How to do your Company's Accounting in Hong Kong

When establishing a business in Hong Kong, it is essential to note that the Inland Revenue Department (IRD) mandates that your Hong Kong company maintains proper accounting records and business documents. Accounting documents must be presented in either English or Chinese.

According to Section 80(1A) of the Inland Revenue Ordinance, failing to maintain proper accounting records constitutes a criminal offense, punishable by a fine of up to HKD 100,000 and possible imprisonment for the director.

In addition to avoid a court conviction, maintaining organized accounting records and business documents is beneficial for your business. Conducting business in a professional manner facilitates negotiations with banks for lines of credit or loans and also helps in the application for tax exemptions in Hong Kong.

To assist you, the following is a list of the obligations and documents required to maintain your accounting records in accordance with Inland Revenue Department (IRD) guidelines: 

•  Accounting with the recording of receipts and payments, or income and expenses;

•  Bank statements;

•  Receipt/deposit notices;

•  Payment receipts for payments and withdrawals;

•  Complete set of original business documents, including:

                                   I.  Bill of Lading

                                   II. Commercial invoice and packing list issued by your company.

                                   III. Commercial invoice and packing list issued by the supplier.

All documents must be duly signed and stamped by the company or supplier. Commercial invoices are required to include the seller and buyer information, descriptions of the products sold, as well as the corresponding quantities and values.

•  Original invoices for expenses, such as travel agent, electricity bill, consulting and so on.

•   List of debtors and creditors.

•   Inventory, if your company has one.

A copy of the original is also accepted for the above documents.

If your company is a service provider, the above list is the same, with the exception of the Bill of Lading, packing list and inventory.

Finally, it is essential to retain these records for a minimum of seven years following the date of the transactions. Even after the closure of your company, you are required to maintain these documents and records for a period of seven years.

Brasia offers accounting and auditing services in Hong Kong, with the knowledge and experience necessary to manage your company's records effectively.

For further information, please contact us at info@brasia.hk.