Incorporating a company in Hong Kong is remarkably straightforward — the process is fast, affordable, and one of the most business-friendly in the world. But what happens after incorporation is where many new business owners get caught out. The accounting obligations begin the moment your company exists, and setting things up correctly from the start will save you significant time, money, and stress down the road.
This guide walks you through everything you need to have in place on the accounting side — from your very first decisions to your first 90 days of operation.
What Accounting Obligations Start on Day One
Many new company directors are surprised to learn that their accounting obligations begin immediately upon incorporation — not when they make their first sale, not when they hire their first staff member, but from the moment the company legally exists.
From day one, your company is required to:
- Keep proper books of account — the Companies Ordinance requires every Hong Kong company to maintain accounting records that correctly explain its transactions, financial position, and enable financial statements to be prepared
- Retain financial records for at least seven years — this is an IRD requirement that applies from your company’s first transaction
- Prepare annual financial statements — which must be audited by a certified public accountant before being submitted with your profits tax return
- File an annual profits tax return — the IRD will issue your first return approximately 18 months after incorporation, but your accounts need to be in order from the beginning
- File an annual return with the Companies Registry — a separate requirement from the tax return, confirming your company’s registered details
None of these obligations wait for your business to be “ready.” Setting up your accounting infrastructure on day one means you’ll never be scrambling to reconstruct records you should have kept all along.
Choosing a Financial Year End
One of the first decisions you’ll make as a new company director is choosing your financial year end — the date on which your company’s annual accounts will be prepared. In Hong Kong, you have complete flexibility to choose any date you like, and it’s a decision worth thinking through carefully.
Common choices and their practical implications:
- 31 December — aligns with the calendar year, making it easy to track annual performance. This is the most common choice globally.
- 31 March — popular in Hong Kong as it aligns with the government’s financial year and the IRD’s bulk issuance of tax returns in April
- 30 September or 31 October — gives you a quieter audit and reporting period, away from the busy December and March windows when many accountants are stretched
Things to consider when choosing:
- When is your business naturally busiest? You generally don’t want your year end to fall right in the middle of your peak trading season.
- Do you have related companies? Aligning year ends within a group makes consolidated reporting much simpler.
- When does your CPA firm get busiest? If you’re working with a smaller firm, choosing a less common year end can mean you get more attention and faster turnaround.
Once chosen, changing your financial year end requires notification to the IRD and may have tax implications — so it’s worth getting this right from the start.
Opening a Business Bank Account and Connecting It to Your Accounts
A dedicated business bank account is non-negotiable. Mixing personal and business finances in the same account creates accounting nightmares, complicates your tax position, and raises red flags with auditors.
When opening your business bank account in Hong Kong:
- Most major banks — HSBC, Hang Seng, Bank of China, Standard Chartered — offer business accounts for newly incorporated companies. The process typically takes two to four weeks and requires your Certificate of Incorporation, Business Registration Certificate, and directors’ identity documents.
- Some newer digital banks (like Neat or Statrys) offer faster account opening for SMEs and may be a practical option for businesses that don’t need traditional banking services.
- Open the account as early as possible — bank account opening in Hong Kong can take longer than expected, and you’ll need it before you can accept customer payments or pay suppliers properly.
Once your bank account is open, connect it to your accounting system. The best accounting software allows you to import bank statements directly (or reconcile against them easily), which dramatically reduces data entry time and the risk of errors.
Registering for Profits Tax
New companies are not required to proactively register for profits tax — the IRD will issue your Business Registration Certificate automatically after incorporation, and will send your first profits tax return approximately 18 months later.
However, you should be aware of the following:
- Business Registration Certificate — you must display this at your place of business and renew it annually (or every three years if you opt for the three-year certificate). The fee is currently HK$2,150 per year.
- Employer’s Return — if you hire staff, you’ll need to file an Employer’s Return (BIR56A) each April, reporting salaries paid to employees. This triggers when you have your first employee.
- Notification of chargeability — if you believe your company has assessable profits before receiving your first tax return, you should notify the IRD proactively. Failing to do so when profits exist can result in penalties.
Choosing Your Accounting Software Before You Have Transactions
This point is more important than most new business owners realise: choose your accounting software before your first transaction, not after.
Here’s why it matters:
- Migrating historical data from spreadsheets (or worse, paper records) into an accounting system later is time-consuming, error-prone, and sometimes impossible to do completely
- Your chart of accounts — the structure of income and expense categories — is much easier to set up correctly from the start than to reorganise after hundreds of transactions have been coded against it
- Consistent data from day one means your financial reports are meaningful from day one — you can see where your money is going in real time
- Your auditor will thank you — accounts maintained in proper software from the beginning are significantly easier and cheaper to audit than reconstructed records
For most Hong Kong SMEs, the choice comes down to a cloud-based subscription platform or a locally installed desktop system. Both have their place — our guide on desktop vs cloud accounting software covers the trade-offs in detail. For businesses that want a system built for Hong Kong from the ground up — with Chinese language support, HK-format reports, and multi-company capability — Giga Accounting by 凌峰會計 is worth a close look.
Your First 90-Day Accounting Checklist
Use this checklist to make sure your accounting foundations are solid in your company’s first three months:
Week 1–2 (Immediately after incorporation):
- ☐ Choose your financial year end date
- ☐ Apply to open a business bank account
- ☐ Select and set up your accounting software
- ☐ Set up your chart of accounts to reflect your business structure
- ☐ Engage a CPA or bookkeeper if you’re not managing accounts in-house
Week 3–4:
- ☐ Bank account open — record opening balance in your accounting system
- ☐ Record any incorporation costs (government fees, legal fees) as expenses
- ☐ Set up supplier and customer records in your accounting system
- ☐ Establish a process for capturing receipts and invoices consistently
Month 2–3:
- ☐ Complete your first bank reconciliation
- ☐ Review your first month’s profit and loss — are expenses being coded correctly?
- ☐ Set up payroll if you have employees, and begin making MPF contributions
- ☐ Confirm your Business Registration Certificate is displayed and renewal date is in your calendar
- ☐ Store all financial documents securely — digitally where possible
Start Right — and Stay Right
The businesses that find tax season, audit time, and financial planning easiest are almost always the ones that built good accounting habits from the very beginning. It’s far easier to maintain a clean set of books than to reconstruct a messy one.
If you’re in the early stages of setting up your Hong Kong company and want to get the accounting right from day one, our team is happy to help. You can also explore our bookkeeping services, try Giga Accounting free, or check our pricing page to see what’s included.
