An accountant is a very popular profession in Hong Kong. There are a lot of relevant services offered in the Internet, but are they really worth paying for? This is a difficult question, and we cannot give a definitely positive answer.
On the one hand, external accounting services will simplify the business operations in Hong Kong and significantly reduce the risks associated with misunderstanding of corporate/financial legislation.
On the other hand, third-party accounting services will require additional expenses (although their cost is relatively low). Another problem is finding an accountant to whom you can entrust the financial affairs of the company/business. Many offers in the market come from low-skilled specialists, and their only advantage is a slightly lower price.
As a result, business people who understand that their company requires external accounting services face a difficult choice of finding a competent accountant or rather trying to manage the records on their own. Both options are certainly bad, and the second is no better than the first. The main problems are high qualification requirements for an accountant in Hong Kong, the corporate legislation that has its tricks, and significant risks of errors.
This is the reason why external accounting services in Hong Kong remain an area of corporate services that experiences a clear shortage of offers with good overall characteristics. But accounting in Hong Kong can be simple, relatively affordable, and profitable for even a small business. Read the article to find out how to get high-quality accounting services.
Reporting in Hong Kong – Basic Information
Accounting services allow a company/business in Hong Kong to simplify reporting. The corporate law does not make (third-party or in-house) accounting services mandatory, but there are no exceptions to the filing requirements. This applies equally to companies that do business in Hong Kong and those whose activities are concentrated abroad.
The most important aspects on the issue:
- Reporting form – a duly completed tax return signed by an authorized person.
- The accountant should also prepare the financial report and attach the audit opinion. In this regard, third-party accounting services (it remains unclear whether external audit is part of them) are mandatory for business in Hong Kong.
- Never save on accounting services! Remember that an unskilled accountant means an increased risk of mistakes, which are severely punished in Hong Kong. Therefore, a relatively low cost of services provided by a third-party accountant may eventually cost the company/business too much.
- Accounting services are controlled and regulated by an independent organization, HKICPA (Hong Kong Institute of Certified Public Accountants). HKICPA-approved standards are constantly being modified, so external accounting services require frequent monitoring of changes in Hong Kong corporate law.
Accounting Services in Hong Kong and Filing of Tax Returns
While planning a business in Hong Kong, remember that the company must submit the first statement no later than 18 months after registration. During this period, the regulator (IRD – Inland Revenue Department) will send a blank return form to the company’s address and explain the conditions for filing the tax return. A typical reporting period is 1 month, but your accountant will be able to take advantage of the 3 bonus months for the first time.
The most important aspects on the issue:
- When you order accounting services in Hong Kong, remember that you can choose the duration of the first reporting period yourself. The standard term is from 12 to 18 months, but it may be shorter if a number of conditions are met.
- The financial year in Hong Kong begins on April 1 and ends on March 31. But your accountant can specify other time frames (the main thing is for them to last for 12 months).
- One of the significant advantages of third-party accounting services in Hong Kong is an opportunity to discuss the scope of the financial year of the company/business with a competent expert. This will optimize reporting and simplify the work of a full-time accountant (if the position is available in the company).
Deadlines for filing tax returns (examples, a tax return and an audit opinion are mandatory):
- The reporting period lasts from April 1 to March 31 of the next year – the deadline is November 15.
- The reporting period lasts from January 1 to December 31 – the deadline is August 15 of the next year.
Our readers often ask to clarify this point while discussing external accounting services with our experts. You can get detailed targeted recommendations at a one-on-one consultation, so will just give a general example here. If the company was incorporated on April 15, 2021, it will receive the first declaration on October 15, 2022 (an 18-month period for new business in Hong Kong).
Then our expert (if you decide to order accounting services on our portal) will discuss the options with you and choose the reporting period. The standard (but not the only possible!) choice is the end of the calendar year, that is, December 31, 2022, and the final reporting period will last from April 15 to December 31, 2022. It will be shorter than the period specified in the law (12 months), so you will be offered an adjusted version – the period ending on April 31, 2023. In this case, the duration of the reporting period will exceed 12 months, but it will be less than the maximum allowed by law (18 months).
While planning accounting services in the future, you will need to focus on the selected period starting on May 1 and ending on April 30 of the next year. Therefore, your accountant (or our expert if you have ordered accounting services from us) will have to submit the following statements no later than December 15.
The accounting/financial statements are usually prepared once a year, immediately before the external audit in Hong Kong. But practice shows that it is better to make intermediate calculations more often, once a month or quarter, if the number of transactions is high. This will simplify the accountant’s work and reduce the total cost of service.
The company’s business documents required to prepare the statements (primary accounting documentation):
- All account statements
- All invoices (sale of goods/services, purchases, other expenses)
- Delivery slips
- Lease agreements, contracts and any other financial documents
High-quality accounting services in Hong Kong imply that other documents may be required to prepare the accounts. If the accounts are not kept in an orderly manner, the cost of accountant’s services and the timing of reports preparation will increase significantly!
Peculiarities of Company Accounting
“Manual” accounting services are now in little demand in Hong Kong. This means that automated accounting systems for real business will be much more profitable and efficient. The main reason is a significant reduction in the burden put on the accountant, a reduction in the cost of external accounting services and a minimized risk of errors.
But such systems are quite expensive, entail a long period of adaptation from the accountant and require taking into account all the peculiarities of doing business in Hong Kong. Therefore, we cannot recommend specialized software for independent use. But we would like to offer you a list of the obvious benefits of accounting systems that our experts use instead.
Optimal accounting services in Hong Kong, basic features:
- 24/7 access to information
- An extremely high level of protection for communication channels and processed data
- Accounting services with data transfer to any client device (not only in Hong Kong but anywhere in the world)
- Much simpler cost tracking that does not require special skills or abilities
- Simple conversion of paper receipts and invoices into the electronic format
- Transparent and simple invoicing
- Tracking of overdue invoices
- Typical and custom reports for all operations in real time
- Comparison of income and expenses for any reporting periods
- Advanced visualization tools
- Simple financial flow management. Comprehensive accounting services based on traditional methods are too expensive. The services of an external accountant using modern methods of work are much cheaper, and their cost is quite affordable even for those companies that are just starting their business in Hong Kong.
- Backup of information in automatic and manual modes
- You have full control over accounting services and the work of an external accountant, so you can make the necessary adjustments or discuss an urgent issue in real time whenever you need to.
What is the Cost of Accounting Services in Hong Kong?
The final price will depend on many factors. The greatest impact on the cost of our accountant’s work is the turnover of the company/business in Hong Kong, the number of transactions, competent realization and completeness of primary accounting and the time spent. In the table below, the cost of accounting services is indicated in the form of: a) a fixed amount; b) the amount for a certain number of transactions in the basic package with an additional payment for each additional transaction (*).
Basic pricing (you can find out more at an individual consultation):
| Turnover for the reporting period, USD | Number of transactions | Cost of service, USD |
| Up to 100,000 | 0 – 100 | 700 |
| 101 – 200 | 700 (100) + 6.5* | |
| 201 — 300 | 1350 (200) + 5.5* | |
| 301 and more | Upon request | |
| 100,001 – 250,000 | 0 – 100 | 900 |
| 101 — 200 | 900 (100) + 7* | |
| 201 — 300 | 1600 (200) + 6* | |
| 301 and more | Upon request | |
| 250,001 – 500,000 | 0 – 100 | 1100 |
| 101 — 200 | 1100 (100) + 7.5* | |
| 201 — 300 | 1850 (200) + 6.5* | |
| 301 and more | Upon request | |
| 500,001 – 1,000,000 | 0 – 100 | 1350 |
| 101 — 200 | 1350 (100) + 8* | |
| 201 — 300 | 2150 (200) + 7* | |
| 301 and more | Upon request | |
| 1,000,001 – 2,500,000 | 0 – 100 | 1600 |
| 101 — 200 | 1600 (100) + 8.5* | |
| 201 — 300 | 2450 (200) + 7.5* | |
| 301 and more | Upon request | |
| 2,500,001 – 5,000,000 | 0 – 100 | 1850 |
| 101 — 200 | 1850 (100) + 9* | |
| 201 — 300 | 2750 (200) + 8* | |
| 301 and more | Upon request | |
| 5,000,001 – 10,000,000 | 0 – 100 | 2100 |
| 101 — 200 | 2100 (100) + 9.5* | |
| 201 — 300 | 3050 (200) + 8.5* | |
| 301 and more | Upon request | |
| 10,000,001 – 20,000,000 | 0 – 100 | 2400 |
| 101 — 200 | 2400 (100) + 10* | |
| 201 — 300 | 3400 (200) + 9* | |
| 301 and more | Upon request | |
| 20,000,001 – 30,000,000 | 0 – 100 | 2700 |
| 101 — 200 | 2700 (100) + 11* | |
| 201 — 300 | 3800 (200) + 10* | |
| 301 and more | Upon request | |
| 30,000,001 – 50,000,000 | 0 – 100 | 3200 |
| 101 — 200 | 3200 (100) + 12* | |
| 201 — 300 | 4400 (200) + 11* | |
| 301 and more | Upon request | |
| 50,000,001 and more | Upon request |
Please note that these rates are not final. The ultimate cost of accounting services is determined after we review the company documents you provide.
While planning accounting services in Hong Kong on a turnkey basis, remember that the report must include all transactions (banking/non-banking, commercial/any other). The latter include bank fees, accrued interest, unpaid expense invoices received from suppliers, unpaid invoices sent to customers.
Conclusions and Recommendations
Accounting services in Hong Kong are greatly simplified for businesses as the tax structure and tax returns filing system are among the most transparent and simple ones. But an understandable and justified desire to reduce the cost of the accountant’s services should not push you to do all the accounting on your own. Such an approach is costly and time-consuming, and may result in unintentional mistakes which are severely punished in Hong Kong.Therefore, we strongly recommend that you assign the record-keeping and all accounting services to experienced experts of the International Wealth portal. We have been working with Hong Kong for many years and have an excellent understanding of its financial, corporate and tax laws. And the time and money you will save with us can be spent with much more benefit. We are waiting for your questions at info@offshore-pro.info
How long do I need to keep the documents which confirm the company’s operations in Hong Kong?
Of course, you cannot get rid of the documents confirming the activities of the Hong Kong company after you have prepared and submitted the tax returns. All primary documents will be needed during the audit, and they may also come in useful in the future if the Hong Kong Inland Revenue Service decides to arrange a company audit. Companies that apply for tax-free status are audited most often. Therefore, all documents must be kept for at least 7 years.
What fines are imposed for delaying the company’s reporting in Hong Kong?
If the Hong Kong company is more than one month late in filing and this is the first time this has happened, the fine starts from USD 155. If the term of delay exceeds one month and this is not the first time, the penalty will be significantly higher (from 1,300 US dollars). The preparation of financial statements may take several months. Therefore, if you have a lot of transactions, it makes sense to prepare reports on a quarterly or even monthly basis rather than once a year before the audit in order not to delay submission of statements and avoid fines.
