From Hong Kong to Singapore: Incorporation Services with Spring Discounts!Explore Today!

an illustration of a book with a cover that says "Accounting Standards" with a Hong Kong symbol as the background.

Hong Kong’s accounting standards are straightforward and easy to follow as long as you do your due diligence and maintain an organised system of record keeping. Your financial statements should include 3 key elements, your sales and purchases, expenses, and business account statement.

Establishing a company in Hong Kong can elevate your business to new heights, capitalising on the numerous benefits this business-centric city offers, such as its unique and dynamic market and strategic geographical location. Hong Kong’s offers, along with its many other appealing attributes, make it the ideal choice for launching a new business or expanding your existing business.

However, one aspect that often escapes the attention of many entrepreneurs is accounting, primarily due to its complexity. Fortunately, Hong Kong's accounting system is straightforward and user-friendly, making it easy for you to maintain and report your financial records to the relevant authorities.

In this article, we will focus on an essential point mentioned in the Hong Kong Companies Ordinance, which points to the annual requirement for Hong Kong-based companies to compile their accounting records.

But before we carry on, let’s begin with a brief introduction to the accounting system in Hong Kong.

Which Accounting System Does Hong Kong Follow?

Although Hong Kong is part of Mainland China, they have different systems of accounting and taxes. As briefly mentioned above, stated in the Companies Ordinance, which is the law that rules over the obligations of Hong Kong-registered companies, this law requires that companies once a year, keep a record of their transactions and also send these records to be audited by a Certified Public Accountant (CPA). 

The authority that regulates the Financial Reporting Standards (FRS) and keeps them updated with the international standard is the  Hong Kong Institute of Certified Public Accountants (HKICPA). One of the significant changes in the standards was in 2005, when the framework was adapted to the International Financial Reporting Standards (IFRS).

For example, a newly registered Hong Kong company typically has a window of up to 18 months to initiate the preparation of its accounting records for its initial tax declaration. Nevertheless, in practice, the first declaration is based on the period from the date of incorporation to the conclusion of the financial year, commonly referred to as the fiscal year-end. Typically, the fiscal year-end date is determined by the company’s directors prior to the incorporation stage. Additionally, a company’s fiscal year must encompass a continuous 12-month operational period.

Now that we have covered the basics of accounting in standards and the law in Hong Kong let’s move on to what accounting records and audits are in the next section.

What Are the Accounting Records?

During a financial year, a company’s accounting records and transactions must align with the Hong Kong accounting standard. Let’s explore this point in more detail.

Accounting Records

As previously mentioned, it is imperative for a Hong Kong-based company to meticulously document all its financial transactions, encompassing purchases, sales, expenses, employee and director salaries, and accrued profits. Compliance with this legal requirement requires maintaining these records in an organised manner, a practice that can significantly influence a company’s ultimate success or failure. The resultant report derived from these accounting records is the Financial Statement.

Financial Statement

All of the company’s accounting records come together to form the Financial Statement report. This report will allow a person to understand the standing of a company in a defined lapse of time. This report consists of the Balance Sheet, the Income Statement, and the Statement of Cash Flow, which in turn reflect a company’s assets, losses, profitability, and expenses, as well as the flows of cash. 

It is advisable for people starting a business to learn the basic principles of accounting beforehand to keep a healthy record from the beginning as the business operations expand. But what can be included and counted in this record?

💡 Tips: Read this guide to find out more about filing your annual returns.

What Can Be Included in Your Financial Statements?

In the following section, we will outline, in a general way, the elements that can be recorded in the accounting of a company in Hong Kong:

  • Sales and Purchases: A company’s business transactions can be documented through the invoices it issues. For instance, this includes recording the acquisition of materials from suppliers or the purchase of finished products intended for resale to end customers.
  • Expenses: Hong Kong offers flexibility when justifying business expenses, known as cost accounting. This encompasses various expenses, such as office space rent, business trips, participation fees for trade shows, equipment procurement for employees, and machinery acquisitions for business operations. Additionally, costs related to hiring service providers, including accountants, auditors, and company secretaries, can fall within this category. Employee and director salaries are also categorized as expenses, encompassing remunerations paid to directors for their roles. For more information about payroll and payslips, please refer to the dedicated article.
  • Business Account Statement: every month, a business account summarises all the money transactions coming in and coming out. This supporting document helps to match the income that a company receives, and it is one of the best ways to corroborate your company records with your accountant or your provider for accounting services. These documents are issued either by a Bank, in the form of bank statements, or as an alternative to a Financial institution such as Statrys’s Platform. To learn more about how Statrys can help you open a business account, find the following link.

It is also important to mention that it is also mandatory by law to keep your accounting records at the designated business address of your company. This is known as company record keeping, which must be done sometimes for up to 7 years since the annual financial statements will serve as evidence and may be requested by the authorities from time to time to review the good standing of a company, such as the Hong Kong Inland Revenue Department (IRD). 

What Are Your Options for the Accounting of Your Company?

In this section, we will briefly mention some of the options available for Hong Kong Accounting services of your company.

  • Accounting software: Currently, many options and platforms offer a wide range of prices and perks that will adapt to almost all the needs of your business in Hong Kong. Some solutions even allow you to record expenses on a real-time basis.
  • Bookkeeping and accounting services: A more traditional option, although it might be a little more pricey, is to delegate the role of your accountant to an accounting firm based in Hong Kong. New companies with small operations take this option to learn how to record their operations. 


As we have explored in this article, compliance for Hong Kong companies is straightforward but should not be delayed. Initiating the preparation and maintaining organised records for all transactions is crucial to avoid encountering obstacles during the audit process. In the absence of necessary documents, the audit process cannot be completed. It’s essential to bear in mind that the final stage in the accounting process involves filing taxes for your company.

Moreover, it is highly recommended to engage the services of a professional accountant and an audit firm to provide guidance and assistance with this annual requirement, mainly if you are unfamiliar with the intricacies of accounting in Hong Kong.

A spring promo for company creation pricing of Statrys


What accounting standards are used in Hong Kong?

Hong Kong Financial Reporting Standards (HKFRSs) is the accounting standards used in Hong Kong. Some of the accounting standards used in Hong Kong are audits of companies, maintenance of financial records, and content of financial statements in Hong Kong.

What is HKAS Hong Kong Accounting Standards?


Who regulates accountants in Hong Kong?


Looking for a business account?