Chart of Accounts for a Small Hong Kong Business: How to Set One Up

The chart of accounts is the backbone of the ledger. Each transaction is coded to one account, and the account totals become the statement of financial position and profit and loss.

Typical structure

• Assets: bank accounts (one per account and currency), accounts receivable, deposits and prepayments, stock, fixed assets and accumulated depreciation.
• Liabilities: accounts payable, accruals, MPF payable, loans, amounts due to directors.
• Equity: share capital, retained profits.
• Income: by product or service line.
• Expenses: cost of sales, salaries, MPF employer contributions, rent, professional fees, depreciation, bank charges, travel.

Setup tips

1. Start from your software's default list and delete what you will never use.
2. Keep director-related accounts (loans, current account, expense claims) separate, because the Companies Ordinance requires director dealings to be disclosed in the notes (s.383).
3. Use separate accounts for items that need different treatment at tax time, such as entertainment or capital purchases.
4. Do not create a new account for every one-off; use a clear "other" bucket and review it.

Section 373 requires that records be able to explain transactions and show assets and liabilities, and a clean chart is how you meet that in practice.