Finding the best CPA firm is a critical factor in keeping your Hong Kong company up and running.
While you can choose to personally keep an eye on the accounting aspect of your operation, a certified public accountant can give insights about the financial health of your business.
Most of the time, their accounting services can uncover areas where you can improve your operation for a better bottom line.
Here are 5 tips to consider when looking for the best CPA firms in Hong Kong and the accounting services they offer:
Table of Contents
Determine your business needs
Business owners often associate accounting and tax filing as a simple company secretarial work.
However, a closer examination of the accountancy profession shows that this involves a wide range of specialty areas, from auditing, taxation, forensic accounting and statutory audit services.
Top accounting firms, for instance, have their specialized areas that cater to various financial and business related tasks.
Therefore, it is important to determine your company needs before deciding to engage the services of a CPA. This will help you know the qualifications to look for when shopping for the services of professional accountants.
Below are the major services provided by CPA firms:
- Statutory audit and assurance services. One thing that prompts business owners in Hong Kong to hire a CPA is that all of the companies in HK are required to comply with statutory audit requirements. As per the policies of the Hong Kong Companies Ordinance, all incorporated companies in HK have to present their financial statements for an annual audit by a CPA with a practising certificate issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). Only CPAs with a practising certificate can perform audit engagements, which emphasize the independence of the professional accountant.
- Accounting and bookkeeping. A CPA firm also provides bookkeeping services to organize your transactions. The bookkeeping engagement includes verifying supporting bills and invoices to determine the accuracy of charges.
- Secretarial and virtual office. Wouldn’t you be happy with a professional help that takes burdens of secretarial work off your shoulders? CPA firms also offer secretarial and virtual office support, such as submission of financial documents to regulatory agencies.
- Tax advisory. If you are like most business owners, you might be wondering how you can possibly reduce your tax liability further. A CPA firm can help you with your tax planning and ensures that proper documents are presented.
- Hong Kong company incorporation. CPA firms can assist you get your business started. Whether you are a foreign entrepreneur or a resident in HK, you are in a better position to engage the services of a CPA firm.
Verify legitimacy
Now you have an accounting firm in mind. However, remember that prior to setting an appointment with your prospective CPA, you may want to check the Hong Kong CPA Pratice Directory.
This database has search functions that allows visitors to identify certified public accountants registered with the HKICPA.
You can check the HKICPA website to directly verify the current membership of an individual with the organization.
Knowledge and experience in your industry
The reputation around the license of certified public accountants make people assume that CPA’s are experienced professionals who can provide all kinds of accounting services.
Still, it’s worth your time to look for the right fit when engaging the services of an accountant as the accountancy profession has a wide range of niches.
For instance, if you are looking for a CPA who will provide various business support services for your e-commerce business, you would like someone to have the knowledge and expertise in working with this type of business.
Similarly, when engaging a CPA for management advisory services, you want someone who is not only adept with numbers but one who works well with others.
Professional accountants have the technical skills to prepare financial statements and tax returns. However, you’ll want to onboard a CPA with a background assisting clients and businesses in your industry. Here are some of the questions you want to ask your prospective accountant:
- What types of industry/market do you serve?
- What is you speciality/ tax-related background
- What are the steps you’ll take in auditing?
- Who will be doing my tax return?
- Will you use tax software to prepare my returns?
- What do you expect from the company each year?
Strong understanding of regulatory guidelines and tax laws
Other than assisting companies with statutory requirements, the professional services of certified public accountants are needed for tax compliance.
Thus, regardless of your company formation, the Inland Revenue Department requires you to complete a profits tax return in relation to your trade or profession.
Note that as per the inland revenue ordinance, you are required to file your tax return by the due date.
Remember that non-compliance to the provisions of the revenue department will result in punitive provisions. This can mean added costs in the form of additional taxes and penalties.
Your company secretary or a CPA can assist you in complying with the presentation of required forms to minimize tax compliance costs.
Whether you are an offshore company, or a limited company incorporated in Hong Kong, a CPA can help with your corporate tax planning and compliance.
Here are some ways by which Reachtop KSHK can support the tax compliance needs of your company:
- Tax compliance, including filing of tax returns
- Resolution of tax disputes
- Assist in tax planning
- Due diligence review for taxation purposes
- Full range of individual tax planning and advisory services
Proven background in financial planning
A recent study found that 82% of the time, poor cash flow planning contribute to the main challenges of newly established companies.
A QuickBooks State of Cash Flow Report further reveals that six in ten small enterprises experience cash flow problems.
Hong Kong companies are not spared. While cash flow problems are not exclusive to HK’s small and medium enterprises, a study showed that most of them experience difficulties in managing their collections.
The main focus of CPA’s accounting services includes the provision of insights on cash flow patterns. Note that despite the existence of cash flow issues, this may not always indicate a substantial flaw in your operation.
Feel free to reach out to a professional accountant, who can provide a different perspective and solution to the issue. A professional team of CPAs can help you with the following key cash flow areas:
- identify where money can be saved
- find ways to optimized tax reliefs
- advise clients to focus on creating other funding options
- use professional insight to keep the company on top of its books
- help management to in tax planning
Further, as part of their role to provide business advisory services, professional accountants can also assist companies in preparing financial forecasts so business owners can make sound decisions.
Hong Kong accounting firms – Overview
The Hong Kong Institute of Certified Public Accountants (HKICPA) maintains a record and regulates the practice of all CPAs in Hong Kong.
Based on the citation and interpretation of the Professional Accountants Ordinance, an accounting professional is required to successfully pass the Practising Certificate Examinations issued by the HKICPA to become a Certified Public Accountant.
The Institute council rules that an applicant for a practising certificate has to pass the open-book examination consisting of three parts.
A practising certificate from HKICPA is mandatory for professional accountants who wish to work as auditors in Hong Kong.
Interestingly, a Hong Kong member of HKICPA may apply for a temporary auditing business practice permit to the mainland departments.
This will allow accounting firms to serve the Chinese market and increase their clients by practicing in Mainland China.
International financial reporting standards
Banking on its role as the only body authorized by law to promulgate financial reporting, the HKICPA approved the convergence of the Hong Kong Financial Reporting Standards with the International Financial Reporting Standards (IFRS) in 2005.
The IFRS is a framework issued by the International Accounting Standards Board (IASB). The adoption of the IFRS was in line with Hong Kong’s commitment to support the use of a single set of a high quality global accounting standard.
What is the extent of IFRS application in Hong Kong? Domestic companies with publicly traded securities are set to use HKFRS, which is modelled after IFRS standards.
The only exception is when the listed company was previously established outside of Hong Kong, to which it can use either HKFRS or the IFRS as promulgated by the IASB.
In 2010, Hong Kong Institute issued the HKFRs for Private entities, which is designed for companies in Hong Kong without publicly traded securities.
This is an accounting option for private companies, and its main objective is to relieve private entities from the burden of fully complying with HKFRS.
Private entities are defined under these standards as established companies that do not have public accountability and publish general purpose financial statements for external users.
Certified Public Accountants help establish business integrity
The Hong Kong Companies Ordinance requires all registered and incorporated business entities in Hong Kong to maintain proper business records and books of accounts.
The provision is for Hong Kong companies to comply with accounting standards and statutory audit requirements on an annual basis.
For this reason, accounting professionals have to ensure the quality of financial reports. While management is responsible for the presentation of financial information, CPA’s responsibility includes safeguarding the integrity of these reports.
Certified Public Accountants who offer auditing services are required to provide an independent assessment of the integrity of financial reports.
Suppliers, clients, and investors rely on financial statements in making their decisions. As a member of a profession bestowed with a privileged position, accounting professionals are governed by their ethical duty to the general public.
Therefore, it is imperative that these financial reports are prepared in compliance with accounting standards. Accounting firms have to maintain high standards in the delivery of accounting services.
This is in line with their key role in promoting public interest while encouraging business organizations to adhere to ethical standards of operation.
CPAs help in reducing business-related costs
The tough economic times brought about by the pandemic has left many businesses struggling to stay afloat. For most of these businesses, increasing sales and prices are not realistic at the moment.
One way to keep a business position in the market is to reduce costs. The question is, in what area of operation is cost reduction possible without adversely affecting business operation?
This is where CPAs and their expertise comes in.
In addition to bookkeeping and tax planning, your accountant can provide advisory services to help manage your operating costs.
Engaging a CPA for their professional services, from simple bookkeeping, risk management, tax preparation and audit services is an investment that will serve your business well in the long run.
With the help of a Certified Public Accountant, you can save time and effort for what matters most to your business. Reliable professional accountants can provide services that can be done at your convenience.
Reachtop KSHK CPA
Reachtop KSHK CPA is a Practicing CPA firm with experience in rendering high quality services to our SME clients. Below is list of services that Reactop KSHK CPA has to offer:
- Statutory audit and assurance
- Accounting and bookkeeping
- Company secretary
- Tax advisory
- Hong Kong company incorporation
- Virtual offices
Get in touch today and let our Reachtop KSHK CPA experts help unleash your business potential.
