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Another Sole Proprietor Situation - any help appreciated

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  1. #1

    Another Sole Proprietor Situation - any help appreciated

    Hi

    I'm looking for some advice on my current situation and what happens next. Please excuse my illiteracy about visas and tax laws in HK - this is probably a unique case and so it's been quite hard to find out any info on what I should do.

    I have been living in Hong Kong for two and a half years. I have been on a sponsored work work visa for this duration. The visa itself expires in May 2013. I finished up employment with this company in April 2012 and from what i can see so long as i don't seek employment or work for anyone I can stay here until the visa expires in 2013.

    Just before i moved out to Hong Kong 2 and half years ago I set up a blog to support one of my hobbies (sports). Over time that grew and started bringing in some decent money at the end of last year from selling digital products (teaching specifics of a sport) and advertising.

    The money earned was enough that I thought I should be paying taxes on it so I set up as a sole proprietor at the beginning of 2012. As the money is essentially a royalty and i don't need to work to earn it I thought I could just add it onto my tax return as an additional income.

    As I mentioned above i left employment in April. I am now essentially living of the money earned through the website - as I say I am not working for it and I will pay taxes on it.

    I would now like to pursue this online business as I think I can grow it into a real business in Hong Kong (as a hub to grow it across Asia) - including hiring local staff. At present I won't be going over the $2,000,000 accounts audit threshhold this year - but it's entirely possible if I choose to grow the company properly.

    So I have around 10 months left on my current visa to live in HK - Towards the end of the year if i want to stay in Hong Kong I will need to transfer over to LLC or similar and look to sponsor my own visa.

    So my questions are

    1) Is this change over possible? If so do you have any recommendations on who i should speak to and should i just wait until closer to the end of my visa in 2013?

    2) If i can demonstrate in a business plan that there is a solid business possible and I can support myself and local staff will the money earned as the sole proprietor help my case (to show the validity of possible profits)?

    3) If I set up the LLC and lets say I'm denied a visa then I'm stuck with a company I need to file accounts with (which i don't have to unless i earn over 2 million HKD i believe) . So do I try for the visa then set up or do it vice versa?

    4) If i choose to leave HK before May next year and my taxes are up to date - can i leave HK and still keep the sole proprietorship and bank accounts here and run it all through HK (do i in that case pay the taxes to HK or to the country i am living in)?

    5) At present most of the money earned is from the US/UK - but by opening in HK i can really focus on Asia. Excuse my ignorance but am i taxed the same on transactions outside of HK?

    6) Is there anything i may have misunderstood or other options open to me?

    One more thing is that i am a UK citizen so i don't have to pay taxes back to UK whilst i do not live there.

    Thanks very much for your time


  2. #2

    No one has any thoughts?


  3. #3

    Join Date
    Jan 2008
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    1,953

    I am not sue, whether you can keep the sole proprietorship once you leave Hong Kong. Why do you want to keep the business in HK , when you leave? Where is home? What are the Tax Laws in your home country? If you are not a resident of USA or UK, then the best plan is to buy a British Virgin Island Company. This will allow you to receive your ad money. No audit is required. You can work from any Beach Paradise in the world.


  4. #4
    Quote Originally Posted by Oldtimer:
    I am not sue, whether you can keep the sole proprietorship once you leave Hong Kong. Why do you want to keep the business in HK , when you leave? Where is home? What are the Tax Laws in your home country? If you are not a resident of USA or UK, then the best plan is to buy a British Virgin Island Company. This will allow you to receive your ad money. No audit is required. You can work from any Beach Paradise in the world.
    Thanks for your reply.

    UK is 'home' - so tax laws, so long as I am not resident there, are not really an issue.

    Really though my home is Hong Kong - everything is here... I don't particularly want to leave unless I have to. If I can set up properly and get a visa that way then I will. I would love to perpetually travel the world and live of a website however girlfriend and pets won't allow that

    The BVI's sounds ideal - however at present I use PayPal for everything and they won't allow that for obvious reasons. If I was to set up properly I would be able to go the merchant account route and then that would be possible.

  5. #5

    Join Date
    Jan 2008
    Posts
    1,953

    INVEST HK

    If you have decided to live in Hk, then marry the girl friend and get a dependant visa. This will solve your problem.
    If you are not ready for marriage, contact Invest HK, a HK government organization for help. They will guide you, and help you to set up your business. Also apply for space in Government Science Park for office space.

    Quote Originally Posted by jamessj97:
    Thanks for your reply.

    UK is 'home' - so tax laws, so long as I am not resident there, are not really an issue.

    Really though my home is Hong Kong - everything is here... I don't particularly want to leave unless I have to. If I can set up properly and get a visa that way then I will. I would love to perpetually travel the world and live of a website however girlfriend and pets won't allow that

    The BVI's sounds ideal - however at present I use PayPal for everything and they won't allow that for obvious reasons. If I was to set up properly I would be able to go the merchant account route and then that would be possible.

  6. #6
    Quote Originally Posted by Oldtimer:
    If you have decided to live in Hk, then marry the girl friend and get a dependant visa. This will solve your problem.
    If you are not ready for marriage, contact Invest HK, a HK government organization for help. They will guide you, and help you to set up your business. Also apply for space in Government Science Park for office space.
    Thanks - I'll give them a shout.

    Government Science Park - is there some benefit to this?

  7. #7

    Join Date
    Mar 2007
    Location
    Gold Coast Marina
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    17,862

    1) Is this change over possible? If so do you have any recommendations on who i should speak to and should i just wait until closer to the end of my visa in 2013?

    Yes it's possible to change visa's. I think the advice to speak to Invest HK is the best idea, they can give you an idea. It IS possible to self-sponsor on a work visa, but it's tough. Not sure if possible for a sole-proprietorship either, might need to be a proper company. Your other option is QMAS - you probably qualify. It takes about 9 months so start sooner rather than later.

    2) If i can demonstrate in a business plan that there is a solid business possible and I can support myself and local staff will the money earned as the sole proprietor help my case (to show the validity of possible profits)?

    It's the only way. You basically have to show that there is a company in HK that needs your expertise. In your case, the expertise is given so you just need to show the company is real and can support you. As above, may need to convert into a "real" company not sole properietorship, but not sure.

    3) If I set up the LLC and lets say I'm denied a visa then I'm stuck with a company I need to file accounts with (which i don't have to unless i earn over 2 million HKD i believe) . So do I try for the visa then set up or do it vice versa?

    Companies in HK are cheap to set up and cheap to shut down. I'd set it up first but that's just my view!

    4) If i choose to leave HK before May next year and my taxes are up to date - can i leave HK and still keep the sole proprietorship and bank accounts here and run it all through HK (do i in that case pay the taxes to HK or to the country i am living in)?

    I can't see why not.

    5) At present most of the money earned is from the US/UK - but by opening in HK i can really focus on Asia. Excuse my ignorance but am i taxed the same on transactions outside of HK?

    For salary income earnings, sometimes you can get dispensation if you work outside of HK. But for company revenue, no, I think it's all the same. Our company earns revenues from all over the place and we pay tax on all of it in HK because we are a HK company.

    6) Is there anything i may have misunderstood or other options open to me?

    Nothing I can think of.


  8. #8

    Join Date
    Mar 2010
    Posts
    7,239

    I assume your US source income is subject to US income tax.


  9. #9

    Join Date
    Dec 2009
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    Sai Kung / Clearwater Bay
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    1,520

    I wonder if its legal to work for yourself here on that visa?

    I thought the Visa's were tied to the job you are on - unless you get a dependant visa..

    change job need change visa?

    would immigration see the writing of the blog is an "act of work" ?

    ok I admit I dont actually know - but thats what goes thru my mind?


  10. #10
    Quote Originally Posted by Morrison:
    I assume your US source income is subject to US income tax.
    I'm not a US citizen nor do I live in the US and my bank account and business is registerd in Hong Kong - so why would I?

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