B. Location of business premises, licences, documents of guarantee and human resources matters
In deciding whether to lease or buy office or retail premises for your business, you should consider the cash or credit that is available and the potential return on the investment. Note that for taxation purposes, any rent that is paid to lease a premises, or the capital costs that are incurred in purchasing, maintaining and repairing a premises can be deducted from the income of the business.
If the business premises are leased, then attention should be paid to the following:
- Whether the rent is fixed or based on a percentage of sales (also called "turnover rent", which means that the rent will be calculated at a specified percentage of the sales turnover).
- Whether the tenant has the right to sublet if the business is to be downsized or closed down (thereby minimising the financial loss involved).
- Whether there is any option to renew the lease and how any rent increase is to be determined.
- Whether there are any restrictions on the use of the premises.
- Whether there is any right of access to shared facilities.
The advice of a lawyer should be sought in relation to these matters. Please also refer to the Landlord and Tenant topic for basic information about tenancy law.
You must also take out appropriate insurance against occupiers' liability. The Occupiers' Liability Ordinance imposes a duty of care on you (as the owner or occupier of the premises) in relation to injuries to any visitors, including guests, workmen, and people who deliver goods to your premises.
- Do I have to obtain a licence(s) from the Government for my business?
- Are there any legal stipulations about human resources management that apply to running a business in Hong Kong?
- What are "personal guarantees" and "bank guarantees"? When will I be required to provide these documents to other parties in business transactions?