There are 4 major types of business organisations: limited liability company, joint stock company, proprietorship and partnership. To learn more about the similarities and differences between them, click here. Each type has its advantages and disadvantages. Depending upon the needs of your business, you will have to choose the one that is most suitable for you. However, if you wish to establish a business in Hong Kong, you need to get the help of a professional company that provides business advice and assistance in establishing your business.
Limited liability partnership (LLP) is one of the easiest types of business to set-up. The reason for its ease is that there is little difference between it and other types of business organisations that are common in the local market. A partner (who is also called the proprietor) takes on the responsibility of managing and running the business. In addition, there are usually less restrictions as to how the partnership funds can be used and the fact that there is at least two partners makes it easier for the partner to decide on their own income and expenditure matters.
Another simple way of creating a partnership is through the usage of an implied authority. An implied authority is a body that exists for the express benefit of a group of people. Examples of implied authorities include Limited Liability Company (LLC) and the Joint Membership Limited Partnership (MMLP). Limited Liability Company is considering a simple set-up because there is no requirement for meetings and quarterly meetings, unlike in a partnership. With an MMLP, however, the partners are required to meet twice annually and the annual income and expenditure are more restrictive. It is recommended that you hire a professional to help you set up an LLC in Hong Kong.
Next is the Limited Liability Company. Like the LLP, it allows for limited liability. However, unlike the LLP, a partner will only be held personally liable for the company’s debts. Lastly, there is the Formal Partnership. This is similar to a partnership, except that partners are obliged to maintain the business, which they formed, and pay the company fees if it makes a profit.
One last example of these three options is the formation of a limited liability partnership (or partnership deed). A partnership deed binds the partners to work together and share the profits. Unlike the Memorandum and the Limited Liability Company, this will not require annual meetings and is considered to be a lower cost option. There are other rules that govern these types of businesses. For instance, a partnership deed cannot incorporate more than two people. The partnership must have been set-up for at least one year in order for it to be valid.
If you are looking into setting up your own business, you will need to consider the pros and cons of each of these three options. While a partnership deed and a limited liability company are certainly the most popular options, they are not the only ones. You should consider forming your own company, or a new partnership with your colleagues. In doing so, you can decide on the style and structure of your firm, choosing whether to be formally established or operate via the use of a partnership deed.
Formal partnerships are much like general partnerships, with one partner acting as the sole proprietor. These types of businesses are created with one or more general partners and one or more limited partners. A general partnership will have limited liability for any issues arising from the partnership’s debts. Limited partners will be required to undertake all the duties necessary for the general partnership without being liable personally. These companies can be set-up quickly, providing you have the resources and knowledge to carry out the process.
Finally, there is the informal partnership. These types of businesses are set-up by two general partners who recognise that the relationship between them will not have the same levels of success as a formal partnership firm would. The informal partnership firm will have limited liability, meaning that the partners will share in the responsibility for debts, but will still benefit from the benefits of the business. This type of business can be set-up quickly and easily, although it is important to recognise that it will require much more dedication and care than other types of business.