Open Business Account : All you need to know in Hong Kong

Definition and types of business accounts 

A business account refers to a dedicated bank account opened in the name of a registered company or enterprise. Its primary function is to handle the company's daily financial transactions, such as receiving customer payments, paying suppliers, employee payrolls, tax filing, and financial reporting. A business account is usually managed by the company's finance department and is closely related to the company's operations.

More and more people are starting their own businesses or opening online shops nowadays. When opening a business account, it is essential to choose the type of account that suits your company's needs. For example, there are accounts for companies registered or established in Hong Kong, China, or overseas, as well as accounts for different organisational structures such as limited companies, sole proprietorships, or partnerships. It is crucial to carefully review the minimum deposit requirements of different types of account before making a decision.

Why do you need a business account?

Opening a business account may seem complex, and you may wonder why it is necessary instead of just using a personal account. Here we summarize four major benefits:

1. Compliance with legal and regulatory requirements: Opening a business account helps ensure that the company complies with relevant regulations and taxation requirements. Financial records and reports can be provided to regulatory authorities when necessary.

2. Clear financial records: Running a business involves numerous transactions. A business account allows for clear separation between personal and business finances, ensuring transparency and accuracy in liquidity and financial records. The risk of being flagged or frozen with large transfers is also much lower compared to a personal account.

3. Business accounts offer a wider range of financial services: Business accounts typically provide various services and features to meet the needs of different companies. These include online banking services, wire transfers, large transfers, corporate credit cards, as well as access to real-time wire transfer status, financial statements, and transaction records. Larger companies can also utilise their account for depositing business capital, investment management, and activities like fixed deposits, funds, and stocks investment.

4. Convenient for tax filing: Business accounts provide accurate and comprehensive financial records, including income, employee payrolls, and transaction details. These records can make the entire tax filing process more accurate and transparent by avoiding confusion with personal expenses. They are also helpful for calculating tax declarations and deductions.

The process for opening a business / commercial account — traditional banks vs virtual banks

Opening a business account is simple regardless of whether your company is registered locally or overseas. It is similar to opening a personal account, but it requires some additional information and documentation for the company. Generally, the account opening process in traditional or virtual banks involves the following steps:

For traditional banks, these steps are required via mobile application or online banking:

1. Review the online guide for opening a business account

2. Fill out the company information, upload required documents, and complete the application form

3. Pay the applicable fees for opening the account

4. Verify the application and undergo identity verification 

5. Deposit funds into the newly opened business account within the specified timeframe 

6. Once all the necessary steps are completed, the business account opening process is considered finished

For virtual banks, these steps are required via mobile application:

1. Download the mobile app of the virtual bank and select the option for business/commercial account registration

2. Fill out the online application form, including company details, company members, business activities, and financial information

3. Prepare your Hong Kong identity card for Digital ID Verification (eIDV) and application confirmation

4. Complete customer due diligence (if applicable).

5. Make the online payment for opening the business account

6. Once the above steps are completed, the account will be activated and ready for use

Documents required for opening a business account

Documents required for opening a business account may vary depending on the traditional banks or virtual banks and the specific requirements for different types of business accounts. However, regardless of whether it is a sole proprietorship or a partnership, these documents are essential to verify the company's legality and identity.

1. Proof of company registration, such as the Business Registration Certificate (BR) or Certificate of Incorporation (CI)

2. Shareholder Register: Identification documents and address proof for shareholders, board members, and authorised signatories.

3. Company Background: Source of funds and reasons for establishing the business

4. Company Organisational Structure

5. Business proof documents, such as invoices, purchase and logistics orders, lease agreements, contracts, etc.

Why is “Know Your Customer” (KYC) required for opening a company bank account?

KYC is a necessary step for banks to verify the customer's identity and examine the details in order to comply with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. It benefits both the bank and the customer by reducing the risk of fraud and illegal activities.

Minimum deposit requirement for business accounts

Each bank has its own minimum deposit requirements for opening a business account. In general, the monthly fee will be waived if the minimum balance is met, or a monthly fee of HK$150 to HK$200 will be charged. We’ve gathered below the requirements of several major traditional banks for your reference.

HSBC Hong Kong offers three types of business accounts:

• HSBC Sprint Account - Dedicated for startups, with a minimum initial deposit of HK$10,000. Service fee is waived for the first year, and account balance must be maintained at HK$50,000 or above from the 13th month onwards.

• HSBC Business Direct - Suitable for small and medium-sized enterprises (SMEs) that are just starting out and do not frequently visit the bank branch for banking transactions. The minimum initial deposit is HK$10,000, and the subsequent minimal balance is HK$100,000 or above.

• BusinessVantage - Also suitable for SMEs, with a minimum deposit of HK$500,000 or above.

Hang Seng Bank offers two types of business accounts:

• Biz Virtual+ Account - Suitable for startups and local SMEs. Service fee is waived for the first year, and the Total Relationship Balance must be HK$50,000 or above from the 13th month onwards

• Integrated Business Solutions Account - Suitable for stable growing businesses. The Total Relationship Balance requirement is HK$100,000 or above.

Bank of China (Hong Kong) offers three types of business accounts and fee waivers are offered for meeting the following conditions:

• Business Integrated Account - Elite: Total Relationship Balance of HK$1 million or above

• Business Integrated Account - Plus: Total Relationship Balance of HK$200,000 or above

• Business Integrated Account: Total Relationship Balance of HK$50,000 or above

*As of August 14, 2023. Information provided is for reference only. Please refer to the official bank websites for the most up-to-date details.

What business services are available for traditional bank and virtual bank business accounts?

Traditional business accounts offer comprehensive and diversified services, along with various account opening promotions. The services primarily include multiple currency exchange options, 24-hour instant foreign exchange (FX) services, fast cross-border remittances, and instant large payments and receipts. Some banks might even provide real-time financial information and transaction services along with other promotions for corporate cards.

On the other hand, virtual business accounts offer relatively limited services but might be more suitable for smaller-scale companies. Key services include real-time FX quoting and exchange, wire transfers, Faster Payment System (FPS) transfers, and small business loans.

Which bank offers the fastest business account opening? What are the fees for each bank?

In general, major traditional banks take one to three business days to complete the opening of a business account. For example, HSBC Hong Kong takes a minimum of three business days, Standard Chartered Hong Kong takes a minimum of two, and Hang Seng Bank takes a minimum of three to five.

The account opening fees for local business accounts at major traditional and virtual banks do not differ significantly, ranging from HK$1,200 to HK$1,300.

Why is it more difficult for startup companies to open an account? Some promotions and programs offered by local banks

Opening a business account usually requires proof of business operations and financial documents. It is challenging for banks to assess the credit risks for startups or SMEs with limited funding and a lack of credit history and financial data.

Nevertheless, with the proliferation of startups, some local banks (such as Standard Chartered Hong Kong, Hang Seng Bank, and Dah Sing Bank) offer several promotions and programs. These may include exemptions of below balance fee for specified months, waivers of monthly fees, expedited account opening, and FX offers.

Comparison between business accounts opened with Airwallex and banks

Banks usually have a minimum deposit requirement for opening a business account. Instant account setup isn’t available and it typically takes one to three business days to open an account. Additionally, there are various fees involved, including a substantial account opening fee and monthly service charges.

Airwallex, on the other hand, emphasizes no account opening fee or monthly fees, and there is no requirement on minimum deposit. Customers can easily sign up for a business account anywhere, anytime through our website, eliminating the need to wait in bank queues and go through complicated application procedures. Customer identity verification is typically completed within 24 hours, with a maximum time frame of three days for KYC.

Restrictions and considerations for opening a business account with Airwallex

Airwallex currently only offers corporate services and does not offer personal account services. Businesses such as investment companies, pharmaceutical companies, charitable organisations, etc., are also ineligible to apply for Airwallex account services.

What are the benefits of opening a business account with Airwallex?

The greatest advantage of opening a business account with Airwallex is cost saving. There are no account opening fees, monthly fees, or additional charges. There is also no minimum deposit or minimum transaction requirement. Furthermore, the account can be opened instantly, making it faster and more convenient compared to traditional banks and virtual banks.

The Airwallex Borderless Card simplifies business expense management by allowing your employees to upload receipts and reimburse expenses through the Airwallex mobile app.

For companies that require cross-border transfers, Airwallex allows for instant local currency accounts opening online, with over 30 currencies to choose from. 

Customers can make transfers to over 150 countries and regions with real-time rates as low as 0.2% above the Hong Kong Interbank Offered Rate (HIBOR). You can also receive payments directly in your local currency, making it convenient and simple.