As legal entity types, the sole trader and the general partnership in Hong Kong are similar in terms of investors liability. A key difference, however, is that more than one investor may form the partnership.

Our Hong Kong company formation agents present the main characteristics of both business forms and the advantages of switching the entity type. While it is possible to change a sole trader into a general partnership in Hong Kong, investors need to weigh the advantages of this business decision.

The sole trader compared to the general partnership in Hong Kong

The sole trader is the simplest type of business entity, formed and run by a single individual. The key difference between the sole trader and the partnership (in general) is that the latter is co-established and co-owned by two or more individuals.

A similarity between the sole trader and the general partnership is that related to the liability of the founder and/or partners. The sole trader is fully liable for the debts and obligations of the business and in the general partnership each partner is liable for the debts and liabilities of the partnership. This also means that a partner can be held liable for the actions or decisions of another partner. Nevertheless, despite the liability issues, the general partnership offers a different business perspective and a better chance at growing the business particularly because it represents a partnership between two or more professionals who combine their expertise.

Other advantages of the general partnership in Hong Kong include the easy setup procedure and the low maintenance requirements (also applicable in case of the sole trader), the ease of raising capital and the attractiveness towards potential employees in Hong Kong.

One of our Hong Kong company formation agents can give you full details about the characteristics of the sole trader and those of the general partnership.

What to consider when changing the type of the business entity

Changing a business structure in Hong Kong will imply the registration of the new business. All entity types except for corporations must register with the Companies Registry within one month after the commencement of the business. This will also apply when changing the sole trader. Moreover, investors who enter into a general partnership are advised to seek proper business opportunities together with an experienced business partner.

You can contact our team of agents who specialize in company formation in Hong Kong for more details on company formation and the requirements for the registration or the change of different types of companies.

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Change a Sole Trader into a General Partnership in Hong Kong

The sole trader compared to the general partnership in Hong Kong

What to consider when changing the type of the business entity

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