What are the risks of mixing personal and business money in a Hong Kong company?
A limited company is a separate legal person. Paying personal costs from company funds, or business costs from a personal account, muddies the books, can create a restricted loan to a director, complicates the audit, and weakens your records. Keep separate accounts and record any exception clearly.
Why it is a problem
- Records: the law requires records that explain the company's transactions and show its financial position accurately (s.373). Unexplained personal items undermine that.
- Director loans: company money used for a director's personal benefit appears as a debit on the director's account, which may be a loan needing member approval under section 500, and must be disclosed in the notes (s.383).
- Audit and tax: the auditor will query personal items, and the IRD expects records that let assessable profits be worked out. Mixed transactions make it harder to prove which costs belong to the business.
- Evidence of separateness: keeping the company's affairs distinct supports the principle that it is a separate legal person.
What to do
- Open a bank account (and cards) in the company's name for business use only.
- Pay yourself through salary, approved dividends or a properly recorded loan.
- If you pay a business cost personally, claim it with a receipt and credit your current account.
- If personal spending slips through, record it as such at once and repay.
- Reconcile monthly and review the director account.
This answer is general information. Sole proprietors have no separate legal entity, but should still keep business and personal money apart for clear records.
Legal basis
- Companies Ordinance (Cap. 622), ss.373, 383, 500
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.
- 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.
- Which documents should a Hong Kong business keep for its books?Keep every document that supports an entry in your books: sales and purchase invoices, receipts, bank statements, contracts, payroll and MPF records, asset purchase papers, loan agreements, and stocktake sheets. The test is whether someone else could trace any figure back to its source.
- Can a Hong Kong company keep its accounting records digitally or scan paper originals?Yes. The Companies Ordinance allows records in hard copy or electronic form, provided they stay available for reference and can be reproduced on paper. The IRD also accepts electronic books and scanned source documents if integrity, legibility and origin details are preserved, and no prior approval is needed.