager to help with the setup. New e-commerce business owners may feel assured that eWay provides 24/7 technical support, which is especially helpful. Additionally, it accepts a range of credit cards and debit cards at a transaction fee of 3.4% on each card charge, plus a HK$2.35 fee per payment. For foreign card charges, there will be a 1% cross-border fee applied per transaction.

5. AsiaPay

Hong Kong-based payment gateway AsiaPay is one of the leading digital payment solutions in the Asia Pacific. If the regional market is your target audience, AsiaPay could be a good fit for your company. AsiaPay even supports up to 126 currencies and Chinese payment solutions from your usual credit and debit cards to China-specific payment options including China UnionPay, TenPay, and AliPay.

6. 2Checkout

If you are targeting a global audience, 2Checkout could be an ideal option for your business.

Global payment processor 2Checkout can be integrated with over 100 shopping carts and supports recurring billing for businesses with subscription models. Moreover, it accepts payments in 87 currencies and offers a range of payment gateway languages.

However, this comes at 3.9% on each card charge, plus HK$0.45 fee per payment. Foreign payments also incur a 1.5% fee, plus an extra 2-5% currency conversion fee to HKD.

7. WeChat Pay

If your target audience is from mainland China, offering them the preferred payment options like WeChat Pay can be a great way to boost your business.

This China-based market leader in online payments is one of the biggest players in its field, used by Chinese consumers around the world with more than 800 million monthly active users. Additionally, the integration process is quite simple -- you simply have to integrate with it via a single API, and then start accepting payments.

WeChat Pay’s transaction fee is dependent on the sales volume, which ranges from 1.1% to 1.5% per transaction. If you are looking to enjoy some cost savings, WeChat Pay’s pricing plan may be worth your consideration. A year of “WeChat Official Account – Hong Kong” and WeChat Pay business will set you back by HK$4,988 and HK$650 respectively. However, if you sign up for 2 years of the “WeChat Official Account – Hong Kong” plan, you can enjoy a HK$500 discount, resulting in a total of HK$4,488. Moreover, if you sign up for both the “WeChat Official Account – Hong Kong” and WeChat Pay Business account for 2 years, all fees will be waived.

8. AliPay Hong Kong

Alipay is a subsidiary of the Alibaba group and is currently the most used payment gateway in China. It is also one of the most popular third-party online payment service providers in China, boasting more than 520 million active users and 100 million daily transactions. According to the State of Mobile 2020 Report, AliPay is the most-used app in the world after social media apps. This also means that AliPay would be a well-received mode of payment by your customers.

AliPay Hong Kong charges a transaction fee of 2.5%. It accepts a variety of credit and debit cards from MasterCard, Visa, Mastercard and about another 180 financial institutions, making it an ideal payment solution for online stores. If customer service is something you prioritise, AliPay offers an escrow service to allow your shoppers to verify their products before they release their payment to you, giving your customers peace of mind.

9. Payment Asia

A leading payment gateway in Hong Kong, Payment Asia offers multiple currencies with flexible settlement periods and accepts over 130 transaction currencies through a range of credit cards and debit cards.

A user-friendly online management system and dedicated customer service, which is beneficial for start-ups and small businesses. Known for its innovative technologies, Payment Asia also offers a crypto-gateway for your customers to pay in crypto-currency. With crypto-currency on the rise, businesses that hop on this bandwagon and offer this as a mode of payment can have a fast-mover advantage, as well as a lower flat fees to reduce transaction costs compared to normal card payments.

10. Adyen

Adyen offers 24/7 in-house support with no setup fee and could be a good choice for new business owners.

Adyen prides itself as the payment platform of choice for many of the world’s top companies, with its modern end-to-end infrastructure that accepts MasterCard, Visa, and shoppers' globally preferred payment methods directly.

The Adyen payments platform supports all major payment methods globally, with many modes of payment that can be used outside of Hong Kong. Transactions are charged at 3% on each card charge, plus HK$0.12 fee per payment.

Save time, free your mind and focus on your business

We know how time-consuming the payment gateway selection process can be, outsource the accounting to us so you can focus on what matters most to your business.

We've got an expert who has your back, and does accounting and optimises tax for your business. We advise what tax exemptions and tax reliefs your company is entitled to and our company secretaries help you file documents to the authorities on time, and we organise your reports exactly the way needed to comply.

Don’t take our word for it though, try out for yourself today!

Photography may not spring to mind when one thinks of business but it can be a powerful way to accelerate your online sales. In this article, we’ll share some top tips for e-commerce photography that could have a direct business impact for entrepreneurs - whether you want to set up an online shop or bolster an existing one.

By the way, did you know that there are benefits to registering a company in Hong Kong before setting up your e-commerce business? Talk to us to find out if you need to formalise your company.

Cater to the Right Audience Mindset

Before we dive into tips and technicalities, let’s start with what keeps your business in business: Your customers.

E-commerce photo editing plays an important role for two distinct online audiences, which we’ll represent with 2 characters:

Limited time & intent-driven Lauren

Lauren goes online when she has a mission that your product could help them solve. The role of photography for someone like her is to offer clarity, detail and practical info that gives her the most direct route to that checkout button.

Unlimited time & escape-driven Danny

Danny’s a “window shopper” who browses the virtual halls of whatever strikes their fancy whenever inspiration strikes, often jumping between categories. For him, photography should entice, persuade, or convince him to stop browsing and click “Buy”.

Tip #1: The Best Camera for E-commerce Pics

Your equipment is a tool to showcase your products. It’s an extension of your brand so be willing to pay for a quality camera (or even a photographer) who shoots with one. There’s also a wealth of extremely proficient phone cameras out there, which are just as effective for e-commerce photography if you apply the right techniques.

While you plan the setup of your storefront, our expert team can handle accounting, taxes and reports for your e-commerce business.

Tip #2: Apps & E-Commerce Photography Editing Software

You know your business best, so don’t be a Danny in this case. Decide what necessary editing could serve to improve your bottom line and then seek the software that specialises in that. Some require a subscription fee or are limited to specific operating systems, but lots are free.

Here are just a few free options at a glance:

• Snapseed
• BeFunky
• Photoshop Express
• Lightroom
• Canva
• STORE Camera
• iPiccy
• VSCO
• Pixlr

Tip #3: Shoot Smart Photos from the Start

Update or photograph as many e-commerce products as possible in one go. Doing it in batches could reduce your shoot budget and mean the images (and their differences) are less likely to be jarring to Danny who’s meandering through your product catalogue.

If you’re pressed for budget or time restrictions, you could approach the image overhaul of products on a category-specific or themed-basis. That way, you can work through each according to your wallet and timeline (while you work your photography magic behind the scenes).

Tip #4: A Balance of Looks & Logic

Make what you’re selling be the hero. Don’t let filters, effects or app extras detract from the focal item. Remember, a lawnmower may not scream visual appeal or Pinterest board goals, but for someone like Lauren who’s looking for something specific, it’s all she wants to see. Give yourself permission to lose the fluff where it matters.

Here are a few things to keep in mind to give your e-commerce photography a sense of relative consistency:

• Contextual size anchor (i.e an object next to it)
• Not too many props or scenic cues that the utility is lost or focus detracted
• Lighting source and shadows not to hinder features
• Editing enhancements (contrast / brightness / highlights/ colour distortion etc)
• If you’re using a tripod, keep it at the same height
• Stick to a couple of key angles (eye-level, top-down, slanted, low angle)
• Rely on presets that enhance what you’re showing

Tip #5: E-commerce Image Galleries

Here are a few considerations to enhance the way Danny and Lauren scroll through your e-commerce product galleries:

• Number of images: It’s common practice for most e-commerce platforms to allow for single product galleries with between 5 - 10 images or photos.
• Arrangement of images: Plan the order of your photos when you upload so it makes sense (i.e before close-ups of textures or materials start with a full view)
• Selection of images: Use your discretion to add the must-haves for Lauren and the nice-to-haves for Danny.
• Quality of images: If something tactile like upholstery or even paint, ensure your gallery pics are easy to zoom in on or even feature close up of NB features. Shoot high res, then crop.

Tip #6: Considering Context and Photo Crops

Building on tip 4, let’s look at how the context you provide in each pic adds functional value. Before you hit upload, use the list below as a guide to making sure you’re appealing to the Dannys and the Laurens out there and helping them imagine how what you’re offering can fit into their homes, lives or lifestyles:

• Show item in the right context: A kitchen knife shouldn’t be shot on the beach but it could be a useful shot on a cutting board.
• Humanise it: It’s not imperative but showing the product with a person, on a person or relative to a lifestyle setting is an effective way for e-commerce to resonate with it.
• Support with specs: Fashion e-commerce that relies on models should be supported by written descriptions (i.e model wears size Large, model wears size 38) so the shopper can consider it relative to their needs.
• Crop comfortably: Image gallery sizes may vary across platforms and even display differently across devices. To stay safe and avoid pics getting cut off, allow a “safe zone” around your image.

Tip #7: Update, Optimise, Evolve (and Repeat)

Whether your product catalogues are updated, expanded or streamlined toward a niche, all e-commerce business owners should be open to maintenance. This doesn’t need to be complicated or even require new product photos. Consider updating the product title or even adding a disclaimer to the item description.

Some examples of instances where this is useful:

• When a specific colour is no longer in production (featured for reference only)
• When a new item has been added to an existing range
• When a product that’s discontinued appears alongside others still available
• When items are on sale or discounted

This helps manage Lauren’s expectations so she doesn’t land up frustrated or click on a search result that leads to a dead end. It also allows Danny to easily spot visual cues that could sway a final decision or catch his attention during his retail therapy session.

Tip #8: Mobile-first Photography Principles

Most people shop on their phones. It’s not a surprise. It’s second-nature. Anticipate the need for responsive layouts (across devices) but try to cater to mobile-centric design principles from the start, such as:

• Allow easy “pinch to zoom” functionality
• Make it easy to toggle or swipe through pics
• Make it clear how many pics are available to view
• Allow your photos to scale appropriately without losing context

A Little Less “New” and a Little More “Normal”

Our post-covid business world that’s seen a meteoric rise in digital commerce and as the numbers increase in this competitive landscape, customer expectations also soar. Finding the right camera to shoot e-commerce product photos, knowing what software to use and keeping everyone from Danny to Lauren top of mind is sure to enhance your virtual storefront to stand out in this “new normal”.

As a live entity, it’s expected that a company will change and evolve throughout its lifespan. So if you want to change your company name, it’s relatively easy to do so in Hong Kong. And if there are other changes happening in your company -- such as change in registered office address, new company director or secretary -- you have 15 days to report these changes to the Companies Registry. If you’re scrambling to get these tasks done, fret not, our company secretaries in Hong Kong can help with that while you focus on growing your business.

In this guide, we’ll explain to you how to file these changes with the authorities.

All the forms that you’ll need can be downloaded from the ‘Forms’ section on the Companies Registry website. We’ve also linked them down below.

How To Change Company Name

If the company name you picked during incorporation is no longer a good fit for your company’s latest activities or brand identity, you can apply to the Companies Registry to have it changed. Here are the steps you’ll need to follow.

Step 1: Pick a new company name. Check that it meets the company name guidelines (see below), and hasn’t been taken by or is too similar to an existing company.

Company Name Guidelines By Companies Registry

• You can register an English name, a Chinese name, or both an English name and a Chinese name. However, you cannot choose a name which combines English words and letters with Chinese characters.
• English company names must end with the word “Limited” and Chinese company names must end with the characters “有限公司”.
• Chinese company names should contain traditional Chinese characters (繁體字) that can be found in the Kang Xi Dictionary (康熙字典) or Ci Hai Dictionary (辭海) AND also in the ISO 10646 international coding standard. Simplified Chinese characters are not accepted.

Step 2: Pass a special resolution on the new company name.

A special resolution is a document signed by at least 75% of shareholders who agree to the proposed change in name.

Step 3: Fill out Form NNC2 "Notice of Change of Company Name'' within 15 days of passing the special resolution. You can file this form online or submit a hard copy to the Companies Registry office in person or via post. The address for both posting and drop-offs is Companies Registry, 14th floor, Queensway Government Offices, 66 Queensway, Hong Kong. If posting, you must plan ahead to ensure that the Companies Registry receives your form before the 15 days are up.

The filing fee is HK$295, regardless which method you choose. If posting your application, enclose a cheque and do not send cash.  

Step 4: Wait for the Companies Registry to process your request. If it is approved, they will issue you a Certificate of Change of Name in either soft copy or hard copy format, depending on how you submitted your form. This means that your company’s name has been officially changed.

If your change of company name request is rejected, note that you will not receive a refund of the filing fee.

How To Change Company Address

If you’ve moved to a different office address, you’ll need to promptly update your registered address with the Companies Registry.

Fill up Form NR1 “Notice of Change of Address of Registered Office” and either post it or submit it in person to the Companies Registry for registration within 15 days of change.

The address for both posting and drop-offs is Companies Registry, 14th floor, Queensway Government Offices, 66 Queensway, Hong Kong. You must factor in the delivery time and plan ahead to ensure that the Companies Registry receives your form before the 15 days are up.

This filing is free of charge. However, the maximum penalty for late filing is HK$50,000 together with a daily default fine of HK$1,000.

How To Change Company Secretary and Company Director

Over the course of your company’s growth, there may be company directors joining and leaving. The same goes for your company secretary. These changes in appointments are not officially recognised until you’ve filed them with the Companies Registry.

Now, there are several Companies Registry forms that look similar, so be sure that you are filling up and submitting the correct form. Otherwise, you’ll have to go through the hassle of re-submitting the forms.

The forms available are:

• Form ND2A Notice of Change of Company Secretary and Director (Appointment/Cessation)
• Form ND4 Notice of Resignation of Company Secretary and Director
• Form ND5 Notice of Change of Reserve Director (Nomination/Cessation)
• Form ND8 Notice of Resignation of Reserve Director

You can either post the form or submit it in person to the Companies Registry within 15 days of change. The address for both posting and drop-offs is Companies Registry, 14th floor, Queensway Government Offices, 66 Queensway, Hong Kong. If posting, you must plan ahead to ensure that the Companies Registry receives your form before the 15 days are up.

This filing is free of charge. However, if you exceed the deadline, the maximum penalty is HK$25,000 for each late filing breach together with a daily default fine of HK$700.

Difference between “cessation” and “resignation”

Use the resignation form only if you are the company director or secretary who is leaving the company and you have reasons to believe that the company will not be filing a cessation notice on your behalf.

For all other cases, it would be more appropriate to use “Form ND2A Notice of Change of Company Secretary and Director (Appointment/Cessation)”.

Who is a “reserve director”?

If you are the sole director and only shareholder of your company, you may appoint a reserve director who will act on your behalf to continue managing the company in the event you pass away.

To nominate or change your reserve director, use “Form ND5 Notice of Change of Reserve Director (Nomination/Cessation)”.

How To Update Changes in Company Directors’ and Company Secretary’s Particulars

As a company director or secretary, you must inform the Companies Registry if there are changes to any of your following particulars:

• Name
• Alias
• (For company secretaries) Correspondence address, must be a Hong Kong address
• (For company directors) Residential address, can be a non-Hong Kong address
• E-mail address
• Hong Kong identity card number
• Passport number

To do so, fill up the Form ND2B Notice of Change in Particulars of Company Secretary and Director.

If you are the reserve director of a company, fill up the Form ND7 Notice of Change in Particulars of Reserve Director instead.

You can either post the form or submit it in person to the Companies Registry within 15 days of change. The address for both posting and drop-offs is Companies Registry, 14th floor, Queensway Government Offices, 66 Queensway, Hong Kong. If posting, you must plan ahead to ensure that the Companies Registry receives your form before the 15 days are up.

This filing is free of charge. However, note that the penalty for late filing can go up to HK$25,000 for each breach together with a daily default fine of HK$700.

Key Takeaways On Changing Company Name And Updating Information

• Changing your company name costs HK$295 and can be done either online or in hard copy. The filing deadline is within 15 days of your shareholders passing the special resolution regarding the proposed name change.
• Updating your company’s registered office address is free of charge and can be done via hard copy only. The filing deadline is within 15 days of the effective date of change.
• Nominating and ceasing the appointment of a company director or secretary are free of charge and can be done via hard copy only. The filing deadline is within 15 days of the effective date of change.
• Updating the particulars of a company director or secretary is free of charge and can be done via hard copy only. The filing deadline is within 15 days of the effective date of change.

The main purpose of AGMs is to provide yearly updates to shareholders on the activities of your company, especially on the financial performance. A key component is presenting the latest financial statements so that shareholders get an accurate picture of how the company is doing. In Hong Kong, AGMs are a requirement by the Companies Ordinance and are enforced by the Companies Registry.

For newly registered companies, the first AGM must be held within 18 months of incorporation. If you’re unsure about what an AGM entails or how to organise one, here’s the procedure for holding annual general meetings.

If you’re trying to put an AGM together on your own, you might benefit with the help of experienced company secretaries in Hong Kong, otherwise, read on to find out how to do this on your own.

How To Organise an AGM in 5 Steps

Step 1: Convene and hold a board meeting to authorise the calling of an AGM and the issue of a notice.

Company directors must work together to organise AGMs after you have received your audited financial statements from your auditors. Among yourselves, agree to hold an AGM and set a proposed date for it, which must be within 9 months of your financial year end. By law, the notice period must be at least 21 days or longer if your company’s articles of association requests so. Working backwards, this means that preparation-wise, you must plan at least 1 month in advance to factor the 3-week notice and to give yourselves enough time to prepare the meeting materials.

During the board meeting, you should also determine the agenda of the AGM and formally agree to send an AGM notice to all shareholders. Other than seeking approval for the financial statements, an AGM is a good platform to propose recommendations (formally known as “resolutions”) on other matters such as the distribution of dividends, appointment of new directors, auditors, etc.

Find out more about your financial reporting obligations and what to expect when engaging a public accountant to audit your company’s financial statements.

Step 2: Send the notice to shareholders.

The notice itself can simply be an email to inform shareholders of the details (date, time, and location) and the agenda of the AGM, and to request for their RSVP.

Under the Companies Ordinance, shareholders who are unable to attend have the right to appoint a representative (formally known as a “proxy”) to attend the meeting and to help vote on their behalf.

Step 3: Collate your shareholders’ attendance, including appointments of proxies, if any.

As with regular meetings, it’s good practice to collate the attendance list so that you know who to expect for the AGM.

Step 4: On the day of the AGM, run the meeting according to the agenda.

Here is a basic agenda structure that you can adopt for your AGM. Other than the presentation of financial statements which is mandatory, you don’t have to include the other items if you feel they’re unnecessary for your company.

• A welcome address by a designated company director.
• Presentation or recap of previous AGM’s meeting minutes.
• Updates on follow up actions based on the previous AGM discussion (also referred to as “business arising” or “matters arising”).
• Presentation of the financial statements, for shareholders to approve.
• Other matters to be discussed and approved.
• Any general updates, if you want to brief shareholders on your company’s activities.
• Any other matters, where you can open the floor for shareholders to raise concerns.
• Closing remarks.

The level of formality required depends on how familiar your shareholders are with your company’s activities. If your shareholders are already aware about the company’s recent performance, the AGM would likely be more casual and straightforward.

Where decisions are required, you should put them up for voting among shareholders and follow the majority.

Step 5: Prepare the minutes of the meeting.

After the meeting is over, document the key decisions made during the AGM and also capture key points of the discussions. The completed minutes should be signed by the company chairman. Lastly, circulate the minutes to all shareholders for their records. There’s no need to file the minutes with the Companies Registry.

That’s pretty much it. Once you’ve organised your AGM, it’s time to look into filing your annual return.

Common Questions on Holding AGMs in Hong Kong

Here are some common questions that we get regarding annual general meetings for Hong Kong-registered companies.

Q: Can I hold a virtual AGM?

Yes, you can conduct your AGM through a web conferencing service as long as shareholders are able to listen, speak and vote at the meeting. You can also do a hybrid i.e. a physical event with a tele-conferencing set up for shareholders who prefer to attend virtually.

Q: When must my company hold an AGM?

In general, AGMs must be held within 9 months after the financial year end and once every financial year. If there are issues requiring shareholders’ approval that cannot wait until the next AGM, you can hold a special meeting or seek approval through written resolutions.

Q: Can my company do away with AGMs?

You can do away (also known as “dispense”) with AGMs in the following scenarios.

Scenario 1: Your company is dormant.

Dormant companies have no company activities to report, so naturally there’s no need for AGMs until they become active again.

Scenario 2: You are the only shareholder.

AGMs are a platform for shareholders to collectively make decisions and get updated on the company’s activities. Therefore as the sole shareholder, you don’t need AGMs to make the call on matters related to your company.

Scenario 3: All your shareholders agree to pass a resolution to do away with holding future AGMs.

The Companies Ordinance allows for companies to do away with AGMs if this is what the shareholders prefer. However, it cannot simply be a verbal agreement - there must be proper documentation on this. You could either seek shareholders’ approval via a written resolution, or propose in your AGM agenda to dispense with AGMs from next year onwards.

By dispensing with AGMs, you are essentially choosing to seek shareholder approval on future financial statements and other resolutions via written communications instead.

Scenario 4: You choose to seek approval on the financial statements and other matters through a written resolution instead.

Say your company has not dispensed with AGMs but there are years where you feel holding one is unnecessary. You can do away with AGMs in those years by sending shareholders copies of the documents that would have been laid at the meeting on or before the circulation date of the written resolutions.

Q: If we have dispensed with AGMs, how do I circulate the company’s financial statements to shareholders?

Send a copy of the financial statement document to every shareholder of your company via email or post. Request that they reply to you by a certain date with their approval or concerns on the financial statements, if any.

Q: Are AGMs no longer relevant in this age of technological advancement?

Not necessarily. You may still find AGMs useful for discussing more complex issues that are affecting your company.

Q: With the threat of the COVID-19 virus, how can I make my AGM safer for all attendees?

In line with the Hong Kong government’s recommendations, you can implement precautionary measures such as:

• Taking everyone’s temperature before allowing them to enter the venue.
• Requiring everyone to wear face masks.
• Providing hand sanitizers at the venue.
• Providing sanitising mats at the entrance of your venue.
• Ensuring sufficient physical distancing between seats.

Ideally, you should include details of these measures in your notice of AGM so that all attendees can be mentally prepared and allow you to run these measures smoothly.

Conclusion on Holding Annual General Meetings

The basis of AGMs is to allow company directors and shareholders to come together and decide on important issues affecting the company’s future. It’s also an important avenue for shareholders to get a true picture of how the company is performing, which is their right as owners of the company.

Do you find AGMs cumbersome? You can engage East river’s expert company secretaries to help you with the administration and paperwork required of AGMs while you focus on strategising for your company. Let us lighten your burden - sign up for our attractive company secretary packages today.

For other back-end corporate admin tasks you need to complete, please know that you don’t have to do it yourself! We provide bookkeeping and accounting services for busy entrepreneurs like you.

Launching an online business is not an easy achievement, with increasingly more entrepreneurs entering the online market space. Competition is fierce, product ideas are saturated, and consumers are getting more well-versed in sieving out the best prices for online products. So, how can you make your online store successful?

In this article, we go through what niche products are, what kind of products sell better online, how to choose your niche, and ways to get your online business started.

We know you have a hundred ideas to grow your online shop. At the same time, there are a lot of routine administrative tasks to do too like accounting. Our service automates accounting for e-commerce businesses with a touch of human experts. Why not leave that to us while you find ways to sell more.

Why You Should Sell Online

E-commerce is the way to go in this day and age, with brick-and-mortar stores facing less retail human traffic and more rent liabilities. Firstly, with the COVID-19 pandemic, consumers are ordering necessities and other products online more often. Secondly, technology is allowing consumers to surf for products on both mobile and laptops. There are published statistics on the e-commerce landscape if you’re interested in taking a look.

Nonetheless, starting an e-commerce business is not as simple as it sounds. Luckily for you, here at East river, we have a guide you can refer to on how to start an e-commerce business from the comfort of your home.

For e-commerce, the business models are somewhat similar to opening a traditional business, although there are some differences. There are 4 major business models you can consider - make, manufacture, wholesale or dropship. Each of these models has its pros and cons, so it is important to make sure you know which e-commerce model you plan to go with.

What Products Can You Sell Online?

To rise above the competition, you have to find niche product ideas and choose an e-commerce platform carefully. So, what exactly is a niche product?

Niche products are services or goods that cater and serve a very specific customer base and target audience. These can include unique handmade products that are one-of-a-kind, hard to find in your usual stores, and low in quantity count.

On the other hand, commoditized products are often essential goods and services that the common man needs. These products are usually in high demand and can be physical or digital products. Examples can include fruits, vegetables, meat, T-shirts, shorts, kids toys and more. You get the picture - commoditized products are what people buy as necessities and are actually what makes up the majority of online sales numbers.

How A Commoditized Product Can Become A Niche Product

Ideas for niche products are usually spontaneous and if you have an existing business, try finding a commoditized product you can work with.

Example: Cameron has a business selling perfume for both men and women. He realised that his sales are getting lower with each passing year, and it has been at an all-time low point during the pandemic period. He recently realised that hand sanitisers are selling like hotcakes and regret not getting onto the trend sooner. Nonetheless, he comes up with an idea - to merge his current perfume business with the popular hand sanitiser market.

His current perfume business has been around for years and he has garnered many loyal customers. He can sell hand sanitisers that carry the scent of his most best-selling perfume fragrances. To spread the word, a mass email blast can be sent out as an advertisement for his new product - “Hand sanitisers in your favourite scent”. He can also offer consumers the choice to make their perfume scent, then adding it as a hand sanitiser. In this way, Cameron can create an online business catering to both a niche and commoditized product, diversifying his sales in the long run.

How To Choose Your Niche Product?

Now that you are familiar with a niche product, how do you choose one? Niche products can be based on demographics, industry, price, location etc.

Here are a few questions to consider:

1. What are you passionate about personally?
2. Does your product solve a problem that your audience is facing?
3. Is it niche enough to appeal to enthusiastic hobbyists?
4. What is your main, secondary and tertiary target audience?
5. Who is already selling your product idea or a similar product?
6. Read customer reviews on existing products
7. Stay on top of trends on both retail and online marketplaces
8. How profitable is your niche?
9. Incorporate trends into your product
10. Spot business opportunities in everyday life

Truth is, new ideas are hard to generate in today’s already saturated product market. However, some marketing ideas just have not been invented yet.

To give you some brainstorming ideas, here are some of the better selling niche products online.

1. Conscious consumers
   1. Cruelty-free health products and cosmetics
   2. Reusable tumblers and straws
   3. Vegan-friendly inner and outerwear
2. Pet owners
   1. Organic pet food
   2. Special pet accessories and clothing
   3. GPS tracking pet collars
   4. Easy to use pet cameras and interactive feeders
3. The LGBTQ+ community
   1. Pride-themed clothes and accessories
   2. Makeup for certain skin types
4. Avid travellers
   1. Translation apps
   2. An app that gives perks to frequent flyers

The list goes on. The point of the story is to find your target audience first, then dive in from there.

How To Start Up My Online Store?

The big question is how to get yourself started?

Once you have your product idea, you firstly need to incorporate your online business. It is a common misconception that e-commerce stores do not require incorporation.

If you’re a new entrepreneur and are unsure of how to get started, East river can help with our incorporation services for both foreigners and locals.

Here are some tips to get the ball rolling:

1. Do your due market research on major consumer sites like Amazon, eBay and see what are the products that tend to have higher sales numbers.
2. Zoom into your target audience and choose your niche product to sell.
3. Identify both your commoditized and niche product.
4. Analyse if your product idea is profitable.
5. Begin research on what e-commerce platforms you’d like to sell on.
6. Start manufacturing a small batch of your niche product.
7. Always test out your product before investing further.
8. Conduct surveys and focus groups to get feedback on your product.
9. Finalise your final product.
10. Create a marketing strategy to target both existing and potential customers.

There are many e-commerce platforms you can choose to sell these days. This depends on what business model you are choosing to go with, and how big your target market is.

Takeaways

Always remember: planning is key for a successful business. You should always have a certain plan on how to run your business before diving into the details. One way to ensure you’re on the right track is to stick to what you are familiar with and passionate about, instead of blindly catching onto whatever the current trend is. Furthermore, no matter which country you are in, there are regulations to follow, and tax laws to adhere to. Therefore, if you are unfamiliar with the tax regulations, look for professional help.

At East river, we have a group of experienced and dedicated professionals who help entrepreneurs like yourself handle all the paperwork needed to incorporate a company, take care of all accounting and bookkeeping matters, and make sure you are free to run your business the right way.

Tax and filing deadlines are the bane for many company directors, but we can be fairly certain they’re here to stay.

Whether you’re a Type A (“Deadlines are easy!”) or Type B (“When is my next deadline?!”) entrepreneur, we’ve put together this handy guide for you. It summarises the various filings and their respective deadlines that Hong Kong registered companies must follow to avoid paying penalties. Some deadlines are across the board for all companies - such as tax deadlines in April every year - and some are variable depending on your financial year end or whenever changes or developments happen in your company.

Grab your calendars, and be sure to take notes! If you’d rather focus on growing your business rather than get your brain scrambling to remember the deadlines, you can trust our experienced corporate secretaries with these important tasks. A compliant company is important to continue operating and growing.

Quick Summary of All the Key Filings To Be Done

Apart from taxes, there are also other key filings and obligations that Hong Kong companies must submit or perform on time. Otherwise, higher filing fees or late penalties may be imposed by the Inland Revenue Department (IRD) or the Companies Registry.

Here’s a list of them:

1. Profits tax return (i.e. corporate taxes).
2. Employer’s return, even if your company has no employees.
3. Annual return.
4. Annual general meeting. It’s not a filing per se, but an obligation that must be carried out unless exempted by your shareholders.
5. Business renewal.
6. Updates on all changes to your company’s information.

As there are 2 main authorities you’ll need to file with, we’ve divided this guide into deadlines with the IRD and deadlines with the Companies Registry.

Deadlines With the Inland Revenue Department

Every April, there are 2 major Hong Kong tax filing deadlines to take note of: profits tax return, and employer’s return. These deadlines apply to all companies in Hong Kong.

Other than the once a year filing for the above, you’re also required to submit employer’s return forms to IRD whenever employees join or leave your company. We’ll explain more below.

1. Profits Tax Return

Small companies must prepare audited financial statements even though they’re not required to submit them to IRD, unless specifically requested.

Find out more about profits tax returns in Hong Kong.

2. Employer’s Return (once a year filing)

3. Employer’s Return (ad-hoc filing)

For new employees, you must submit the IR56E to the IRD within 3 months of employment. (See IR56E sample from IRD’s website.)

For employees who leave your company, you must submit the IR56F within 1 month of their departure. (See IR56F sample from IRD’s website.)

For employees who will be leaving Hong Kong, you must submit the IR56G 1 month prior to the expected departure date. (See IR56G sample from IRD’s website.)

Deadlines with the Companies Registry

Every year, all Hong Kong companies must conduct an annual general meeting and submit their annual return to the Companies Registry. There’s also a separate business renewal that must be completed, although the government has provided a 3-year renewal option to reduce the hassle.

Lastly, whenever there are changes in your company related to your registered office address, company secretary, or company directors, you must report these to the Companies Registry promptly so that your records with them are kept up to date.

Let’s look into each of the filing obligations.

1. Annual Return

Your company’s annual return is due within 42 days of your incorporation anniversary every year. The cost of filing your company’s annual return, called the “registration fee”, is HK$105.

The 42-day period includes Sundays and public holidays. If the 42nd day falls on a Sunday or a public holiday, the due date will be extended to the next working day. However, if the 42nd day falls on a Saturday, there will be no adjustments to the due date. Submissions of the annual return via post must reach the registry by Friday. Otherwise, even if your submission reaches them the following Monday, the higher registration fee of $870 will apply.  

2. Annual General Meeting

Under traditional regulations, companies must hold annual general meetings (AGM) to seek shareholders’ approval on the audited financial statements. Once the financial statements have been approved, companies would then submit a copy to the Companies Registry as part of their annual return.  

However, in recent years, the Hong Kong government has allowed for companies to do away with AGMs if the shareholders agree to do so, or if the shareholders prefer to make decisions through written resolutions instead.

Single shareholder companies need not hold AGMs.

If you plan to organise an AGM, you’ll need to work backwards from when your annual returns are due. You must also factor in the mandatory 21-day notice period to shareholders to determine the latest date you can hold your AGM and remain in compliance with the regulations.

3. Business Registration Renewal

You must renew your business registration at least 1 month before expiry every year, or once every 3 years if you had previously chosen the 3-year renewal option.

4. Changes to Business Information

Whenever there are the following changes in your company, you must update the Companies Registry within 15 days of the effective date to avoid late filing penalties:

• Changes to the registered office address.
• Changes of company secretary.
• Changes of company directors.
• Changes in particulars of the company secretary and company directors.

Key Takeaways on Hong Kong Filing Deadlines

1. There are 2 main authorities that Hong Kong companies must file promptly with: the Inland Revenue Department and the Companies Registry.
2. For each authority, there are the fixed deadlines and ad-hoc deadlines. You must comply with all of them.
3. To avoid paying higher registration fees (we’re talking about a 7X increase for late annual returns) or late filing penalties, make sure you’re highly organised around your paperwork and have a systematic approach to them.
4. Note down the deadlines we’ve shared, work backwards to give yourself enough time to prepare, and set plenty of reminders!

Alternatively, if you’d rather not worry about the complex forms, their confusing code names, and the various filing deadlines, schedule a free call with us to find out about our company secretary and accounting services in Hong Kong. Our East river chartered accountants and highly experienced company secretaries strive to make compliance as pain-free as possible for you.