What is the difference between bookkeeping and accounting in Hong Kong?
Bookkeeping is the day-to-day recording of transactions: sales, purchases, payments and receipts. Accounting uses those records to prepare financial statements, interpret results and support tax and audit work. In Hong Kong the law cares about both: the company must keep adequate records, and its directors must prepare financial statements from them.
Bookkeeping is the recording layer. It covers entering invoices, bills, bank movements and payroll, keeping supporting documents, and reconciling the bank. The output is an accurate ledger.
Accounting sits on top of that ledger. It covers period-end adjustments (accruals, prepayments, depreciation, stock), preparing the statement of financial position and profit and loss, applying the right accounting standard, and explaining the numbers to owners, lenders and the tax authority.
Why the distinction matters legally:
- The Companies Ordinance requires every company to keep accounting records that can explain its transactions and show its financial position at any time (s.373). That is the bookkeeping duty.
- Directors must then prepare financial statements for each financial year from those records (s.379). That is the accounting duty.
In practice a small business can have a bookkeeper maintain the ledger through the year and a qualified accountant do the year-end work. Neither replaces the statutory audit that most Hong Kong companies need; the audit is performed by a separate, independent auditor.
Good bookkeeping makes the accounting step faster and cheaper, because the accountant spends less time fixing gaps.
Legal basis
- Companies Ordinance (Cap. 622), s.373
- Companies Ordinance (Cap. 622), s.379
Sources
Applies to 2026 · Last reviewed 29 October 2026
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.
Related questions
- Is a Hong Kong company legally required to keep accounting records?Yes. Section 373 of the Companies Ordinance (Cap. 622) requires every company to keep accounting records that explain its transactions and show its financial position and performance at any time. Directors who fail to take all reasonable steps risk a fine of HK$300,000, and up to 12 months' jail if the failure is wilful.
- What must a Hong Kong company's accounting records contain?The law names two things: daily entries of all money received and spent, with what each was for, and a record of the company's assets and liabilities. Beyond that, the records must be sufficient to explain transactions and show the financial position accurately at any time.
- How long must a Hong Kong company keep its accounting records?Seven years. Under section 377 of the Companies Ordinance, a company must keep its accounting records for 7 years after the end of the financial year to which the last entry relates. The Inland Revenue Department separately requires business records to be kept at least 7 years after the transactions they relate to.
- What does section 51C of the Inland Revenue Ordinance require from my business?Anyone carrying on a trade, profession or business in Hong Kong must keep enough records, in English or Chinese, to work out assessable profits, and keep them for at least 7 years. Failing to do so without reasonable excuse can lead to a fine of up to HK$100,000.
- Does the Business Registration Ordinance require me to keep accounting records?Not directly. The Business Registration Ordinance deals with registering the business and notifying changes, such as a new business address or name, within one month. The duty to keep accounting records comes from the Companies Ordinance (for companies) and section 51C of the Inland Revenue Ordinance (for all businesses).