How to File Receipts and Invoices for Small Business Owners in Hong Kong

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Keeping track of credit card statements and other business receipts is critical for you as a company owner.

Financial documents and other paper receipts serve as documentation of your day-to-day transactions.

Proper record-keeping and filing of receipts are essential for every company in Hong Kong.

However, if you are like most entrepreneurs, you consider paperwork redundant. You enjoy managing your own company, but working on your invoices and business receipts is your least favorite task.

But don’t sweat it. This article presents various tips on how to file receipts and invoices that every company owner can do, including the physical and digital approaches to record-keeping and bookkeeping.

Table of Contents

Business Receipts and Invoices

An invoice is a payment request. After providing your products and services, your next step is to send an invoice to the customer to request f payment.

While both digital and paper invoices do not necessarily follow a standard template, these documents typically include information such as:

  • transaction’s date and time
  • tax codes
  • delivery date
  • invoice number
  • payment date
  • goods and services provided
  • their price and quantity
  • vendor and customers’ names.

A receipt refers to an official record of goods and services received from a service provider or vendor. It is a document that is not only used as proof of payment but also as proof of ownership.

Like invoices, receipts do not have a specific format but contain details describing the transaction such as dates, name of seller and customer, price, tax, and amount due.

Importance of Filing System for Paper Receipts and Invoices

Monitoring Business Progress

Having an efficient filing system for organizing receipts, invoices, bank statements, and other records will help you track the progress of your business.

These documents serve as accurate records, which is helpful in monitoring business transactions.

For example, by looking at the invoices, a company owner can determine which items are selling and make adjustments.

Preparing Financial Statements

Preparers of financial statements need copies of receipts, invoices, and other business records for accurate entry.

Documents kept correctly in the filing cabinet will allow you to categorize expenses. For instance, it is easier to recall why you paid for entertainment expenses with a copy of a receipt.

Identifying Sources of Receipts

Identifying Sources of Receipts

Entrepreneurs most likely deal with many vendors. As their own business grows, it can be challenging to keep tabs on the sources of income and expenses, even for a small business.

One thing to remember is that filing receipts are more than having them in-store. These documents should remain organized and, if possible, filed in chronological order for easier access.

Keeping Track of Deductible Expenses

The receipts will help you keep an eye on your expenses and identify possible deductibles for the tax year.

The Inland Revenue Department requires business owners to keep their documents for future reference.

Prepare Tax Returns

Business documents offer a snapshot of your business operation for the tax season. As a responsible business owner, you must keep copies of your receipts to come up with the most favorable return legally possible.

Moreover, it is necessary to have records to support your tax return. The Inland Revenue Department performs audits on businesses at certain times, and you need to have documents that support your tax return.

How to Organize Invoices and Receipts

How to Organize Invoices and Receipts

People do their thing differently; however, everyone can benefit from universal tips proven to make organizing documents more accessible.

  1. Adopt a specific document-keeping system for your company. Sticking to a uniform system prevents confusion among your team members.
  2. Create a detailed template for your invoice and receipts. The details include the date, customer ID, name of services or products, amount, discounts, taxes, and reference number. Your accountant will appreciate a detailed and complete template for these documents.
  3. You want an automatic update of your income, and one way to do this is to do a chronological order of transaction documents.
  4. Save and store your files neatly, so it’s easier to search without going into too much data.

Paper Method of Keeping Receipts and Invoices

Filing copies of receipts and invoices is an integral part of every business. These documents serve as proof of the transaction for both seller and buyer.

A consumer wants a copy of the receipt to determine that they paid the right amount.

On the other hand, a business owner wants a copy of these documents to keep them updated about their business expenses and other transactions

Importance of Filing System for Paper Receipts and Invoices

Retaining paper records simply means keeping all of your receipts and invoices.

The paperwork also includes storing documents, such as adequately placing your checks, bank deposit slips, and copies of bank statements in one pile.

Remember that these documents are the basis for your journal entries. So, when you employ a paper-based method of keeping receipts, make sure to store all of your records orderly for easier access.

Here are tips for a more efficient recording of receipts and invoices through the paper method:

  • Keep in mind to print two invoice copies, retain one and give the other to your clients.
  • Keep a separate file for your receivables and payables
  • Write down invoice and receipt information in your accounting journal.
  • Design a paperwork system for categorizing invoice and receipt pairs.
  • Remember to store unprocessed invoices and receipts where they are readily accessible.
  • Consider transitioning to a digital method of record keeping.

Digital Method of Keeping Receipts and Invoices

With the advancement of information and technology, small businesses today benefit from the digital method of record keeping.

Businesses that use digital record keeping save time as they no longer need to handle copies of many receipts.

Business Receipts and Invoices

Even a small business can simplify its record-keeping using computer accounting programs that allow them to create folders for storage.

In addition, it is easier to access a file, and a specific receipt should the Inland Revenue Department decides to audit your company.

It can be time-consuming for small businesses to present their account details during an audit.

However, the audit process can be done quickly with a digital system, saving time for the accountant, auditor, and other staff.

Consider the following tips for doing digitized or electronic invoicing:

  • Research and choose an invoicing or project tracking app that suits you and your team. Some of these include Google Sheet, Notion, and Trello.
  • Develop file naming standards that your team can use.
  • Design the processing path for your document. This means creating a distinct path for each type of document. For example, you want to keep a separate path for your unprocessed and processed receipts to create clarity.
  • Be aware of the risks of losing old and new files. Create a digital accounting journal for a more efficient and faster data transfer.
  • Make use of cloud storage that you can share with your team.

FAQs

How long should I keep my accounting records as a small business owner?

Even with accounting software and digital folders, the Inland Revenue Ordinance still requires keeping proof of transactions for up to seven years.

You can scan receipts and keep digital copies of documents but should still maintain physical files.

What is the best way to organize company receipts?

Keep in mind to print out three copies of receipts, namely the invoice, stub, and accounts copy.

You can also store your receipts by digitizing them. For example, you can scan and create a folder in Google Drive, so finding them for year-end accounting is easier.

What are the advantages of digital receipts?

  • Digital receipts make data more accessible compared to the use of a paper receipt.
  • Digitized receipts allow your accountant to organize expenses. For example, it is easier to classify entertainment receipts from office supplies receipts.
  • It helps entrepreneurs save more money, as this system requires less use of paper and ink to print hard copies.
  • A digital recording system will also allow a quick sharing of information across departments.

Is electronic record-keeping valid in Hong Kong?

Electronic record-keeping is valid and a favorable option for entrepreneurs in Hong Kong. It helps business owners and their staff facilitate accounting and auditing works without burdening themselves with much paperwork.

However, the IRD requires businesses to keep the source documents or in an alternate form, such as scanned copies saved in DC-Roms.

Upgrade and Store on the Cloud as Your Business Grows

As a diligent entrepreneur, you feel confident and capable of managing your finances and record-keeping processes.

However, the tasks can become daunting as you scale up your operation.

You can no longer do most of the recording of receipts and know it’s time to let go of your folders and spreadsheets.

Your best option is to upgrade to cloud computing software so you can access your files anytime and anywhere you want.

With your files stored in the cloud, you can benefit from the help of bookkeeping and accounting services professionals.

Besides, record-keeping should not consume most of your time.

Call us for a free consultation on how you can best administer the recording processes of your company so you can focus on more important things.


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