Business Bank Account in Hong Kong – Index
Introduction: Your options
If you’re reading this article then perhaps you already know that in recent years, opening a business bank account in Hong Kong for your company has become complicated.
The time has passed when you could just show up at any branch and open a business bank account in one day.
But all is not lost. These days there are three ways for handling payments for your company in Hong Kong:
- Open a “traditional” bank account in Hong Kong (this as I already mentioned has become complicated, as I will explain in detail later in this article);
- Open an off-shore bank account: this could be simpler but is more expensive, and would also make it very hard to accept payments through Paypal or credit cards via Stripe or Braintree (the companies used by the majority);
- Open an “alternative” account with Neat, one of the first startups to offer business bank accounts in Hong Kong that can be opened for free, giving you access to international payments, allows you to accept payments through Paypal or credit cards, and even gives you the right to a prepaid MasterCard.
In this article I will describe these three options. I’ll start with Neat, since it’s the simplest.
How to open a Neat business account in Hong Kong
Pros: fast and easy; free; integrated with Paypal, Stripe and Braintree; modern (you can use it through an app); customer service almost always responds in one day; you can open the account online (without being in Hong Kong).
Cons: at the moment, if you receive a payment in a foreign currency, the money will be converted into HKD (Hong Kong Dollars); you can’t get credit (so you can only spend the money you have in your account).
Since opening a bank account for our company was taking a long time, we decided to try Neat, a service which at the time was starting to offer business accounts.
Considering all the difficulty we were having with the bank account, we were absolutely blown away when we saw that to open an account with Neat, all we had to do was fill out a form online with the following documents:
- Copies of the passports of all the directors and shareholders with more than 10% shares;
- The company’s business license;
- Brief explanation of the company’s business model.
In half an hour we filled out and sent the form to Neat’s website with all documents; after this we got a confirmation email explaining that it would take a few days to activate our account.
There’s no cost to open an account, nor is it necessary to go to Hong Kong.
Once we opened an account online, we followed the instructions to activate it and request the prepaid MasterCard (you need to use the Neat app, which is also free).
Right away we sent a small wire transfer (both from a bank account and from Paypal) to verify that everything was working the way it should, and we didn’t run into any problems.
Once the MasterCard arrived, we verified that it too worked properly (if I’m not mistaken it was a payment with Xero, the accounting software that we use at our company in Hong Kong).
We’ve been using Neat for months now, and at the moment, the only problem is that they don’t offer an integration with Xero (our accounting software), causing us to export transactions as a .csv file to then import it into Xero; but this is just a small problem since it only takes about five minutes each month.
Click here to take a look at Neat’s website (or immediately apply to open a business account if you prefer).
How to open a “traditional” business account in Hong Kong
Pros: access to a multi-currency account (HKD, USD, EUR, etcetera); integrated with Paypal, Stripe and Braintree; you may be offered credit (depending on the situation).
Cons: Opening one has become extremely slow and complex (so much so that without using an agency it’s almost a lost cause, at least for small companies); it can cost a lot; customer service is rather slow; you have to be in Hong Kong in order to open the bank account.
As was already mentioned, the time has passed when you could show up at any branch and open up a business account in one day just by showing your passport, your curriculum, your company’s documents and a business plan (this is exactly what I did in 2013, without any business experience).
Just this year, we opened another business bank account for another company, and the process was somewhat more complicated. Here are the documents that they asked us for:
- Passport and curriculum of shareholders and directors (the usual at this point);
- Business plan (a much more detailed version than the one they asked for in 2013, but still few surprises here);
- Documentation about the company you want to open a bank account for (certificate of incorporation, business license, etcetera, all standard procedure);
- 10,000 HKD (the cost for opening the account) plus 10,000 HKD to deposit (which they paid back); note that the amount depends on the bank you choose;
- The director’s business experience, including accounting balances of the other firms where the director (or directors) is a shareholder and active participant. This is the point that made me reflect a little bit, since it means that if you don’t already have a company with at least a year’s worth of experience, opening a business bank account seems like it would be impossible;
- Months of time, since many of the documents need to be certified by a notary (or at least an official accepted by Hong Kong) or they’re not readily available.
So, compared to the past, the biggest problem was the time needed to open the account together with the fact that if you don’t already have a company (which can also be in another country, not necessarily in Hong Kong), opening a business bank account has become extremely difficult (if not impossible).
Moreover, and this is important, we never would have been able to open a bank account without the help of an onsite agency.
To all this there’s the added costs for the bank, the notaries and accountants, and the agency.
Click here if you’re interested in contacting an agency that helps you to open a bank account for your business in Hong Kong (or to open your business, if this is the option you’re interested in at the moment).
How to open an off-shore business account for your company in Hong Hong
Pro: at the moment it seems that it’s easier than opening a “traditional” bank account in Hong Kong.
Cons: Can be expensive; in addition receiving payments via Paypal, Stripe or Braintree can be difficult (if not impossible); this is an off-shore account, so you should consider the tax implications, whether for the business or the director’s personal taxes (depending on where you are a resident, check the CFC regulations which vary according to country of residency).
Even when opening an off-shore account, in the majority of cases you’ll need to use an agency (if they offer this service it may be easier to use the agency that helped you open the firm, but that isn’t always possible).
In this case, the bureaucratic process (along with the costs) will change according to where you decide to open your off-shore account (opening it in the Seychelles Islands is quite different than opening one in Singapore).
Note that if you intend to accept payments via Paypal, Stripe, Braintree or similar services, I don’t recommend that you use this option.
There’s a practical reason for this: when you open a Paypal business account, for example, you have to enter your company’s address associated with the account (so an address in Hong Kong, in this case). And, from my personal experience (I own 3 Paypal business accounts, in various countries), Paypal only allows you to connect a bank account from the same country (Hong Kong).
So, as I found out, you can’t transfer Paypal funds to an off-shore account (which by definition it wouldn’t be located in Hong Kong). It’s a similar situation with Stripe. I’ve never personally used Braintree, but I suppose the situation is more or less the same considering that these limitations are due to capital control laws (which must be obeyed by all financial services such as Paypal, Stripe, etcetera).
Click here if you’d like to contact an agency that can help you open an off-shore bank account for your company in Hong Kong (or to open your business, if this is what you’re most interested in at the moment).
Frequently asked questions
Note that, as long as you took an appointment beforehand and that you can provide all the required documents, the meeting in Hong Kong shall not last more than a couple of hours.
Also, note that in recent years there are new companies, like Neat, that allow you to open an account online. However, such accounts have some limitations, as discussed in this article.
- A copy of passport (and/or HK ID card, when available) of all directors and shareholders of the company;
- A detailed business plan (if the company is new) and/or past auditing reports and accounting data (if the company has already been operating in Hong Kong);
- Documents concerning your company (certificate of incorporation and others);
- Documentation that proves the director (or directors) past business experience;
- Any other documents required by the bank (the list might vary).
Note that in in this article we describe the required documentation more in details.
Disclaimer of limitations and responsibilities: In this article we’re not offering any financial advice, we’re strictly limiting ourselves to listing your alternatives based on our personal experience from 2013 to today. I recommend that you discuss it with your agency and/or accountant, to understand what would be the best option for your situation.
[Photo Credits (Creative Commons License): www.flickr.com/photos/philiproeland/]