Company Formation – Unlimited Company
Last time we talked about company incorporation, and introduced you to the first type of company – Limited Company. This time, we would talk about another friend – Unlimited Company. From its name you could possibly guess that this type of company comes with an unlimited liability for its owners, but what is more? What other points you should notes when you are ready for company formation?
An Unlimited Company is a form of private company, in other words you could not list your company to the stock market and issue stock like a limited company. Unlimited liability company is established by one to six shareholders, and the shareholders must bear unlimited liabilities for the debts of the company.
Therefore, most business entering company formation as unlimited company are small business, without the need of issuing stock for expanding capital base. There are two forms of company structure: Sole Proprietorship and Partnerships. Sole proprietorship means that the unlimited company is owned and run by only one person, and that person would have to bear all the risks and financial debts of the company. Partnerships means that the unlimited company is formed by 2 to 20 people, and all partners would have to bear the liabilities of the company. However, for partnerships, only one of the partners could own assets in the name of the unlimited company and sign contracts in the name of the company and the other partners.
This means that the private assets of the proprietor or partners would be subject to contribution when capitals of the unlimited company run short. Proprietors or partners would also have to bear decisions risks and contract risks for the company.
Then why would people like to incorporate as an unlimited company? Why would people choose among all the choices, but unlimited company during company formation?
l Exempted from filing annual accounts to the registrar
According to the Companies Ordinance, because an unlimited company is a form of private company, and shareholders could contribute with private assets, annual financial accounts and records of an unlimited company is not required to be submitted to the registrar. No statutory audit is required from the government. There will be a lower accounting and auditing fee required. OneStart Business Centre could offer you with auditing and accounting service, hoping to cater to the needs of our different business customers.
l Lower profit tax rate and no need to pay annual return fee
Compared to a limited company, registered unlimited company would have a lower profit tax rate of 15%. Owners of an unlimited company would only need to pay business registration fee, upon suitable circumstances this could even be waived. There is no need for you to pay the annual return fee to the Company Registry, as it is only a required payment for limited company.
l No need to appoint Company secretary
Company formation as an unlimited company implied that there are less documents required for submission to the government officials. As an unlimited company is not required to submit the annual return, internal meeting records and resolution, and cannot issue company stock, there is no need and no regulation for an unlimited company to appoint a Company Secretary.
l Easier control over business matters within company
As only one of the partners in partnerships is able to make decisions on behalf of the whole company, and number of partners are usually within 10, decisions making would not need to go through a voting procedure among a large number of shareholders, i.e. 30. Instant business response and decisions could be made, and without much internal disputes.
Applying for company formation procedures through OneStart Business Centre is much more convenient. Registering as an unlimited company could even just take one day to process! All you have to do is provide our professional consultants with the documents needed, then we will handle the rest for you.
Although unlimited company does not need to appoint a company secretary, but OneStart Business Centre could still offer you with other professional services, and provide you with one-stop aid in your journey of company formation. OneStart Business Centre could provide you with accounting services, MPF consultation services and insurance consultation services. CLICK HERE to check out our different service packages.
Interested in OneStart Business Centre’s Company Incorporation and Accounting services? Phone in to our hotline 3575 6888 or WhatsApp our helpful consultants!