Registration of PE in Hong Kong

Private entrepreneurs

Being a private entrepreneur is the simplest form of doing business. Despite this, most often the activity of such an enterprise is most often considered as the most risky, since the personal savings of the individual owner are not protected from the risks and obligations incurred as a result of commercial activities. A private entrepreneur simultaneously receives all the profit from the activity and is the only responsible person for all obligations. This creates significant financial risks, and start-up entrepreneurs try not to resort to this type of business.

Advantages of Private Enterprise

• The easiest registration
• A private entrepreneur is the sole owner and retains full control over the activities, decision-making is fast, efficient and does not require additional approvals from third parties.
• Private entrepreneurs do not have an obligation to share the profits received from commercial activities.
• Termination of the activities of a private entrepreneur is the simplest, least time-consuming and cost-effective in comparison with other types of enterprises.

Disadvantages of being a private entrepreneur

• The owner and entrepreneur are the same person; a private entrepreneur is liable for all debts and obligations.
• In the event of a debt, the entrepreneur's personal assets (including property) are not protected.
• The only source of capital is the personal funds of the entrepreneur and the profit received from the activity. With a limited amount of working capital, development and expansion of activities is slow.
• Continuous succession is not possible, since the activities of a private entrepreneur cease with the moment of his death.
• Given the risks of operating as a sole trader, investors are less willing to invest.
• The transfer of activities can only be done by selling production assets.

Hong Kong Corporate Law