Keeping proper bookkeeping

Now that you have set up your company and are all ready to begin the operations, do you know how to properly maintain the bookkeeping in Hong Kong for your business? Bookkeeping and accountancy is crucial for business management and planning as well as for the tax filing period with the Hong Kong tax department. It doesn’t matter if your business is still a start-up or has been running for years now; you may still need someone to assist you the bookkeeping of your business.

This is to help you meet your financial reporting requirements timely, have a record of all the money coming in and out of the business, reducing the risks of fraud and wrongdoings in the business, follow modern accounting standards and manage your business performance efficiently.

What is bookkeeping and why is it important?

Bookkeeping is the complete recording and organizing of financial transactions in a company. These business records are usually done day-to-day, but can also be done at the end of the month after all the transactions and documents are gathered. Most would gather all their sales receipts, expenses and bank statements, and organize a breakdown to put into the company’s books. Bookkeeping in Hong Kong makes sure that all the records of the individual financial transactions are complete, up-to-date, and correct. This makes sure the books are accurately done.

Moreover, through bookkeeping, the information for the accounts that is used for the filing of the annual return are prepared, and the bookkeeping is recorded when the accounts are prepared. A bookkeeper only keeps all the records of the business, while the accountant would give advice on the records and also fill the tax returns and other necessary forms.

Bookkeeping is the record-keeping of business transactions into a business’s books. Until recently, bookkeepers were a detail-oriented profession, and bookkeeping was only performed by specialists. While bookkeeping does not require an Accounting degree, we typically recommend that you employ the services of a bookkeeping company for the greatest accuracy. An accountant uses the books that were maintained by the bookkeeper and produces an overview of the company’s financial condition.

Why a Hong Kong Professional Accountant?

In most of the businesses, it is the Hong Kong professional accountant who usually advises about the structure of the company. They advise on providing the most effective tax plan for a company to more complicated cases as in the consolidated accounts for the transactions between the subsidiary and the parent corporation. Along with this, they also advise on the accounting procedures and controls for the financial statements that is out of the scope of simple accounting software or the normal bookkeepers.

We would suggest to find a truly professional accountant with a keen eye on details, as the lower accountants will not give you the best advice or the needed time to properly prepare your accounts. Don’t expect high quality if you’re not willing to hire a proper accountant. Unfortunately, many accountants will not give a lot of their time to those that are not worth it.

Therefore, when you seek out an account to help you with your company’s books, there may be some signs to consider when they ask about accounts. Do they try to understand the business, or only look at the numbers? Is their quotation based off the number of transactions or the total revenue? Will they provide you the profit and loss statement, balance sheet, trial balance and general ledger? Will they conduct the accounts properly or only do cash basis accounting from the bank statement? Are your accounts prepared as a net loss when you know your company has been profitable?

These, along with many other questions, should be considered when finding a good accountant for your company.

Why is bookkeeping in Hong Kong vital?

It is vital for you to keep the adequate records of the company that is required by the IRD where the documents can be in both Chinese and English. This requirement is a must since it would enable the assessable profits to be readily accessible by the tax department without any hassle.

Other than this, the records have to be retained for seven years from the date of the transaction. Failing to keep adequate records is an offense, which can lead to penalties.

Along with this, there are many other reasons why bookkeeping in Hong Kong is vital. Here are a few of them:

• Accurate records enable you to be in better control of your company.
• Losses and theft in your company might be detected easily.
• The compliance costs become less for you.
• The costs of an IRD audit for you are reduced if all of the necessary documents are readily available, where you would not need to pay extra for extra time spent by the Hong Kong professional accountant.
• Appropriate records allow you to file an accurate profits tax return.
• You eventually would be able to portray a much more professional image that makes it easier to deal with your bank or other investors.

Some Flawless Ideas for Bookkeeping in Hong Kong

The business records that have to be kept in the company’s office include the documents which show a record of the company’s business transactions, or any report that helps with tracing the transactions and confirming this through the accounting system. As per the advice of a Hong Kong professional accountant, these include the cheques, banking records, cash register tapes, receipts, and invoices. Efficient bookkeeping would save you money as well as time in the long run.

Below are some tips that would help to improve the bookkeeping efficiency:

• Do not leave things until the last minute.
• Always search for new ways to enhance your bookkeeping in Hong Kong.
• Keep your ledgers in a well-organized way as you would be able to work faster only if you can comfortably access the data you need.
• Keep your bookkeeping in up-to-date.
• Make bookkeeping a part of your daily routine, and once you have set a routine, you would notice that you operate through your books quickier.

Records That Need to be Kept by All the Businesses

It is vital to keep adequate amounts of records so that you can enable the assessable profits of your business to be immediately determined. So, for this calculations, the business records that have to be a part of your company’s bookkeeping in Hong Kong are:

• A day by day record of all the sums of money expended and received by your business, profession, or trade together with supporting details or documents of the payments or receipts.
• A record of the liabilities and assets of your business.
• The underlying documentation required to validate the entries in the ledgers of account, like the receipts, invoices, bank statements, vouchers, and other relevant papers.
• The bookkeeping in Hong Kong of account recording payments and receipts, or expenditure and income.

Additional Records – For the Businesses

Businesses, professions, and trades have to keep a ledger with the records of all the services with the sufficient details.It is vital to keep a record of each and every provided service. The sums charged and paid for them have to be traceable via the ledgers of account to the statement of profit and loss. And if you are not sure about the details to add in, you can hire a Hong Kong professional accountant to record all the particulars of all products sold and all products purchased.

Copies of the receipts for the transactions have to show the products, about the sellers and buyers, in adequate detail to allow the IRD to identify them. You would need to show the identity of the buyers and sellers and quality & values of the goods (shown on the invoice). If the relevant details are either not clear or absent from the invoice, you would need to include this information. You may need to also show the shipping information for goods, to show from where the goods were shipped and delivered (important for profits exemptions claims).

For cash-heavy retail businesses in Hong Kong, strict bookkeeping is crucial but often challenging. Without diligent record-keeping, you could easily lose track of buyer and seller details. We strongly advise meticulous daily record-keeping, including all cash inflows and outflows. Even if bank statements appear balanced, your internal books might show discrepancies (e.g., selling twice what you bought!). Therefore, exercise extreme caution with accounts for cash-based companies.

Keeping proper company books

And you know a lot about the services of bookkeeping in Hong Kong, but are you clear about what a book is here? There aren’t just one record that has to be kept when you start a business in Hong Kong or any other country and not all the files of the documents are called book. Only the ledger that describes the movement of value into and out of your company is called “books”.

The reason the word value has been used is as it is not always about tracking the money, but since the underlying bookkeeping in Hong Kong is for the records of the money, we would be talking about that here.

What are BOOKS in the bookkeeping in Hong Kong?

“Books” can vary for each business. Some use physical ledgers, others rely on Excel, and some integrate various accounting systems. Hong Kong imposes no specific format for recording. You have flexibility to choose between written or digital records.

Each ledger entry should include the source and destination of funds, a date, description, and amount. Your company’s ledger is more complex than a simple checkbook or bank statement, which highlights the importance of a professional Hong Kong accountant.

Double-entry Bookkeeping in Hong Kong

Many businesses use double-entry bookkeeping, where the company keeps multiple logical ledgers, each representing an account of the company. “Accounts” here could resemble certain bank accounts or something that is valuable to think about, but it does not have a physical place of its own, for example, the revenue of the business. Double-entry bookkeeping in Hong Kong has every transaction recorded twice where it is as a credit to one account and a debit to the other.

This method was something that was used a lot and a revolutionary technology in the 1400s since it reduces the errors as compared to when the records are just kept once. And since these days, computers are taking care of most of the work; the owner can leave these troubles and focus more on making the right decisions about the results from the bookkeeping or the accounting processes.

How to Keep your Records

There are two methods that have been shared above, but would be described here in details. They are:

• The computer method: The modern way of keeping records is by utilizing a computer for it. Regardless of the business size and the type, using a system for bookkeeping in Hong Kong would simplify and even improve the record keeping. The reasons are that it can be saved online and also edited as and when needed. Moreover, there would be fewer chances for errors and wrongdoings.
• The paper-based method: This is the method that has been in working for ages, where all the invoices for sales and purchases, bank statements, copies of your bank deposit slips, as well as all your cheques are kept in paper form. These are then noted in the cash book where you would need to make sure, in this case, that the records are legible and in a well-organised manner.

Ways to simplify bookkeeping

Below are some tips that can help you perform the bookkeeping in Hong Kong properly under the following categories:

Revenue

For keeping a right track on the revenue and have the best-recorded bookkeeping in Hong Kong, open a business bank account which is anyways a must for the business and make sure that all the revenue is deposited in that account only. With this, you would be able to scan the deposits quickly and properly of the deposits into the business.

Non-revenue deposits

Money seldom moves into companies for reasons that are other than “a customer paid it to you.” Notable examples include entrepreneurs lending money to the business, investment, etc. All these transactions have to be kept as infrequent as possible, and they need to be documented appropriately too.

Expenses

Issue a credit card or a small number of credit cards under either the business name or your name, which you would be able to obtain after the business is running and not during the early life of the company. You can then use the credit card for all the business expenses for keeping track of the payments too. Also, remember to never purchase any personal items with the business credit cards. However, mark personal transactions clearly and inform your accountant when you complete your accounts.

In short, it is better to avoid the mix up business and personal payments in one account, where you might make a purchase that is on Amazon for the business and even for your personal needs in it. It is better to make the purchase separately, even though you might need to pay a little more. Otherwise, the bookkeeping in Hong Kong that you are doing would mess up all the books and the annual return eventually. You could be overpaying taxes for some personal deposits or currency transfers in your accounts.

Also, make sure all your business expenses are with the credit card or most of them so that you do not have troubles searching for other proofs for the methods that you spend cash for the business.

Popular accounting software

Now we get to the part where you can organize the accounts on your own, along with the bookkeeping in Hong Kong for the company. Software have taken up most of the work a person does that is needed in a business and it has helped many concentrate on much more important things rather than on the small issues of the business.

The choices below were chosen, keeping in mind the features like those that are easy to use, affordable, timesaving features like – reconciliation, financial reports, expense reports, bill payment, invoicing, and automated entries. Moreover, these are more like the cloud-based software that would sync with the bank accounts and point of sale (POS) systems.

This would allow you to perform more advanced tasks like accepting payments and even running financial reports. Here are some accounting software selected according to how you can use them as well:

Note: Prices and informations for the accounting software may vary due to promotions or price changes by the providers.

Best Small Business Accounting Software: QuickBooks Online

The software Intuit QuickBooks Online awards a range of features for every kind of small businesses for both the services of accounting and the bookkeeping in Hong Kong. Even though you are just starting out, expanding, or already have an established company, QuickBooks Online is packed with the essential and advanced features to meet your accounting needs instead of hiring a Hong Kong professional Accountant.

You can try out the software online with a 30-days trial to check if it matches your needs and offers the right services that you need. Each has its own features as per the package and payment where you can choose as per your company’s needs. This software dominates the US market and leads the industry in accounting.

Best Accounting Software for Mac: Xero

This is an excellent choice for those who use the Mac system, since there are many complaints of Mac users of a stripped down or a less intuitive software as compared to the Windows. Xero’s cloud-based accounting software is for both the Mac users as well as the Windows users, which has a complete set of features and is easy to use as well. This software would be able to help you in saving time and to simplify the accounting by integrating it with about 500 more apps and automating tasks.

Best Micro Business Accounting Software: Zoho Books

Small businesses need a simple accounting software if they are not going to hire a Hong Kong professional accountant for the tasks. Zoho Books provides all of the fundamental features that any micro-business needs as well as the advanced tools that would help your business grow better. Other than this, the pricing in Zoho Books is impressive for all the capabilities that it has.

Best Mobile App for Small Business Accounting: FreshBooks

Almost all the accounting software has the mobile applications as well, but not all of them are equally great. In this case, FreshBooks overcomes all due to its ease of use, excellent customer service, and for providing all of the features any small business needs to handle their finances on the go.

Best Free Small Business Accounting Software: Wave Accounting

Now that we’ve covered the paid options, we’ll present a great free cloud software. Since not all the businesses need the long list of accounting services that the other software has to offer, Wave Accounting has got the limited number of features for free, that a businesses that have just started can use.

Another great thing about this is that, unlike the other software that limits capabilities, Wave Accounting gives a comprehensive set of accounting features without the monthly price tag.

When to seek a professional accountant, choose Startupregistry

Bookkeeping in Hong Kong requires careful concentration. Through the books, you can measure the pulse of a company, and proper bookkeeping in Hong Kong expands past necessary cash expenses. While accounting software works for initial business needs, complexities arise during transition. Small businesses and startups might adjust easily at first. However, established companies must hire a professional Hong Kong accountant for their services.

Companies need a professional Hong Kong accountant because errors can occur and remain unnoticed until annual tax filings. Some companies may even submit incorrect returns unknowingly. Accounting software also cannot help with crucial issues like possible tax allowances, deductions, tax return filing, or overall account advice.

Also, if you are about to choose a Hong Kong professional accountant, make sure you select the right one who has enough of experience. You can take the help of your agency that is assisting you as your company secretary in Hong Kong.

Optimize Your Startup’s Growth: Essential Bookkeeping in Hong Kong

Whether you are a start-up, an established small or medium-sized enterprise, or a multinational group, the service of bookkeeping in Hong Kong is needed in each and every business. One main reason is that you would need those records for the annual return filing, and the other reason is that it is better to have a record so that you can avoid any errors, fraud, or wrongdoings in your business.

Hiring a Hong Kong professional accountant would allow you to enjoy comprehensive services that include arranging businesses and operations in a tax effective manner to bring down your efficient global tax rate, satisfy international tax compliance responsibilities and moderate taxation risks. Hence, it is better to grow your business with the right bookkeeping in Hong Kong.

Last update: May 2025