Accounting Services in Hong Kong

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There’s no escaping taxes, not even in Hong Kong. According to the Companies Ordinance, companies incorporated in Hong Kong are required to maintain proper records of business transactions and meet statutory audit requirements annually.

So, who governs the accounting profession in Hong Kong? The self-regulated body governing the accounting profession in Hong Kong is known as the Hong Kong Institute of Certified Public Accountants (HKICPA).

The Hong Kong Financial Reporting Standards (HKFRS) is based on the International Financial Reporting Standards (IFRS) which is issued by the International Accounting Standards Board (IASB).

The value-added of auditing, accounting, and legal services in Hong Kong as of 2019 was 36.4 billion in Hong Kong dollars. This just goes to show how crucial a role accountants play in this area of the world.

Hong Kong, in the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area, is defined as an international financial center, and according to Forbes, “Hong Kong is China’s financial gateway to the world.”

In 2017, the HKICPA introduced the Qualification Programme to guarantee that their professional accountants stay up-to-date on the skills and expertise needed to promote Hong Kong as a financial center and an international business hub.

Therefore, in 2019, Hong Kong vowed to strengthen its role as an international hub for asset and risk management, paving the way for all types of extremely qualified accountants and their international services.

This article will discuss the various accounting services in Hong Kong the different aspects of accounting found in this remarkable global financial center and international business hub.

Table of Contents

Hong Kong stock exchange

How Many Certified Public Accountant Firms are There in Hong Kong?

Hong Kong has its share of accounting firms and certified public accountants. As of the end of 2020, according to HKTDC Research based on the Quarterly Report of Employment & Vacancies Statistics, Census & Statistics Department, 6,043 establishments deal with auditing, bookkeeping, tax consultancy, and accounting services. This results in 32,474 employees being hired by these agencies.

What are the Different Types of Accounting

What are the Different Types of Accounting?

By breaking accounting down into different types, you will see that the field of accounting covers a broad sector. Some of the different types of accounting include the following:

Public Accounting

These accountants are primarily experienced in bookkeeping, financial reporting, financial analysis, tax preparation, and tax advice for individuals and businesses.

Management Accounting

Management accounting mainly deals with analyzing the financial data of a company, which is used in making decisions regarding how to manage assets, budgeting, analyzing performance, and managing the costs of the company.

Governmental Accounting

This area of accounting deals with accounting for government agencies and ensuring that all income and expenses are made within the framework of the law. These accountants also take part in budgeting and managing government assets.

Internal Auditing

Accountants in this field review the financial practices of a company. Their goal is to make sure your company is running within the parameters of all laws and regulations.

Internal auditing includes areas such as environmental auditing, compliance auditing, and information technology auditing.

Business equity

What Are The Different Types of Hong Kong Accounting Services?

There are many different types of services offered by accountants. These services include the following:

Bookkeeping

Bookkeeping involves the recording and summary of business transactions. In this scenario, the bookkeeper typically works closely with an accountant to ensure the accuracy of the financial accounts.

Typical bookkeeping tasks include monitoring accounts payable & accounts receivable, reconciling bank statements, and creating profit & loss statements.

Bookkeepers often use financial accounting software to make the bookkeeping run more efficiently and to save time.

Chartered Accounting

Chartered accountants usually focus on a particular area within the accounting field. These areas range from management to auditing.

Tax Accounting

Tax accounting deals with income tax responsibilities for individuals and businesses. They make sure clients don’t pay any taxes unnecessarily.

Financial Controller

Financial controllers are heads of the accounting department. They handle the workflow, deal with new clients, and oversee staff. They also manage internal and external audits of the financial year.

Forensic Accounting

Forensic accounting deals with tracking missing funds and discrepancies in financial reports. They also partner with law enforcement agencies in determining tax fraud, embezzlement, and tax evasion.

Accounting Audit

Accounting auditors check accounting reports, financial records, and financial statements to ensure accuracy and validity.

Accounting Requirements in Hong Kong

Accounting Requirements in Hong Kong

Hong Kong companies have official requirements when it comes to small businesses and accounting.

The Hong Kong Companies Ordinance defines the legal limits under which companies can do business. The following are Hong Kong’s accounting standards:

Prepare Unaudited Accounts

Every Hong Kong business must prepare a balance sheet, income statement, and cash flow statement. They must be prepared annually, although some companies in Hong Kong prepare them monthly or quarterly as well.

Audit Accounts Annually

Certified third-party accountants must audit Hong Kong companies on an annual basis. The results of the audited financial statements are then submitted to the Inland Revenue Department.

File Annual Profits Tax Return

The profits tax return shows how much tax a Hong Kong company must pay after applicable expenses are deducted, and all exemptions and incentives are applied. This must be filed annually.

Hong Kong Company Accounting Services

What Types of Hong Kong Company Accounting Services Are Typically Offered?

Since businesses have increased their use of global supply, sizeable international accounting firms have had to broaden their territory and offer more services to serve their clientele better.

This includes Hong Kong, especially since its global financial center has attracted sizeable international accounting firms. The types of services offered specifically in Hong Kong include the following:

Statutory Audit

A statutory audit reviews the accuracy of a company’s records and financial statements. This is carried out by examining bank balances, financial transactions, and bookkeeping records to make sure they represent a fair and accurate picture of the company’s financial position.

According to Hong Kong Companies Ordinance, incorporated companies must maintain accurate books and meet the statutory audit requirements on an annual basis. This is usually an accountant’s biggest source of income.

Tax Advisory

Tax advisory services include analyzing financial and tax issues, coming up with solutions, and making recommendations to be proactive in these situations, especially when it comes to paying unnecessary tax.

Company Incorporation

Company incorporation services walk you through the process of setting up a company, whether it is a Hong Kong-based company or a foreign company.

These services will help you register a new company, establish a business name, open a bank account in Hong Kong, and guide you on what type of business entity to set up.

Corporate Finance

Corporate finance services include financial planning, corporate management, internal audits, payroll, general bookkeeping, year-end financial statements, tax planning, and filing an annual profits tax return.

Liquidation

Liquidation services include advising clients on closing a business, converting assets to cash, converting to other investments, settling obligations to creditors, and preparing the finalizing the taxation process.

Due Diligence

Due diligence services revolve around acquisition decisions such as how much to pay for a business, how to buy the company, how to structure the business, analyzing the policies of a business, and handling any financial issues that come up in the future.

Offshore Claim

Hong Kong adopts a territorial basis for taxing profits derived from a trade, profession, or business carried on in Hong Kong. Profits Tax is only charged on profits that arise in or are derived from Hong Kong.

In simple terms, this means that a person who carries on a business in Hong Kong but derives profits from another place is not required to pay tax in Hong Kong on those profits.

Many places levy taxes on a different basis. Unlike Hong Kong, they tax the worldwide profits of a business, including profits derived from an offshore source.

Company Secretarial Support

Some accountants in Hong Kong offer secretarial services. These chartered secretaries track deadlines, organize documents, and make sure your company remains compliant. They make sure you never miss any filing deadlines.

Outsource HK Accounting Services

Why Outsource Accounting Services For Your Business?

As a startup or a small business owner, you may have taken on the financial end yourself, even setting the business up with accounting software, thinking that would free up some time so that you could spend it in other areas.

Unfortunately, as your business grows, reality sets in, and you soon realize that you can’t do it all.

That’s when you think about outsourcing accounting and bookkeeping services so you can spend more time on your products, services, and clients or customers.

Outsourced accounting tasks include accounts payable, accounts receivable, payroll, coding transactions, financial reporting, annual financial statements, and taxation.

Outsourcing accounting services in Hong Kong to a trusted accountant can save business owners a lot of frustration and time so they can put their time to better use such as strategizing and growing their business.

Hong Kong corporate tax laws are complicated and always changing from year to year, making it a challenging process and costly if not meeting the reporting requirements.

That’s why it is so beneficial to have access to a knowledgeable tax professional who can guide you along the way.

Contact ReachTop KSHK CPA, Ltd., one of the most reliable and trusted accounting firms in Hong Kong, for specialized services that cater specifically to your business.


Contact KSHK For a free Consultation

FAQ

How much should I be charged for accounting services?

In Hong Kong, accountants usually charge a fixed rate, accounting plans, or an accounting package where the rates are based on the company’s revenue.

What is the Inland Revenue Department?

It is Hong Kong’s government department that is responsible for collecting taxes.

When should a newly registered business file taxes?

A newly registered Hong Kong company will receive its first profits tax return around 18 months after the date of incorporation or from when the business commences.

Does Hong Kong require a tax return filing from businesses?

Yes, Hong Kong does require profit tax returns from companies on an annual basis.

What is Hong Kong’s tax year?

Hong Kong’s financial year runs from April 1 to March 30.

Do all businesses need accounting and bookkeeping support?

Yes, businesses will benefit from Hong Kong accounting support.

What is the due date for taxes?

In Hong Kong, taxes need to be filed within a month from when the Inland Revenue Department issues the individual tax return. This is usually in early May.

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All consultants are qualified Hong Kong company accountants and tax advisors.