As a business consulting company, we understand the importance of selecting the right legal structure for your business in Hong Kong. Two common options available to entrepreneurs are sole proprietorship and limited company. We would go through both options.
- A sole proprietorship is a business structure where an individual operates a business as the sole owner. It is the simplest and most straightforward form of business ownership. As a sole proprietor, you have full control over the business, including decision-making and profits.
- A limited company, also known as a corporation, is a separate legal entity from its owners. It is formed by one or more shareholders who contribute capital in exchange for shares. The company’s liability is limited to the amount of capital invested, providing personal asset protection to shareholders.
In a sole proprietorship, the owner is personally liable for all business obligations and debts. This means that your personal assets, such as your home or savings, may be at risk if the business faces financial difficulties. In contrast, a limited company limits the liability of its shareholders to the amount they have invested in the company. Personal assets are generally protected, and the risk is confined to the company’s assets.