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Under S379 Subdvision 3- Financial Statements of the Companies Ordinance Cap. 622, subsection (1) a company’s directors must prepare for each financial year statements. Subsection (4) further states that the director fails to take all reasonable steps to ensure compliance with subsection (1), the director commits an offence and is liable to a fine of HK$300,000. The financial statements have to be audited and file together with the tax return for reporting to the Inland Revenue Department (IRD).
We certainly understand time is money for businessmen who may sometimes forget the statutory compliance and may be tempting to leave the accounting & auditing issues later. However, it may cost you a lot more unnecessary expenses if this may not deal with properly. Even at the beginning, the company may not have operation, you will not need to submit audited accounts to IRD for tax filing. You should however prepare your audited accounts as this is the basic statutory requirement and that you should have them ready at any time if requested by the IRD.
Only a Certified Public Accountant (CPA) can conduct auditing and sign off the audit report. You should need to provide the management accounts to the auditor to arrange audit. For management accounts (i.e. Profit and Loss Account, Balance Sheet and General Ledger), you can do it on monthly, quarterly or yearly basis. However, it is hard to recall the transaction details with supporting documents if you only do this say yearly. It is advisable that you should perform your accounting entries monthly if you may have much transactions ongoing.
Some people try to do the accounting themselves with little to no expertise to keep costs low but don’t take the risk of submitting messy accounts to your CPA. It might seem like you are saving money on accounting, but if you give your auditor disorganized unclear management accounts with missing documents and information, they will need to spend time redoing them in order to be able to do the audit. The more time your CPA spends reworking your accounts, the more expensive it will be for you in the long run.
It makes sense to pass on the work to your own accountant or outsource to the accountant and do this monthly to maximum your business dealing time.
Need Assistance Intershores’ team is dedicated to your Hong Kong businesses to grow Faster and Easier. We are experience to assist your tax compliance. Please contact info@intershores.hk or by whatsapp at (852) 6499 4686.
Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk
Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.
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