C K Yau & Partners CPA Limited

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Hong Kong Taxation | Deadline for Tax Returns | Severance and Long Service Payment | Keeping Business Records
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Important Briefing / Keeping Business Records

 

Introduction

All persons carrying on business in Hong Kong are required to keep sufficient records, in English or Chinese, of their income and expenditure to enable their assessable profits to be readily ascertained. There are statutory requirements to record certain specified details of every business transaction. Business records must be retained for at least seven years after the date of the transaction to which they relate. Failure to keep the prescribed records may result in a fine up to $100,000.

Types of Records You Must Keep

Sales
You MUST keep records that record and explain ALL sales transactions. Methods of recording sales can include:
- Cash register tapes
- Receipt books
- Invoices issued
- Note books and diaries
- Day to day record of all sums received
- Credit notes for returned goods
     
Purchases/Expenses
You MUST keep records that record and explain ALL purchases and expenses transactions. Methods of recording purchases and expenses can include:
- Receipts obtained for payments made include cash register tapes / account statements / diary
- Cheque butts
- Invoices received
- Petty cash vouchers for small purchases
- Day to day record of all sums expended
     
Bank Accounts
Maintaining separate business and personal bank accounts is recommended. Records relating to business bank accounts should include:
- Deposit receipts
- Cheque butts dealing:
  - date of payment
  - amount of the cheque
  - name of the payee
  - details of goods or services purchased
  - whether the expense is for business or private purposes
  - Bank statements
     
Assets
You MUST keep records that record and explain ALL expenditure relating to assets. These records should include:
- Copies of contracts of purchase and sale
- Market valuations, if required
- Statements, invoices and receipts for associated expenses (legal fees, commissions, stamp duty)
- Details of costs of improvements
     
Cash Received and Expended
You MUST keep a daily record of ALL money received and expended by your business. Any cash received or expended that is not recorded in the records relating to sales, purchases and expenses, or assets, must be separately recorded.
     
End of the Accounting Period
At the end of each accounting year, you MUST prepare:
- A statement, including quantities and values, of trading stock held (if you are dealing in goods)
- A list of debtors and creditors

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