Hello, I have a dropshipping business with products manufactured and shipped from South America, I have many customers in the US and I'm doing more than 200 transactions a year, so I'm afraid I can be considered ETBUS even if I don't have anything in the US, so I'm considering forming a Hong Kong company instead of the LLC, do you think is a wise idea? What are the costs compared to an LLC and do you know a reputable provider for such setup? Thank you and happy new year
HONG KONG VS DELAWARE LLC for dropshipping
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You would find it hard to find banking unless you︀ source products from China (e.g. Shenzen) or have a large customer base in HK/China.
If you do not, you need to stick to emi. The british origin lawyers in HK︁ located in central are quite good but not cheap as is the company which will︂ cost money.
Id consider uae for the time being as alternative and you can also︃ do immigration paperwork later down the road as well.
If you do not, you need to stick to emi. The british origin lawyers in HK︁ located in central are quite good but not cheap as is the company which will︂ cost money.
Id consider uae for the time being as alternative and you can also︃ do immigration paperwork later down the road as well.
No and exactly that makes the difference and things so reliable in Dubai.
One of the most important things about the Dubai Setup is that it requires you to open Bank Accounts in person and gives you a Residence Visa - otherwise things would be 10x more worse same like in every other Offshore Jurisdiction.
If you are fine with banking on EMI's you can stick to HK or US but most of the members here want to avoid banking on EMI's with 6 figures for obviously reasons and that's why they︀ improve there US/HK/UK setup with just banking on EMI with Dubai Setup that contains Dubai︁ Company, Dubai Residence and local Dubai Bank Accounts.
One of the most important things about the Dubai Setup is that it requires you to open Bank Accounts in person and gives you a Residence Visa - otherwise things would be 10x more worse same like in every other Offshore Jurisdiction.
If you are fine with banking on EMI's you can stick to HK or US but most of the members here want to avoid banking on EMI's with 6 figures for obviously reasons and that's why they︀ improve there US/HK/UK setup with just banking on EMI with Dubai Setup that contains Dubai︁ Company, Dubai Residence and local Dubai Bank Accounts.
I've noticed in this thread a lot of untrue statements about Hong Kong as a location for business registration.
- You only need a company secretary to shuttle your company formation in Hong Kong and this is done entirely online.
- Banking in Hong Kong is difficult if you don't have a physical presence in Hong Kong, but with the advent of banking alternatives like digital business account providers (which are not banks but still provide business acccount) like Neat, Currenxie, and Statrys, you can now do this online, you just need to go through some KYC questions. There is absolutely no need for a lawyer to︀ open a business account in Hong Kong. I don't know where users on this website︁ got this idea.
If you are ETBUS and has ECI, it doesn't matter︀ if you use a HK company or US LLC, you still need to pay federal︁ taxes.
A word of warning - total costs of doing business in Hong Kong are much higher than you would expect from doing a little reading or you will be lead to believe by people wanting to sell you company registration services. The worst part is that the expenses are not transparent or clearly explained; they will just act like it is obvious when handing you a bill for something you never knew was required. Even if you operate completely outside of HK and do not owe any HK taxes you still have to file complex HK tax documents that are roughly as invasive as anything︀ you would find in the US or Europe. Something I know from experience that doesn't︁ get mentioned until you get the bill is that part of your HK tax filing︂ requires you to have your accounts audited by an accounting firm in HK. This is︃ a huge expense that provides no value for a very small business. Hypothetically let's say︄ you sell on Amazon and get one monthly payout from them, so there are total︅ of 12 deposits on your bank statement. Expect to pay at least HK$15,000 (maybe more)︆ for those 12 deposits to be "audited" in a way that will be accepted by︇ the IRD with your tax return. My auditing bill (with less 200 annual transactions) was︈ always higher than all other expenses of owning my HK company combined (annual fee, registered︉ agent, mail drop, bank fees, etc.).
Tax-free =/= headache-free
When you add in the fact︊ that China has completely disregarded its agreement with the UK not to meddle with Hong︋ Kong until 2047 I cannot recommend Hong Kong as an offshore jurisdiction under any circumstances.︌ Singapore is still 97% of everything Hong Kong used to be and is what I︍ recommend to people thinking about Hong Kong for tax purposes.
Before PT Shamrock disappeared they︎ had a setup for a company account in the Philippines that didn't have any reporting️ or tax obligations for about 2000 USD. Now that PT Shamrock is gone I don't know who has the contacts to make that happen, but it might be worth looking into.
edit: Over the last 5 or so years it has become a lot harder to open decent bank accounts in both HK and Singapore. Sure, you can technically have HK company registratiion done in a day, but an account at HSBC to actually collect the money? Not so much. Do yourself a favor and pay more for a service that takes care of getting you an account with a decent bank along with providing︀ registration services. If it saves you a plane ticket and 2 weeks of hotel expenses︁ it doesn't really matter if they want an extra $500 or $1000 to facilitate the︂ bank account.
Tax-free =/= headache-free
When you add in the fact︊ that China has completely disregarded its agreement with the UK not to meddle with Hong︋ Kong until 2047 I cannot recommend Hong Kong as an offshore jurisdiction under any circumstances.︌ Singapore is still 97% of everything Hong Kong used to be and is what I︍ recommend to people thinking about Hong Kong for tax purposes.
Before PT Shamrock disappeared they︎ had a setup for a company account in the Philippines that didn't have any reporting️ or tax obligations for about 2000 USD. Now that PT Shamrock is gone I don't know who has the contacts to make that happen, but it might be worth looking into.
edit: Over the last 5 or so years it has become a lot harder to open decent bank accounts in both HK and Singapore. Sure, you can technically have HK company registratiion done in a day, but an account at HSBC to actually collect the money? Not so much. Do yourself a favor and pay more for a service that takes care of getting you an account with a decent bank along with providing︀ registration services. If it saves you a plane ticket and 2 weeks of hotel expenses︁ it doesn't really matter if they want an extra $500 or $1000 to facilitate the︂ bank account.
You are not ETBUS just for having clients in the︀ US. To be ETBUS you would need facilities in the US, employees etc.
If you︁ manufacture and ship from South America, you provide service from there and there is no︂ ETBUS. I do not suggest you switch your US LLC to Hong Kong, it will︃ only create more headaches, instead, speak with a US CPA to be sure, but if︄ you do not have any connection with the US and are not a US person︅ you will be fine.
If you︁ manufacture and ship from South America, you provide service from there and there is no︂ ETBUS. I do not suggest you switch your US LLC to Hong Kong, it will︃ only create more headaches, instead, speak with a US CPA to be sure, but if︄ you do not have any connection with the US and are not a US person︅ you will be fine.
Decide what your tradeoff will be and pull the trigger. Whether it makes more sense to form a new company in different country or transfer your current company is a discussion to have with someone that will help you set up in your new country.
Without knowing the specifics of your situation, I would say Singapore is probably your best bet. If you're using a bank that is already︀ in Singapore could make the transfer easier. Your HK bank may or may not let︁ you use the same account/open a new one for you after forming a new company︂ in Singapore. That would be a conversation to have with the bank. You'll get hit︃ with 17% taxes but fewer surprises. Everyone in the world considers Singapore to be legitimate︄ so that cuts down the chances of any government treating you like a tax cheat.︅ Depending on your level of profit, the tax could be less than everything you spend︆ to be "tax-free" in HK, and is certainlky less of a headache.
The UAE offers︇ a better tax rate, which could potentially be zero. You won't have quite as much︈ legitimacy or prestige in the eyes of some by going that route. People here have︉ said losing sales due to a small percentage of payment processing issues costs them more︊ money than just paying a low tax rate somewhere that wouldn't have that issue. You︋ also need to be on the ground for 24 hours every 180 days to maintain︌ permanent resident status. Without being a permanent resident you get treated like a foreigner, and︍ that would cause enough headaches to make Singapore the clear winner.
OTOH, if you do︎ enough business to justify the costs, and can get people to wire you money instead️ using a credit card, nothing is going to touch a Cook Islands trust owning a CI international company.
Without knowing the specifics of your situation, I would say Singapore is probably your best bet. If you're using a bank that is already︀ in Singapore could make the transfer easier. Your HK bank may or may not let︁ you use the same account/open a new one for you after forming a new company︂ in Singapore. That would be a conversation to have with the bank. You'll get hit︃ with 17% taxes but fewer surprises. Everyone in the world considers Singapore to be legitimate︄ so that cuts down the chances of any government treating you like a tax cheat.︅ Depending on your level of profit, the tax could be less than everything you spend︆ to be "tax-free" in HK, and is certainlky less of a headache.
The UAE offers︇ a better tax rate, which could potentially be zero. You won't have quite as much︈ legitimacy or prestige in the eyes of some by going that route. People here have︉ said losing sales due to a small percentage of payment processing issues costs them more︊ money than just paying a low tax rate somewhere that wouldn't have that issue. You︋ also need to be on the ground for 24 hours every 180 days to maintain︌ permanent resident status. Without being a permanent resident you get treated like a foreigner, and︍ that would cause enough headaches to make Singapore the clear winner.
OTOH, if you do︎ enough business to justify the costs, and can get people to wire you money instead️ using a credit card, nothing is going to touch a Cook Islands trust owning a CI international company.
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