Bookkeeping Basics for Small Businesses in Hong Kong [2025]

Many founders think about bookkeeping when it’s too late, especially when tax season arrives.

Setting up proper bookkeeping from the start makes everything easier, and maintaining good records isn’t optional. It’s required by law.

In this guide, you’ll learn the essentials of bookkeeping for small businesses in Hong Kong, including:

✅ The basics and legal requirements of bookkeeping in Hong Kong

✅ How to set up bookkeeping for your business

✅ Practical tips for managing records when dealing with multiple currencies

Let’s get started.

Bookkeeping is the process of recording all financial transactions in your business, from payments to suppliers and customer invoices to payroll and bank transfers.

Bookkeeping helps you track where your money comes from and where it goes. These daily records form the basis of your financial reports and tax filings.

Maintaining accurate and up-to-date records is part of your legal duty as a business owner.

Hong Kong law requires that all accounting records be kept in either English or Chinese. These records must be detailed enough for the Inland Revenue Department (IRD) to confirm your company’s assessable profits.

You need to keep books of account and the source of documents. Below are the main documents to maintain.

The IRD allows these records to be stored in electronic form, such as scanned images or files on a secure system, provided that they remain accurate, unaltered, legible, and retrievable for at least 7 years. Unless your company is officially dormant, you must also prepare audited financial statements every year.

Here’s how to set things up properly from the start.

When client payments and personal expenses are mixed in the same account, bookkeeping becomes like detective work.

A dedicated business account gives you clean, trackable transactions. You’ll know exactly what belongs to the business and what doesn’t.

If you pay suppliers abroad or get paid in multiple currencies, a multi-currency business account, such as Statrys, helps you manage different currencies and record transactions more accurately.

Many founders only call an accountant when tax season hits, usually when something’s already off. Getting professional input at the start is cheaper and less stressful.

A Hong Kong-based accountant can:

• Help you choose the right bookkeeping software.
• Set up your chart of accounts.
• Make sure your setup is ready for future audits and growth

Before you start recording transactions, decide how you’ll enter and track them.

Entry systems

• Single-entry: Records each transaction once, either as income or expense. It’s simple but only works for very small or cash-based businesses.
• Double-entry: Records every transaction twice, as a debit and a credit. This keeps your books balanced and is required for preparing full financial statements.

Accounting methods

• Cash basis: Records income and expenses when money changes hands.
• Accrual basis: Records income when earned and expenses when incurred, even if the cash hasn’t moved yet. This method is preferred by accountants and better reflects your true financial position.

You can keep records in a physical book, a spreadsheet, or a cloud-based tool.

In practice, modern options are popular because they save time (bank feeds and automation), organise documents in one place, and provide secure backups that help you keep records accessible for the required seven years.

If you record once a month, by then, memory fades, and receipts are missing.

Recording transactions daily keeps your books reliable. Log each sale, payment, and expense as it happens, and attach receipts or invoices to each entry.

At the end of each month, take a few minutes to compare your books and your account balance. It helps you spot any problems early.

You might see unpaid invoices or unlogged expenses before audit and tax seasons. If you use software, most of this work happens automatically.

Before year-end, schedule a quick review with your accountant. They can check for mistakes, make adjustments and confirm that your books align with local standards.

They might also spot trends in your numbers, such as rising costs or late payments, that help you make better business decisions.

If you’re doing business in Hong Kong, chances are you deal with more than one currency.

Maybe you pay suppliers in CNY, get paid in USD and manage payroll in HKD. That mix is part of what makes Hong Kong a great place to do business, but it also means your bookkeeping needs a closer eye.

Here are a few practical tips to stay organised.

• Get paid and pay in the same currency when possible: It keeps things simple and helps you avoid extra conversion costs. Holding balances in USD or CNH can make payments faster and reconciliation easier.
• Record transactions in both currencies: Always record the original currency and its HKD equivalent. Most accounting software does this automatically, keeping your reports consistent for audit and tax purposes.
• Update exchange rates regularly: Exchange rates move constantly. Revalue your foreign balances at the end of each month so your HKD figures stay accurate.
• Keep proof of the exchange rate you used: Save your bank statement or payment record showing the conversion rate. If the IRD ever reviews your accounts, you’ll have everything ready.

Good bookkeeping keeps your business on track. With clear records, you’ll know where your money goes, make better decisions, and stay ready for tax season.

With a Statrys business account, you can pay and get paid in 11 major currencies, track expenses, and sync your transactions with Xero to keep your books organised from the start.