Getting your business off the ground may seem simple at first. Many decisions later, you might not have realised the impact they have on your funding options.
Here are 5 common mistakes that many people make when registering their company that limits their access to funding.
We’ve included what you should do instead.
Mistake #1 - Not registering your business as a limited company
We strongly recommend start-ups and small business owners to register as a limited company. While there is a slightly higher cost to kick-start the business this way, your funding options will look much better with financial institutions. Sole proprietorship and partnership are deemed as individuals when being assessed, this translates to less favourable terms for you.
Mistake #2 - Registering only a Chinese name for your company
Be sure to register your business with both English and Chinese company names. Financial institutions require an English business name, it would be great to have a Chinese name if you are a local Hong Kong business.
Mistake #3 - Using your residential address
Avoid using your residential address as the business registered address. This will avoid unnecessary problems if you move, sell your property or worst, financial institutions doubting the validity of your business. Ensure that you have one registered business address matched across all the documents, will make all your funding processes much smoother.
Mistake #4- Forgetting employment and MPF records
Employment records is a prerequisite to secure grants from Hong Kong SAR Government’s Anti-Epidemic Fund. Part of the assessment requires the employment and MPF (Mandatory Provident Fund) records documented. This is applicable for both your employees and you! Without these documents in place will delay your access to funding.
Mistake #5 - Not having your books ready from day 1
When we said ‘books’, we mean all your accounting documents, excels and expense receipts. It’s important to have your data and processes ready right from the beginning. You can use tools like Xero or engage with external accountants to have things set up and structured in the right way. Imagine the bank asks for a document from 2 years ago. Invest your time to set up proper operations, funding and scaling will be easier.
Now that you have avoided these mistakes, let’s talk about the fun(d) part of your business. Let's chat on message on WhatsApp.