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2022-07-13 |
【4 mins Read】OneStart Weekly - Retail Industry Points to Note

If I want to start a retail business, should I open a physical store or an online store? In fact, the competition in the retail industry is fierce in Hong Kong. Every company has tried his best to attract customers. Whether it is selling clothes, daily necessities, electronic products or imported food, it is definitely not easy to maintain business under the continuous epidemic situation.

 

The epidemic outbreak in Hong Kong has increased the market share of "online stores" and spurred the transformation of traditional retail outlets to online sales. Statistics show that the total sales value of "online shops" in January last year only accounted for 647 million, and it has grown to nearly 1 billion in January this year. The transformation action of other retailers is even more pronounced, with the value of online sales rising to 1.375 billion in January this year from 587 million in January last year. The retail transformation forced by the epidemic has doubled the total online sales of the retail industry in just one year. The rise of online stores just means that aspiring entrepreneurs hope to avoid high rents and fight their way out in a real estate-led economy.

 

The Census and Statistics Department began to collect data on online retail sales in January 2020. Since the outbreak of the epidemic in February last year, online sales in Hong Kong have risen sharply. From the beginning of last year, online sales only accounted for 3.3% of the total retail sales in Hong Kong. The data has deteriorated. In November last year, online sales once rose to 9.4%, making online sales a strange phenomenon in the epidemic market.

 

Online shopping is prevalent, because you can buy global products without leaving your home. You don't need to consider rent expenses for opening an online store, and your business is not limited by time and place. For those who want to start a business, the cost for opening an online store and start your business is the lowest. In fact, opening an online store can be through Instagram or Facebook as the first step. After accumulating customers, you can switch to a more professional online store platform to build your own website.

 

Online store has no physical store with all business conducted online, with only a mobile phone or a computer. Compared with physical stores, it is relatively simple and with less costs. No time and place restrictions, and easy relationship with customers are all advantages of opening an online store.

 

Online store vs Physical store

Entry cost: The entry cost of online store is very low, and you only need a mobile phone or computer with Internet access to sell products // The entry cost of the physical store is higher. You need to rent a shop, pay monthly rent, decoration, water and electricity and other necessary expenses.

Business hours and locations: The business hours of online stores are very flexible and with no time constraints. Some employees even open online stores with their own full time job on the way.

 

Do online stores need BR business registration?

Don't think that only physical stores need business registration. Online stores also need Business Registration and BR address! According to Section 310 of the Laws of Hong Kong, Section 5 of the "Business Registration Ordinance" and the Inland Revenue Department's guidelines set out "any form of business, business, craft, professional, occupation or other activities for profit", which requires business registration. Therefore, if you are interested in running a business with an online store, whether it is a small business or a large investment, you must complete a business registration. Otherwise you may be fined HK$5,000 and imprisoned for one year. If the business has not been registered for more than one year, all levies for the year and the past will be recovered.

 

Do online stores need to file taxes?

In addition to business registration, as long as the business is carried out in Hong Kong, the relevant profits of the online store must be declared. Otherwise, it will be a tax evasion, and the maximum penalty will be HK$10,000, and an additional amount equivalent to three times the underpaid tax will be recovered. According to the laws of Hong Kong, online shops are not exempted from profits tax. No matter how the business is operated, anyone operating any business in Hong Kong to obtain profits must pay tax if the profits originate in Hong Kong. Even if the online store does not have a physical store, transactions are conducted online, but regardless of whether the online store buyers are from Hong Kong or overseas, whether the store owner has completed business registration or opened a company, etc., it will not affect its liability to pay profits tax.

OneStart Business Center provides the most professional and reliable one-stop tax services, accounting auditing services. The CPA accountants efficiently help you organize documents and handle accounting. With only $4000up, call our consultants at 35756888 for a quote!

 

Never take a risk for avoiding tax!!

It is said that some retail stores or online stores have never filed tax returns. They feel lucky that they don't make much money anyway, so it is not a big deal to not file tax returns. But you can never run away from the tax bureau.

Opening an independent company account to deal with business-related capital transactions is convenient for account management and tax declaration. Proper bank accounts prevent criminals from laundering money. If you use personal bank account for your online store transaction, once the bank suspect that the account is operating abnormally, they may immediately freeze or even cancel the account.

If you use your own personal account for income and expenditure when operating an online store, there must be a lot of frequent inflow and outflow of funds. At this time, the bank can freeze the account according to the use of the personal account for commercial purposes and point out that the account is different from the one originally declared. In order to avoid sudden interruption of business, it is better to open a company account obediently!

Interested in opening a company, filing taxes, auditing accounting, and virtual office services at OneStart? Call the hotline 3575 6888 or WhatsApp our professional consultants!