One way to succeed in this fast-paced business environment is maintaining accurate and up-to-date financial records. Professional accounting and bookkeeping services provide businesses with the expertise and tools needed to manage their finances efficiently, ensure compliance with tax regulations, and make informed decisions. Any business scale, from small and medium sized business to an established company, requires accounting and bookkeeping for peace of mind. Outsourcing them allows you to focus on what matters most, which is growing your business.
Why accounting is needed in business in Hong Kong?
Accounting is essential for businesses in Hong Kong for several key reasons. Under the Hong Kong Companies Ordinance, all businesses are legally required to prepare annual financial statements because they are crucial for auditing and tax filing. To file Profits Tax Returns with the Inland Revenue Department (IRD), businesses must submit audited financial statements. Without proper accounting, it's impossible to calculate taxable income correctly or comply with Hong Kong's tax regulations.
Why choose accounting services?
Choosing professional accounting services offers peace of mind and strategic support for your business. With expert accountants handling your books, you can ensure accuracy and compliance with tax laws. This reduces costly errors and helps you focus on growing your business rather than managing paperwork.
Professional accounting services also provide access to financial insights and forecasts that support your decision-making. Accounting services are not just a cost, but an investment in the stability and future growth of your business.
What is the difference between accounting and bookkeeping?
Bookkeeping and accounting are closely related, but they serve different purposes in managing a business's finances. Bookkeeping involves the day-to-day recording of all financial transactions such as sales, purchases, receipts, payments, invoices, and expenses. The bookkeeping needs to keep accurate and up-to-date to record any business's financial activities.
Do Small Businesses Need Auditing? Top Frequently Asked Questions Answered
Accounting takes the information from bookkeeping and analysis plus summarizes it to provide financial statements, tax calculations and filings, budget forecasts, financial analysis, and business performance reports. Accounting is needed by business owners and stakeholders to make informed decisions, ensure regulatory compliance, and plan for growth.
How often should bookkeeping records be updated?
Bookkeeping records should be updated daily or weekly, depending on the business size and activity level. For businesses with high transaction volumes, updating records daily helps avoid errors and keeps cash flow visible in real time. Most small to medium-sized businesses still use weekly updates to track their income, expenses, and reconciling bank statements. At minimum, all businesses should review and reconcile their books monthly to ensure financial accuracy and prepare for taxes.
How do bookkeeping services help with tax filing?
If bookkeepers can create detailed and up-to-date records of all financial transactions, that will form the foundation of accurate tax reporting. Proper bookkeeping ensuring all transactions are recorded, reducing the risk of errors or missed deductions that could cost you money. Once you have organized books, preparing financial statements and tax documents will be quicker and stress-free during tax season. If you have accountants and bookkeepers, you don't need to be confused about calculating tax liabilities, file returns, plus you will get tax-saving advice without wasting time tracking down missing records.
When does the accounting period end for tax filing purposes?
Your accounting period end in Hong Kong is flexible. This period is determined by your company and aligns with your financial reporting cycle. You can choose an accounting year end, for example, December 31 or March 31. This period covers 12 months and forms the basis for your tax assessment. Choosing December 31 is convenient because it coincides with the end of the year. Choosing March 31 aligns with the Hong Kong government's fiscal year.
The Inland Revenue Department (IRD) issues the Profits Tax Return (PTR) annually in April, and the filing deadline follows the end of your accounting year. Newly registered companies submit their first tax return approximately 18 months after incorporation. The first accounting period can be longer than 12 months, but not more than 18 months.
What documents are required to be submitted with the corporate tax return?
The IRD requires specific supporting documents to ensure that your company's financial information is accurate and compliant. The official tax form is issued by the IRD depending on your company type (BIR51, BIR52 or BIR54). Audited financial statements are mandatory for all limited companies incorporated in Hong Kong, and specifically for larger companies, they must prepare a cash flow statement. A detailed calculation of your assessable profits or losses is required including adjustments for non-deductible expenses, depreciation allowances, and if you have any tax loss carried forward.
What happens if a business is not compliant in Hong Kong?
Non-compliance with accounting, tax, and regulatory requirements can lead to serious legal and financial consequences. The IRD can impose penalties for late filing of PTR up to HKD 10,000 and daily penalties for continued non-compliance. Under the Companies Ordinance, if a business fails to keep proper accounting records, they will be subject to fines up to HKD 100,000.
In serious cases, if there is tax evasion or fraud, directors and responsible officers may face criminal charges, court prosecution, and imprisonment. Stay away from these things, and make sure you have professional bookkeepers and accountants to file PTR and Annual Returns on time. Stay updated on Hong Kong compliance regulations for peace in mind.
Where to get accounting & bookkeeping services in Hong Kong?
SMEBrother is the best answer for accounting & bookkeeping services in Hong Kong.
Why choose us? SMEBrother ideal partner for SMEs in Hong Kong, specializes in services catered to SMEs, offering comprehensive solutions from day-to-day bookkeeping to full accounting like tax filing and financial reports. Our time is familiar with the Hong Kong Companies Ordinance and IRD rules, making your business stay compliant.
SMEBro will be a one-stop solution for SMEs looking for company secretary services, audit coordination, business registration and compliance, etc. No need to deal with multiple providers, just come to us and we will do all of your SME needs!
