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| Why accounting work
is required. |
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Legally required
Practically required
Accounting work is required for several major reasons:
- required by tax department;
- required by management;
- required by fund provider, such as shareholder and banker.
Only the requirement from
tax department is mandatory in Hong Kong.
Hong Kong individual and
company are not required to file tax return on monthly
basis. It is required on annual basis. Therefore, many
SMEs prefer to have formal accounting work be done once
a year.
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| When accounting
work is to be done. |
In Hong
Kong, individual and corporate need to file tax return
only once a year, the deadline is as follow:
Profits Tax - Corporate
& Partnership - Due date for tax return
filing of represented cases:
| Code |
Accounting date |
Extended due date |
| N |
1/4/2003 - 30/11/2003 |
According to tax return.
No extension |
| D |
1/12/2003 - 31/12/2003 |
16/8/2004 |
| M |
1/1/2004 - 31/3/2004 |
15/11/2004 |
Salaries Tax &
Profits Tax for Sole Proprietorship - Due date
for tax return filing of represented cases:
Bulk issue on 3/5/2004
Not involving sole proprietorship
- extension due on 3/7/2004.
Involoving sole proprietorship
- extension due on 4/10/2004.
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| What
you need to prepare for accounting work. |
Material required for accounting work to start:
1. Last year record
1.1. Last year financial
statements and audit report
1.2. Last year tax demand note and corresponding
2. Company information
2.1. For limited company
¨C the latest Company Registry annual return copy
2.2. For unlimited company ¨C a summary of partnership
and share information
3. Bank account transactions
3.1. Bank account
list stating all bank accounts opened
3.2. Bank statements
3.3. Cheque book stubs
3.4. Outward cheque copies (if any)
3.5. Inward cheques copies (if any)
3.6. Bank deposit and withdrawal record books (if
any)
4. Income
4.1. Invoice copies
4.2. Invoice copies of sales just before year start
and just after year end (for cut off verification
purpose)
4.3. Sales record book (if any)
5. Accounts Receivable (A/R)
5.1. Invoice settlement
record
5.2. Outstanding invoice (unsettled) as at year
end
5.3. Outstanding invoice (unsettled) as at year
end for those appear as at last year end¡¡(aged
invoice over 1 year)
6. Expenses & Accounts
Payable (A/P)
6.1. Bills (or invoices)
received during the year
6.2. Unpaid bills as at year end
6.3. Unpaid bills as at year end which appears as
well in last year end
6.4. Goods or services received but bills not received
¨C amount and supplier list
7. Stock (if applicable)
7.1. Stock list and
value as at last year end
7.2. Stock list and value as at this year end
7.3. Stock purchase record during the year
7.4. Stock movement record (in and out)
7.5. Stock-take record as at year end
8. Salary and commission
8.1. List of recipients
with name, ID number, address and amount received
during the year (including those resigned)
8.2. MPF contribution record
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| What
material you can have after accounting work. |
- Profit & Loss Statement
- Blalance Sheet
- Auditor report (for
limited company only)
- A set of accounting
record (usually in the form of computer data disk)
- Tax computation
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| Offshore
income claiming tax exemption |
Financial statement of a company
needs to cover all transaction undertaken by a company
disregarding where those transaction is carried out.
This means even non-taxable offshore income needs to
be reported in the financial statement.
Therefore, offshore income needs
to be stated in "Tax Computation' in order to claim
for non-taxability. Sufficient evidence needs to be
submitted in order to support the claim. Those evidence
include:
- Company structure and
office location.
- Document example of
a deal showing how an offshore income business is
handled.
Hong Kong adopts a territorial
source principle of taxation. Only profits which have
a source in Hong Kong are taxable here. Profits sourced
elsewhere are not subject to Hong Kong Profits Tax.
The principle itself is very clear but its application
in particular cases can be, at times, contentious. To
clarify the operation of the principle, Inland Revenue
Department prepared a [ simple
guide on the territorial source principle of taxation
]. It gives a brief explanation of how the
principle operates and provides simple examples for
illustrative purposes of the tests applied to different
types of businesses. If you wish to explore the subject
in greater depth, consultation with professional advisers
is recommended.
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Service fee (accounting, auditing, tax
filing and offshore claim) depends very much on the trasaction
volume and business nature of the company. Please contact
us and give detail of your situation for a quotation.
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Text
only section
AsiaBS - Asia Business Service Limited
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Professional qualified accountants - ACCA, HKICPA
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in Hong Kong(HK), China, BVI and Offshore
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providing services of
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Company Formation (form company),
Incorporation, Business start up for Limited and Unlimited
company, Sole Proprietor, Partnership, Wholly Foreign Owned
Enterprise, WFOE, Joint Venture, JV, Representative Office,
RO
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Bank account opening - in Hong Kong - HSBC, Hang Seng Bank etc,
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Company secretary, Nominee shareholder,
director, Annual maintenance, Accounting, Auditing, Taxation,
Tax filing, Tax planning
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