How to Set Up Accounting When Starting a Hong Kong Company

First-month checklist

1. Bank account in the company's name. Use it for all company receipts and payments.
2. Financial year end: directors may specify the first accounting reference date, within 18 months after incorporation. If not, the default is the last day of the month of the first anniversary (s.369).
3. Ledger or software with a simple chart of accounts, including separate accounts for director loans and share capital.
4. Document system: one folder (paper or digital) for sales invoices, supplier bills, bank statements, contracts and payroll, set up from the first transaction. Records can be digital if they can be reproduced on paper and are protected against falsification (s.376).
5. Record-keeping rules: the company must keep records that explain transactions and show assets and liabilities (s.373), for seven years (s.377). The IRD requires records in English or Chinese (s.51C).
6. Payroll and MPF if you hire: enrol employees and set up the monthly contribution routine.
7. Business registration: keep particulars up to date; changes must be notified within one month.
8. Advisers: line up an accountant and an auditor before the first year end, because every year needs an audit, unless the company has become dormant (ss.394, 447).

Setting up properly in month one is far cheaper than reconstructing the records later.