All Hong Kong incorporated and registered entities are required, under the provisions of the Hong Kong Companies Ordinance, to maintain proper records and books of accounts and to comply with statutory audit requirements on an annual basis. Hong Kong has adopted the Hong Kong Financial Reporting Standards (HKFRS) framework, which is based on the International Financial Reporting Standards (IFRS).

The Hong Kong Institute of Certified Public Accountants (HKICPA) is responsible under the Professional Accountants Ordinance (PA Ordinance) for regulating the accountancy profession. Its functions include:

Maintaining a registry of all professional accountants and firms
Regulating the practice of accountancy professionals by establishing quality assurance reviews and an investigation and discipline systems for members and member firms
Setting ethical requirements for members
Setting auditing and accounting standards to be applied in Hong Kong
Setting initial professional development and continuing professional development requirements.

Under the PA Ordinance, HKICPA is responsible for certifying professional accountants in Hong Kong, including issuing the designation of Certified Public Accountants (CPA) and Certified Public Accountants Practicing. Having a practicing certificate issued by the HKICPA is mandatory for auditors.

There are also a number of sound commercial reasons to maintain accurate business records, which include:

Assisting with financial planning and decision-making
Demonstrating competence to partners, suppliers, investors and banks
Enabling accurate and timely Profits Tax return submissions
Reducing compliance and audit costs

Whether you are a multinational, a small or medium-sized enterprise (SME), a brand-new start-up or an established business, Sovereign provides highly competitive accounting and audit services that will assist you to manage arrangements efficiently and effectively, focus on your primary business and explore more revenue opportunities, and reduce the operating and compliance costs.

By assisting with all the accounting, auditing, taxation and bookkeeping needs of your business, Sovereign’s Hong Kong CPAs will take your business to the next level.

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Bookkeeping and Accounting Services

Bookkeeping and Accounting Services

Bookkeeping is the discipline of keeping track of financial transactions in a business. The monthly reports that bookkeepers deliver show the performance of a company in detail and enables its managers to better understand the company’s position and make more informed decisions. Bookkeepers will also cross reference financial transactions against bank statements and other documents to confirm their accuracy.

All Hong Kong-registered companies must maintain proper records and books of accounts, which must be audited annually by a Hong Kong-licensed Certified Public Accountant (CPA) and submitted to the Inland Revenue Department (IRD) along with your Profits Tax return.

Section 51C of the Inland Revenue Ordinance (IRO) requires every person carrying on a trade, profession or business in Hong Kong to keep sufficient records (in the English or Chinese language) of income and expenditure to enable the assessable profits to be readily ascertained.

Such records shall be retained for a period of not less than seven years. Failure to comply with the requirements of the IRO without reasonable excuse may be liable to a maximum fine of HKD100,000.

The records prescribed in the IRO include:

  • Books of accounts recording receipts and payments, or income and expenditure
  • Vouchers, bank statements, invoices, receipts
  • Records of the assets and liabilities in relation to that trade, profession or business
  • Records of all entries from day to day of all sums of money received and expended in relation to that trade, profession or business
  • Where that trade, profession or business involves dealing in goods:
    • A record of all goods purchased, and all goods sold in the carrying on of that trade, profession or business must be provided in sufficient detail to enable the Commissioner to readily verify the quantities and values of the goods and the identities of the sellers and buyers, and all related invoices
    • Statements of trading stock held by the person at the end of the accounting period and all records of stocktakings from which any such statement of trading stock has been prepared
  • Where that trade, profession or business involves the provision of services, records of the services must be provided in sufficient detail to enable the Commissioner to readily verify the entries.

Outsourcing your accounting and bookkeeping

Outsourcing your accounting and bookkeeping requirements will reduce the time, resources and costs needed to keep and maintain accurate accounts, allowing you to focus on your business.

Sovereign’s in-house team of Hong Kong CPAs will work alongside clients in Hong Kong to provide fully outsourced accounting facilities, as follows:

  1. Bookkeeping and Reporting Services
  2. Up-to-date bookkeeping of all documents in compliance with statutory requirements

  1. Preparing bank reconciliation
  2. Verifying that the transactions displayed on your bank account are entered into the bank account on your bookkeeping system.

  1. Re-invoicing Services
  2. Transfer costs incurred by the re-invoicing entity to the entity that actually used the given services.

  1. Payment Processing Services
    • Verifying the validity of the charges and the accuracy of the original supporting bills and invoices presented for payment
    • Preparing and arranging payments in accordance with your company instructions and proper authorisations
  1. Preparing monthly cash flow statement
  2. Statement of all payments and receipts that shows how much cash is coming in to, or leaving, the business.

  1. Automated accounting
  2. Posting all data to designated accounting software (if applicable)

  1. Preparing a general ledger
  2. The general ledger reflects a permanent summary of all your supporting journals, such as the sales and cash receipts journal and the cash disbursements journal.

  1. Preparation of monthly/ annual management accounts
  2. Management accounting is the process of preparing and producing the financial reports for managers and business owners in accrual basis, including a profit and loss statement and balance sheet.

Get in Touch

Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.