TMBA 067 (LBP67) – Why Internet Business Owners Should Set Up in Hong Kong

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TMBA 067 (LBP67) – Why Internet Business Owners Should Set Up in Hong Kong post image

This week, Dan and Ian answer a reader question about Hong Kong incorporation. You’ll learn

  • What Dan and Ian’s HK incorporation experience was like.
  • How much incorporating costs.
  • Why internet business owners should set up a corporation in Hong Kong.
  • Hong Kong vs. Singapore
  • Hong Kong vs. the Philippines

The quick tips will introduce you to a tool that makes your Mac even faster, a tool that makes using your computer at night easier on the eyes and some great podcasting advice from Dan Lyons.

If you want to support the show, check out our first 50 episodes on sale.

Have fun. Leave a comment. Give us a ring. 888-554-8428. Go make it happen! :)

Mentioned:

Quick Tips:

Repost of David Crandall’s tip:

Tip from David Crandall, originally posted at Dynamite Circle, our private community for entrepreneurs.

Remember when Dan & Ian made their list of things they’d “never” do? One of their “never do this” was searching competitors’ sites for any files they have laying around their domain. Customer lists, project plans, ebooks they are charging for elsewhere…that kind of thing.

 

Since they would never do that, they would also never want to use this bookmarklet either. Clicking on it while on a site opens a new tab and Googles the entire domain (regardless of how deep you were into the site) for any of the following file types:

  • PDF
  • DOC
  • TXT
  • XLS
  • MP3
  • ZIP

I would also “never” do this and would never have a few HUNDRED megabytes of files from doing this. Nope, no sir. Never.

 

Which means I didn’t rush right out and create this bookmarklet code or that I now use it multiple times a day every single day whenever I visit a new site (make sure to remove any line breaks that the forum might add):

javascript:var domain=location.href.replace(/^.+:///,”);domain=domain.replace(//.*$/,”);domain=domain.replace(/^.*.(?=.+.)/,”);window.open(‘http://www.google.com/search?q=site:’+domain+’+filetype:pdf OR filetype:doc OR filetype:txt OR filetype:xls OR filetype:mp3 OR filetype:zip’);

 

INSTRUCTIONS: I wish I could figure out how to just make this a draggable link, but alas…I could not; javascript does not like to play nice with HTML in forums. To use this code, right-click on your bookmark bar and select “Add page”. Give it a title (mine is called File Search) and paste all of the the above code in italics in the URL section. Then visit a site and give it a try…or rather don’t. Nope, you shouldn’t do that at all.

 

Call us with your questions or comments at 888-554-8428.

Episode length: 26:44

Download options:

If you’ve found the podcast at all helpful or entertaining, we’d love if you could click over to our iTunes page and give us a positive review. This will help us to get more listeners and invest more in the podcast! If you know some ways we can make it better, please send us an email. Dan at lifestyle business podcast . com.

Published on 08.11.11
  • Brad West

    Episode 62 left a lot of questions about why someone, especially an American, would want to have a Hong Kong Corp. But this episode made clear a lot of those questions. Thanks for bringing it up again.

    It would be really sweet to get one of the guys from Greenback Tax Services on the show to talk about the tax details of off-shore businesses.

  • http://www.tropicalmba.com Dan

    Thanks for that Brad. Yeah I’m going to have David on the program, every time I meet up with him we end up hanging out and drinking beer, I’ll try to get down to work one of these days. Also seeing if Crandall has some support for you on that browser widget thingie. 

  • http://twitter.com/alexwmurphy Alex Murphy

    Loved the podcast.  I couldn’t get David Crandalls File Search script to work.  Nonetheless another useful tool can be found here:  http://www.yougetsignal.com/tools/web-sites-on-web-server/ it allows you to see what other domains are hosted on the same server. Cheers!

  • http://www.tropicalmba.com Dan

    Thanks for the shout Alex…. great tool here too! I’ve used similar as well and gotten some good information. Haha don’t think DC expected to be doing software support, handy little tool but some listeners having trouble with it. Easy to duplicate with site: search but tool is handy. I’ll shout ya on the blog if we figure a fix. 

  • http://twitter.com/createyourgood Matt

    Hey Dan and Ian, I am loving this weekly podcast thing as yours has got to be one of the most down to earth, no crap podcasts out there. 

    Looking at the fees on Jumpstart for setting up a Hong Kong corp, it is dirt cheap and seems like a no brainer for the security and tax benefits it offers.  However do you have any idea about what the ongoing costs for running this corp are from a government fees and charges perspective?  Thanks

  • http://twitter.com/Yemoonyah Yamile Yemoonyah

    Awesome episode! learning more and more about setting up in HongKong. I do have one question though. Do I have to physically be present in HK to set up a Corp or LLC and get a bank account? I know you guys went there but I did not think it is a requirement, is it?

  • http://www.lifestylebusinesspodcast.com/ Ian

    Yamile, you do not have to be present in HK to set up the corporation, all of the paperwork can be mailed.  However you do need to show up in person to open a bank account, based on my understanding there is no real way around that.

  • http://www.lifestylebusinesspodcast.com/ Ian

    Matt, I don’t have an exact figure but it will cost you probably around $100-300 USD to maintain the status yearly.  You need to factor in the cost of a secretary, someone to file you taxes, a local address and phone number if necessary, and gov. fees.  We haven’t filed taxes yet and won’t until next year so I don’t have a figure.

  • http://www.tropicalmba.com Dan

    That sounds about right. It’s way cheaper than I would have though, primarily because this is such a common bundle of services in HK. They’ve got huge scale and efficiency and keep the costs for entrepreneurs low. 

  • http://www.tropicalmba.com Dan

    Thats my understanding as well. 

  • Michael Murphy

    Cool, thanks for fielding my question guys.

    You brought up an interesting point, which is a comparison
    of benefits between using a HK Corp and a Singapore based company.  I’ll have to look into that further.

    Thanks again, good episode!

  • http://www.tropicalmba.com Dan

    Cheers Michael… appreciate you supporting the show. 

  • http://twitter.com/createyourgood Matt

    Thanks Guys, really appreciate the info!

  • http://www.adventurecapitalist.net Wille

    I love your

  • Roc

    What happens with the postal mail i receive at my HK virtual address of JumpStart?
    Are they able to scan and forward to me to Europe by email?

  • http://www.tropicalmba.com/ Dan

    yes

  • Roc

    Would it be possible to open a PayPal or Pazya.com account owned by the HK company, without showing my personal name on it?

  • Roc

    Does anyone here have experience with creating a company in Belize?
    It’s cheaper and easier there, with a lower year maintenance cost, but I don’t know if it would be easy to find good “virtual” services such as the ones offered by jumpstart in hong kong.

  • Roc

    Which method do you recommend me to use to receive the payments of the sales of my online business? Paypal?

  • http://www.tropicalmba.com/ Dan

    not sure

  • Shoots101

    Hi Dan, I don’t know where to post my question that’s why I’m posting it here. I’m looking into import export from America passing to hongkong to save on tax and duties in my country the Philippines. I’m interested to know if I can register my current company in Philippines in America and put up a simple office warehouse there. Then ship my the goods to hongkong as tran shipment. I want to show that origin is from hongkong before arriving to the Philippines to make use of asean trade benefits.

    1. Setting up an satellite office in America, what kind of taxes will I need to pay? If I purchase anything that will be shipped out is will be purchase from the Philippines. Not as domestic sales. Satellite office is meant for logistics and purchase only to represent the Philippine company. I heard there are tax rebates in some American products when they export.

    2. From America, can I save on import duties, I would like to pass-through hongkong so I can change document showing items came from hongkong to save on duties when it arrives to the Philippines.

    It’s not clear to me how to do this. But I believe I would just need a virtual office in hongkong so it will be minimal cost? And what kind of business business category should it be? And when goods enter hongkong what kind of process will it go through?

    Do you think I can save on taxes if I pass through Hong Kong? Or just ship it straight away from American to the philippines?

    Thanks in advance

  • http://www.tropicalmba.com/ Dan Andrews

    hey shoots thanks for listening to the show, your questions is really complex and i don’t feel comfortable taking a stab at giving tax advice, especially since i have no idea about the transfer pricing regulations in the philippines.

  • Shoots101

    Hi Dan thanks for a really fast response.

    How about in the US? If my company is in the Philippines. And US office is just a satellite office, do I still pay taxes in the US? Base on US tax? And what do you think is more advantage to me? setup an trading export company in the US? Or just put up a Philippines satellite office at US?

    For question for HK as trans shipment hub. What kind of company would that be? I’ve heard that other companies are doing the same. What I have in mind is to consolidate the goods at HK before shipping to the Philippines or other Asian destination for actual sale.

    If HK and US is only one company from the Philippines will it save me on taxes in HK and US? Should I setup different companies for each countries for just use Philippine company and just put up satellite offices in HK & US?

    I’m really confuse which way to start.. if you can help direct me to the right direction please help. Or which questions should I ask.

    Thanks

  • http://www.tropicalmba.com/ Dan Andrews

    yeah these are quite literally the million dollar questions, to learn the answers you can either trial and error or pay an international tax lawyer, they exist but are expensive so many people try to figure it out on their own.

  • Julius – TheGlobalCitizen

    Hi Shoots,

    A lot of questions in different directions.
    Based on the information you presented here are some thoughts:

    1. When you set up a satellite office (s) in a new country, it is still the same legal entity. I only then see options for tax reduction when you contribute profits to the different countries based on the permanent establishment of your company (see below). Meaning if you have a branch in Hong Kong, you could contribute some of your profits to Hong Kong, and possible gaining obtaining a tax advantage.

    Personally I would not be eager to run my company like that, because of the administrative and reporting nightmare. Especially involving the US.

    2. Perhaps you can set up a Hong Kong company as agent to arrange the export?
    But remember that as a Philippines citizen you are taxed on worldwide income, so any income you will get out of the Hong Kong company is likely still taxed.
    Also, when you are fully transparent, you will need more than just a virtual office. Because if you de facto run the company from the Philippines, it can be considered a Philippines company for tax purposes. You will need “substance” in Hong Kong. The most important for this “management and Control”. So the director should be in Hong Kong AND making the decisions there.
    See below…

    3. When a Philippine company sets up a simple warehouse in the US and if you have to pay taxes.
    The most important indicator will be if this operation you will have in the US will be considered a permanent establishment, which consists of the following:
    a) place of management;
    b) a branch;
    c) an office;
    d) a factory;
    e) a workshop, and
    f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

    Of course, dealing with the US I would make very sure you know this situation beforehand.

    I hope this makes things a bit more clear. I wrote an article about it that explains this a bit better:

    https://theglobalcitizen.co/where-to-pay-taxes/

    Drop me a line if you have any additional questions.

    Julius

  • Julius – TheGlobalCitizen

    I have set up a number of Belize companies for clients when I was still working.
    The are easier to setup, cheaper and much easier to maintain in terms of paperwork.

    The main advantage of Belize companies is that they
    have very strong asset protection laws. Compared to the West where your business can be ruined just because you have a claim against you. But for most digital nomads this is not relevant at all.

    Setting up companies is not that difficult. But you will have to be able to USE the company. Hong Kong companies are much easier to deal with banks and merchant options.

    And with the world getting more and more regulated it is getting difficult to open bank accounts and merchant accounts. Especially with jurisdictions like Belize and Seychelles, and also BVI.

    I have seen cases where people were running a 6 figure business in a Seychelles company when they lost access to their bank account and were not able to open a new one.

    So if you are setting up a simple freelance company or consulting company which just require you to send invoices you are better of in other jurisdictions (low costs, minimal reporting and no tax considerations when you are a proper nomad). If you run an online business and need to be able to accept online credit card payments, you can go for Hong Kong.

  • http://www.tropicalmba.com/ Dan Andrews

    yep. or world pay. Braintree recently opened up in HK

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