Top 5 bookkeeping tips for Hong Kong business
30 June, 2019
If compared to mainland China, companies in Hong Kong are not bound to file taxes with the Inland Revenue Department (IRD) every month. It is for this reason that Hong Kong entrepreneurs may not keep proper up to date books and accounting records. However, for the process of filing for their profit return, they do require to prepare financial statements.
In Hong Kong, companies have more time to file taxes, due to which, they may miss keeping their receipts for expenses, invoices being issued to the clients, and other important company accounting documents for years past. This may cause Hong Kong Companies to not keep a track record of critical data comprising the business transactions.
Due to the negligence, it becomes almost impossible to stay away from issues down the road with the company's accounts, and for timely filing of the Profits Tax Return (PTR).
Therefore, bookkeeping is essential for Hong Kong businesses.
Here are the top-5 bookkeeping tips that would help you to prepare audit-ready financial statements.
#1 Tip - Separate Your Business and Personal Finances
If you are just a beginner for doing bookkeeping, then this pro tip is exactly for you. There is a very thin line between your personal and business finances during the initial years of your startup.
Therefore, it becomes more critical for you to understand how to maintain a considerable gap between both. Most entrepreneurs, once in a while make the mistake of mixing the income with the personal expenses.
However this is a big no-no for a smart bookkeeper. In the future, it would come up as one of the biggest mistakes as an entrepreneur. So, open a dedicated business bank account as soon as you decide to set up a startup company.
As most Hong Kong banks offer business credit cards, you should also get one to manage both your finances smartly. Also, this practice will build a good credit score for your business entity if you regularly use the credit card for all business expenditures.
#2 Tip - Maintain Your Business Invoices
This tip is another one of the most crucial bookkeeping tips. It would help you to understand late or unpaid invoices of your startup, which will affect your cash flow in the long run.
Therefore, as the owner of your company, it becomes your responsibility to always keep a proper track record of the payments you are about to receive. It even includes information about the jobs for which you have already been paid.
As an additional tip, you are recommended to never to take new orders from that client who has not paid for your previous job yet. It is a very successful approach, which will reduce awkward situations about payments with your customers later down the road.
#3 Tip - Systematically scan and backup your receipts
You might be aware of the fact that if you are doing business in Hong Kong, you require to keep accounting records for 7 years. So, this tip may be of great help to you. Always try to keep the physical receipts sorted and classified with you in safe storage. Otherwise, make a photocopy of the receipt, and keep it in a safe spot in order to not delete or miss locate them.
These receipts would be the only feasible proof of all the business expenditures and expenses to fulfill the statutory requirements in the future. Also, there are chances that the ink on these receipts may fade away. For dealing with such situations, you should maintain a habit of keeping scanned copies of all the receipts saved into your Business's Google Drive or Microsoft OneDrive.
Schedule for a scan at a minimum on a quarterly or a monthly basis. Along with the business transactions or expenditures receipts, you should keep a copy of F&B receipts, transportation, and credit/debit slips.
#4 Tip - Switch to automation whenever it is possible
For smart bookkeeping, you have to stay abreast of all the updates & upcoming bookkeeping software. We all know that reconciling figures manually or entering the data into spreadsheets is a very tiresome and tedious task.
Therefore, it is the right time to replace the in-house methods for entering records & data of your businesses financial management. To hit the ground running, you need to switch to cloud-based bookkeeping software. You can even complete your business banking online by using the modified bookkeeping software.
There is also a fantastic feature for up-to-the-minute records of your business by synchronizing the software with your business bank accounts. The benefits of bookkeeping software don't end here. You can even create a backup of your critical financial data off-site as per your convenience.
#5 Tip - Use Octopus for your Hong Kong business
This tip is for almost every business that is being operated within Hong Kong. Octopus cards. It is basically one of the most popular payment gateways adopted by almost every legit business in Hong Kong.
From retail to transportation, Octopus is considered as the spinal cord of any successful business structure. For the trips related to business, if an employee has to take MTR(Mass Transit Railway) on a regular basis, having an Octopus card for the business is again one of the best options.
Even if you are operating in online stores or in retail, you can think of becoming an Octopus merchant. It holds a significant part of the smart bookkeeping strategy since it would help you to receive payments through this payment method, which further simplifies the record keeping of such transactions.
How can Startupr help businesses in their bookkeeping services?
The above mentioned bookkeeping tips are essential for keeping your small business on track in Hong Kong. However, to stand with the competition, you would require the help of an expert. And Startupr is the leader in the industry and is renowned for its excellence in providing professional bookkeeping services.
No matter if you are a small business enterprise or a huge enterprise, in Hong Kong, having a bookkeeping service is a must. At Startupr, our team of professionals has mastered the art of filing of annual returns, compliance responsibilities, reducing the effective global tax rate, and reducing errors in your account. To know more about our bookkeeping services contact Startupr today!
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