Accounting Services

Core Insights

• Hong Kong has no audit exemption threshold.
• Every Hong Kong company needs to be audited every year regardless of size. Hong Kong grants no audit exemption based on turnover, headcount or asset size. Under Section 405 and 407 of the Companies Ordinance (Cap. 622), only a dormant company may be exempted from audit, and the audit must be signed by a CPA (Practising) registered with the HKICPA.
• Accounting records must be kept for seven years, under two separate laws. Section 373 of the Companies Ordinance and Section 51C of the Inland Revenue Ordinance each impose a 7-year retention duty. Failure to keep sufficient records carries a fine of up to HK$300,000 under the Companies Ordinance and up to HK$100,000 under the Inland Revenue Ordinance (s.51C, prosecuted under s.80(1A)).
• Offshore profits claims are won or lost in the accounting records. If you intend to claim offshore-sourced profits exemption, your records must evidence where the income-generating activities physically took place. Professional review makes them defensible.

Every Hong Kong company must keep accounting records, prepare financial statements, have them audited by an independent HKICPA-registered auditor, and file a Profits Tax Return. Unlike other jurisdictions, Hong Kong offers no audit exemption based on company size or turnover. Every company needs to be audited every year.  Get Started HK’s Accounting Service helps founders and SMEs organize their bookkeeping, reconcile bank transactions, prepare year-end accounts and keep their company ready for audit and tax compliance from start to finish.

Requirements	Rules	Deadline
Profits Tax Return	Companies file Profit Tax Return Form BIR51, issued in bulk on the first working day of April	1 month from date of issue
New Companies: 1st Tax Return	IRD issues the first profits tax return roughly 18 months after incorporation or commencement of business	~18 months, then 3 months to file
Profits Tax Rate	Two-tiered regime for qualifying companies	8.25% on first HKD 2million; 16.5% above
2025/26 tax reduction	One-off 100% reduction of final profits tax; applied automatically, no application required	Capped HKD 3,000 per case
Extensions	Only available where a tax representative holds written authorisation	Application before the submission date
Accounting records	Records must be sufficient to show and explain the company’s transactions, disclose its financial position with reasonable accuracy, and enable financial statements to be prepared from them	Retain 7 years
Statutory audit	Required for all Hong Kong companies except to those applied for dormancy to the Government. Generally, no exemption for size or turnover	Annually
Who can audit	Must be a CPA (Practising) registered with the HKICPA; Overseas / other jurisdictions accountants cannot sign	–

5 Things Most Founders Don’t Get When Choosing an Accounting Service

In 15 years of onboarding Hong Kong companies, the HKD 2 million threshold is the single most common thing founders get wrong. Of the clients who came to us in 2025, 12% arrived believing that gross income under HKD 2 million meant no audit was required. It doesn’t. That threshold only excuses you from attaching audited accounts to Form BIR51. The audit duty itself sits in the Companies Ordinance, and the Inland Revenue Department has no power to waive it.

The misreading has a predictable cost. We take on roughly 260 companies a year that they switch from other service providers and need their accounting rebuilt retrospectively — books reconstructed and audits prepared for financial years that closed long ago.

1. The “reporting exemption” is not an audit exemption

Hong Kong has no small-company audit exemption. Every company incorporated in Hong Kong must have its annual financial statements audited under section 405 of the Companies Ordinance (Cap. 622). The only companies outside that duty are those formally declared dormant by a special resolution filed with Companies Registry under section 447.

The confusion comes from two sources.

First, the reporting exemption under sections 359 to 366 of the Companies Ordinance (Cap. 622) allows eligible small private companies to prepare simplified financial statements under the SME-FRF/SME-FRS. This means fewer disclosures, not fewer audits.

Second, the Inland Revenue Department does not require audited accounts to be submitted with Form BIR51 where gross income does not exceed HKD 2 million. Owners frequently read this as “I don’t need an audit.”

In over 15 years of dealing with the Inland Revenue Department (“IRD”), we have seen this misreading repeatedly. The audit obligation sits in the Companies Ordinance and is enforced by the Companies Registry,  not in the Inland Revenue Ordinance. The IRD’s filing practice is an administrative concession about paperwork; it cannot waive a duty imposed by a different statute. The audited accounts must still be prepared and retained, and the IRD can call for them at any time.

2. Your annual return deadline has nothing to do with your financial year-end accounting

Most owners assume all annual filings happen together as one big compliance event handled by their accountant. The Annual Return (Form NAR1) doesn’t follow that rhythm. It must be filed with the Companies Registry within 42 days of your incorporation anniversary. That date is fixed the moment you register, which often sits months apart from your financial year‑end and tax filing deadlines. For example, a company incorporated on 8 August will always file its Annual Return by mid‑September, regardless of whether its tax cycle ends on 31 December or 31 March. Two cycles, two regulators – staying compliant with one doesn’t guarantee you’re up to date with the other.

3. Switching Accounting Service mid-year can cost you your extension

Hong Kong’s Block Extension Scheme attaches to your tax representative‘s client list, not to your company. Tax representatives apply for filing extensions as a block, on behalf of every client on their annual list. Your company does not hold the extension in its own right.

This is why switching your accounting service in Hong Kong mid-season carries risk. Your extended deadline depends on an administrative step your new accountant must remember to take, not on anything your company has already done.

Each year, the IRD sets a cut‑off date for block extension applications. Clients onboarded on or after that date are not automatically covered, so two separate filings become necessary: Your incoming firm must notify the IRD of its new appointment, and your outgoing firm must confirm it has ceased to act. If either notice is missed, the extension lapses and your return reverts to the original filing deadline. Changing tax representative in mid-year, or appointing one after the block extension application window has closed, can cost you the extension entirely. Confirm in writing who is holding the extension for your company and under which code before you assume you have 

4. Filing electronically buys an extra month, at no cost for Accounting Service

You can get one extra month by filing electronically. If a tax representative acts for you, and your return, financial statements and tax computation are all filed electronically, you can get a further one month on top of the standard block extension date. There is no fee. The only change is how the documents are submitted.

You must apply before the original due date. This is a decision to make at the start of the filing cycle, not a way out once the deadline is close.

The extra month only holds if every e-filing condition is met. If they are not, the IRD treats the further extension as void ab initio,  as if it had never been granted at all. The normal extension date applies instead backdated.

So a company that planned around the extra month and then failed to complete a fully electronic submission is not just short of a concession. It is late, measured against the earlier date it thought it had moved past. Many accounting firms never mention this option, simply because paper filing is what they have always done.

5. “Dormant” is a legal status you must apply for, not a description of your activity

A company is only dormant once its shareholders pass a special resolution and deliver it to the Companies Registry under section 5 of the Companies Ordinance (Cap. 622). Once delivered, section 447 exempts the company from preparing audited financial statements. Dormancy starts when the Registry receives the resolution, or on a later date specified in it, and cannot be backdated.

First, dormancy is not a tax status. If the IRD issues a Profits Tax Return, you must file it. Your Business Registration certificate must still be renewed. The Companies Registry and the IRD do not treat each other’s status determinations as binding.

Second, dormancy ends automatically on the first accounting transaction outside the permitted exceptions — no filing, no notice, no grace period. The audit obligation resumes from the date of that transaction, not from the date you notice it. A single bank charge or a single invoice can be enough, and the consequence is retrospective.

What’s Legally Required for Accounting in Hong Kong

Your company has three separate obligations, set by two different regulators. They are not one job, and they do not all go to the same place.

Owners tend to bundle everything into “doing the accounts.” That is usually where something gets missed.

Accounting records answer to the Companies Registry under Cap. 622. You need proper books, sufficient to show and explain your transactions and to allow financial statements to be prepared from them, and you must retain them for 7 years.

Statutory Audit also falls under Cap. 622: an annual audit by a CPA (Practising) registered with the HKICPA. Hong Kong grants no small-company audit exemption. The only companies that escape it are dormant ones.

Profits Tax Return is the Inland Revenue Department’s requirement, under the Inland Revenue Ordinance. That means Form BIR51, submitted with your audited financial statements, a tax computation, and any applicable supplementary forms.

What “Accounting Records” Legally Means (And Why Bank Statements Aren’t Enough)

The law does not give a simple checklist of records to keep. It asks whether your records are adequate for the job. Under section 373, accounting records must be able to:

• show and explain the company’s transactions;
• show its financial position and performance with reasonable accuracy; and
• help directors ensure the financial statements comply with the Ordinance.

The third point is often where businesses fall short. It is not enough to ask, “Did we keep the paperwork?” The question is: Can the directors rely on these records to approve proper financial statements?

Bank statements alone are not enough. They show money moving, but not why, who it relates to, which invoice it matches, or which period it belongs to. Timing matters too. If December sales are invoiced in January, they may end up in the wrong financial year. That is a record-keeping problem, not just an accounting adjustment.

Retention periods run from the end of the relevant financial year, and more than one law may apply. Directors also have a legal right to inspect accounting records and take copies, which is especially important for minority directors relying on someone else’s bookkeeper.

What Catches Out Foreign Founders Who’ve Incorporated Elsewhere

From our nearly 20+ years of experience, most founders arrive expecting one annual event. You get your accounts done, someone files something, and the year is closed.

Hong Kong doesn’t work like that. Your company has four recurring obligations, they answer to three different bodies, and they run on four separate clocks that were set at four different moments. Nothing here is difficult on its own. The cost comes almost entirely from assuming they move together.

Forms	Who wants it	Which clock it runs on	When
Profits Tax Return (BIR51) — with audited financial statements and tax computation	Inland Revenue Department	The IRD’s date of issue. Bulk-issued usually on the first working day of April	1 month from issue, extended under the Block Extension Scheme if you’ve appointed a tax representative
Annual Return (NAR1)	Companies Registry	Your incorporation anniversary	Within 42 days of the anniversary
Business Registration renewal	Inland Revenue Department	Your BR certificate expiry date	Demand issued before expiry; pay within 1 month
Employer’s Return	Inland Revenue Department	First working day of April	1 month from issue, extended if you’ve appointed a tax representative

From Thousands of Hong Kong Accounts: The 3 Patterns Behind 56% of Delays

From thousands of Hong Kong accounting engagements, we see the same pattern: roughly 56% of delays at year-end stem from just three gaps — missing expense supporting documents, unreconciled payment-platform or multi-currency transactions, and incomplete records for director loans or capital injections. Address these early and most SME accounts move through preparation, audit and filing far more smoothly.

Get Started Experience in Action — E-Commerce Seller

After the pandemic, e-commerce surged as one of the most popular business models for Hong Kong companies, but many founders only record net bank deposits from Shopify, Amazon and Mainland platforms. One such retailer came to us with exactly this gap — gross sales, fees, refunds and FX differences were invisible, creating unnecessary audit friction and IRD risk. We reconstructed the sales ledger from the original platform settlement reports, correctly separated every element, and delivered clean, reconciled accounts that both the auditor and IRD would accept. The same records later enabled a straightforward banking facility review and eliminated the annual year-end panic.

Get Started Experience in Action — Low-Activity Companies

Many owners of holding companies assume that zero revenue means zero accounting effort. In our experience, directors often only realise this is mistaken when a bank or stakeholder suddenly requests audited accounts after two years of informal record-keeping. With no sales — only a few director-loan transactions and incomplete files — we rebuild the books from bank statements, loan agreements and board minutes, then deliver clean financial statements ready for audit. At Get Started, we never treat nil periods as “lesser” obligations, which keeps the catch-up efficient. The truth remains as we see: informal records for quiet years almost always cost more to fix later than doing them properly from the start.

What to Look For in an Accounting Service in Hong Kong

Ask who signs the audit report. This is the first question, because it’s the one legal requirement nobody can work around. Many providers advertising “accounting and compliance” do bookkeeping only and refer the audit out. That’s perfectly normal, but you should know the name of the practice doing it, and whether their fee is inside or outside your quoted package. A provider who is vague here is quoting you an incomplete price.

Check the TCSP licence if they also act as your company secretary or registered office. Providing company secretarial services, a registered address, or nominee directors is “trust or company service business” under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), and it requires a licence. Licences run three years, and there’s a public register at tcsp.cr.gov.hk you can search in under a minute. 

Establish who owns each deadline in writing. Your NAR1 runs off your incorporation anniversary, your audit off your financial year-end, your BIR51 off the IRD’s issue date. Three clocks and the gaps between them are where filings get dropped. A good provider will hand you a calendar unprompted. A weak one will say “we’ll just take care of it.”

Why Using AI Entirely May Not Work for Government Compliance

AI is genuinely useful across much of this work, and this section below is not an argument against using it. In fact, our accountants also use it to smoothen the work. But Hong Kong’s compliance regime is built on a foundation software cannot occupy.

• Your financial statements must be audited by a CPA (Practising). There is currently no small-company or software exemption, and no model can hold a practising certificate. Where AI hits a wall in Hong Kong compliance, it’s almost never because the task is too hard and simply it is because the law names a licensed human.
• Filings require an accountable signatory. When a service provider files your profits tax return, the IRD requires a signed confirmation from you that the return and supporting documents are correct and complete. The system is built around identifiable parties who can be held responsible.
• Liability lands on people. Late delivery of an annual return is an offence under section 662 exposing the company and every responsible person, your directors or your company secretary personally. A tool cannot absorb that risk, and a confident wrong answer costs you exactly as much as a confident wrong answer from a human, minus the insurance and the professional accountability.
• The judgement calls are the expensive part. Offshore profits claims, deductibility, related-party pricing, going concern. These are positions you may have to defend to an assessor years later, and what protects you is a documented reasoning trail someone qualified stands behind.

Why You Need a Professional

The honest framing isn’t AI versus a professional. AI is genuinely good at the volume work: categorising transactions, reconciling, chasing missing receipts, drafting schedules, first-pass document review. Used well, it compresses the part of your compliance bill that scales with transaction count.

What it cannot supply is the three things you’re actually paying a firm for: a signature the government will accept, a judgement someone professional will defend on your behalf, and a calendar that isn’t yours to forget. Those are the deliverables.

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Frequently Asked Questions

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Many of our accounting clients first come to us when they register a company in Hong Kong — if you’re at that stage, our incorporation packages include guidance on getting your accounting set up from day one.