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Having a Hong Kong company can help your business to grow with the multiple advantages that the business-oriented city offers, with its unique and dynamic market and geographical position. This is why, and with its many other attractive features, Hong Kong is the right spot to start a business or expand your business plan.

However, the financial accounting aspect of having a company is something that is constantly forgotten by business people and entrepreneurs alike for being unfamiliar with the topic. Nevertheless, the simplicity of the system of Hong Kong will allow you to report the records to the authorities easily. 

In this article, we will focus on an essential point mentioned in the Hong Kong Companies Ordinance, which establishes that, once a year, it is mandatory for companies established in Hong Kong to prepare their accounting records. 

But before we carry on, let's go through a quick introduction to the accounting system in Hong Kong.

What 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 keep a record of their transactions, and prepare a statutory audit report 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 major changes in the standards was in 2005 when the framework was adapted to the International Financial Reporting Standards (IFRS).

A newly registered Hong Kong company will receive its first profit tax return 18 months from the date of incorporation. In this first declaration, the report can comprehend 18 months of operation, this is an exception, as the following fiscal years must comprise 12 months of operation only. Normally, the year-end date is decided by the directors of a company before the incorporation phase. If you don't already have a registered company in Hong Kong, we have a Hong Kong company registration service to help you get started.

Now that we have covered the basics of the topic 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, the accounting records and transactions of a company must be in line with the Hong Kong accounting standard. Let's explore this point in more detail.

Accounting Records

As we have discussed, a company in Hong Kong must keep all the records of the transactions that a company engages in such as purchases, sales, expenses, salaries to employees and directors, and profits made. Since it's mandatory by law, keeping these records in an orderly way can prove to be a determining factor in the success or failure of a company. The name of the report generated from the accounting records is the Financial Statement.

Financial Statement

All the accounting records of a company 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 the assets of a company, the losses, the profitability, the 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?

Statrys mobile application dashboard showing a total balance in a business account.

What can be included in your Financial Statements?

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

  • Sales and Purchases: the business activity of a company can be recorded by the invoices issued. For example, when they purchase materials from a supplier, or they buy a finished product to sell to a final customer. 
  • Expenses: Hong Kong offers flexibility when justifying business expenses, known as cost accounting. For example, the rent of office space, trips or business fairs, entrance fees, and purchasing equipment for employees or machinery for business operations. Other expenses such as hiring service providers such as accountants, auditors, and company secretaries can be included in this category. The salaries paid to employees and directors can be counted as an expense, and it also includes fees paid to directors for occupying this role. See the following article to learn more about the payroll and payslips of your Hong Kong company.
  • Business Account Statement: every month, a business account provides a summary of 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. Know more about how Statrys can help you to open a business account.

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 what 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. This is the option that new companies with small operations take to learn how to record their operations. 


As we have analyzed in this article, the accounting process for Hong Kong companies is simple, but it should not be left for the last moment. It is important to start preparing and keeping all the documents and transactions organized. It is important to not forget that the ultimate step in the accounting process is to do the tax filing of your company. Furthermore, it is advisable to approach a professional accountant and audit firm to help and guide you with this annual requirement, especially if you are unfamiliar with the process of accounting in Hong Kong.

Statrys mobile application dashboard showing a total balance in a business account.


Is the accounting and tax system in Hong Kong the same as that of Mainland China?

No, Hong Kong adheres to its own standard called the Hong Kong Financial Reporting Standards (HKFRS).

When will a newly registered Hong Kong company receive its first profit tax return?


Who regulates the Financial Reporting Standards (FRS) in Hong Kong?


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