Accounting Services

All Hong Kong companies are required to maintain proper bookkeeping and accounting records in accordance with the requirements of the Hong Kong Companies Ordinance and Inland Revenue Ordinance so as to enable assessable profits to be readily ascertained.

It is an offence not to keep adequate records and all records must be retained for seven years from the transaction date. Any failure to comply with the requirements of the Ordinance without reasonable excuse may be liable to a maximum fine of HK$100,000.

There are many other reasons to keep accurate business records, including the ability to:

  • Offer enhanced levels of business control by assisting with financial planning and decision-making;
  • Demonstrate professionalism to existing or potential partners, suppliers, investors and banks;
  • File accurate and timely profits tax returns;
  • Reduce compliance and audit costs if all necessary records are readily available.

Sovereign provides a highly competitive accounts service that ensures companies stay in compliance with all requirements, leaving its clients free to focus on the core areas of their business.

  • Bookkeeping and Accounting – Limited companies in Hong Kong are required to prepare their financial statements in accordance with Hong Kong Financial Reporting Standard (HKFRS). Private companies in Hong Kong have an option to use either HKFRS for Private Entities or the Small and Medium-sized Entity Financial Reporting Framework (SME-FRF) as a financial reporting option if they satisfy the criteria set out in each reporting framework. Companies can use any date as their financial year-end and use any currency to prepare their financial statements.
  • Hong Kong Corporate Tax Filings – Companies must submit Profits Returns to the Inland Revenue Department (IRD) on request. The deadline to submit audited accounts is dependent on the Profits Return issue date and financial year-end. Tax is chargeable on the assessable profits for each year of assessment. Provisional tax would usually be charged based on last year’s figures. When the assessable profits for the year of assessment are subsequently ascertained, an assessment will be made and the provisional profits tax paid will be utilized to offset the tax liability under the assessment.
  • Audit – Every company registered in Hong Kong (except dormant companies) must have its financial accounts audited annually by auditors registered under the Professional Accountants Ordinance (PAO). Auditors conduct their work in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (HKICPA).
  • For newly incorporated private companies, the first set of audited accounts should be submitted to shareholders at the AGM within nine months (six months for other companies) after its financial year-end. Subsequent AGMs should be held not more than 15 months apart. There is no mandatory year-end date for Hong Kong companies, but 31 March and 31 December are the more common ones.
  • Drafting of Auditor’s and Directors’ Report – Companies are required to submit both an Independent Auditor’s and a Directors’ Report as part of their annual filing requirements if the companies are not considered to be a small corporation. The 2014 Companies Ordinance introduced a requirement for a business review, including more analytical and forward-looking information, to be included in the directors’ report for all companies not falling under the reporting exemption. Non-exempt private companies can opt out of the requirement by a special resolution of members.