In this course · 6 of 6
Course 2
Set up your store's books
6 lessons · 6 min
- 1How long must an online seller keep business records in Hong Kong?
- 2How should an online seller record marketplace payouts versus gross sales in the books?
- 3Are platform fees, advertising and shipping costs deductible for profits tax?
- 4How do I record refunds, returns and chargebacks for an online store in Hong Kong?
- 5How do I value inventory and work out cost of goods sold for an online store?
- 6Do online businesses in Hong Kong need audited accounts, companies and sole proprietors?
The short answer
Yes, for companies. A Hong Kong limited company must have its financial statements audited by a Certified Public Accountant (CPA), with limited exemptions such as certain dormant companies. A sole proprietor has no statutory audit but must keep records and report profits to the Inland Revenue Department (IRD).
Limited company: the Companies Ordinance requires the directors to prepare financial statements each year and have them audited by a CPA (practising) who is independent of the company. The audited statements go to the members, and a copy of the audited accounts is submitted to the IRD with the profits tax return. There are limited exemptions from audit, for example for certain dormant companies, so check the Ordinance before relying on one.
Sole proprietorship or partnership: no legal audit requirement. The business must still prepare accounts or a profit computation with supporting records, and report the profits in the tax return. The IRD may ask for the books.
A bookkeeping, tax or compliance service can prepare records and tax computations, but it does not replace the statutory audit, which must be carried out by a qualified auditor.
Legal basis and sources
The law
- Companies Ordinance (Cap. 622), Part 9
- Inland Revenue Ordinance (Cap. 112), s.51
Official sources
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
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