Organising audits in Hong Kong

How to organize checks in Hong Kong

Do you want to increase the confidence of clients, lenders and investors in your business in Hong Kong? To achieve this result, one cannot do without an audit of financial statements, which is an important aspect of a business that should be given special attention. Therefore, you will definitely need the help of an experienced auditor. And in this review you will find out why.

Why auditing Hong Kong companies is important

Let's start with the fact that the audit is mandatory and is carried out by a disinterested person every year. Some business owners ignore auditing, but this is not an example to look up to, because the situation can lead to negative consequences. For example, penalties and financial losses. It is worth noting that the choice of an auditor for verification is of great importance, since his opinion greatly affects the affairs of the company.

The presence of an audit report increases the credibility of your company on the part of creditors, investors, banks. If the verification is not carried out or its results are unreliable, you will not be able to take out a loan for business development and there will be no trust in your company from the government. So the auditor you choose should not only be an expert in his field, but also understand the features and structure of your enterprise.

It is interesting that some business owners decide to keep accounting and financial statements on their own. However, the reports must be prepared correctly in accordance with the norms of the current legislation, otherwise the company will not pass the audit. Therefore, in this case, it is better to enlist the help of a qualified accountant. In addition, you need to know all the nuances of the process if you want to get tax-free status. And in this matter, you definitely cannot do without an experienced specialist.

Hong Kong reporting requirements

All companies operating in Hong Kong must provide the necessary documentation to government authorities in a timely manner. This list includes updating company information and filing annual reports, maintaining accounting records, preparing and auditing financial statements, and filing tax returns.

In addition, each unit is required to provide the auditor with all financial information, such as the firm's balance sheet, its profits, losses, and remittances. If you do not give a specialist access to this information, it becomes impossible to conduct an audit.

Required documentation also includes:

• Bank statements.
• Documentary detail of payments.
• Copies of all bank checks.
• All signed contracts for the reporting period.

In the case when an audit is ordered by a company that wants to claim tax-free status, that is, it does not make a profit in Hong Kong, it needs to provide data on orders from buyers, contracts signed with them, as well as agreements with suppliers. Based on the data provided, the specialist will make a decision on obtaining the required status. All this is needed to show the direction of business development in the next reporting period.

Hong Kong financial report: process highlights

It is important to note that some firms may be exempt from audit. But this is possible only if the company is "dormant". This means that the company does not conduct transactions that are subject to mandatory reflection in accounting. These transactions include profits, expenses, purchases and sales. Exceptions are the payment of state duties, fines or payment of shares when creating an enterprise. But in order to get the status of “sleeping” enterprise, the business owner is required to draw up a special resolution.

If everything is done correctly, the business will be exempt from auditing. However, you are still required to notify the government of any corporate change, pay an annual registration fee, and file a tax return. When a business does not fall into the dormant category, reporting is mandatory. The list of mandatory documentation should include the following information:

• Address of registered office and where corporate documents are kept (if they are not kept at the office).
• What is the share capital.
• Data on the secretary, directors and members.

Reporting is submitted no later than 42 days from the date of the anniversary of the company's registration, after which this process is repeated every year. In addition, the owner is obliged to notify of any changes to the master data. An important point: the company has the right to postpone the end date of its financial year, but its end date cannot be more than 18 months from the date of registration. And the director of the company is responsible for preparing the report. Interestingly, some firms are eligible for simplified reporting procedures. To such include small private companies with a revenue of no more than 100 million Hong Kong dollars and no more than a hundred employees.

Auditing a company in Hong Kong: how to get a tax-free status

If your company is registered in Hong Kong, but you do not receive income from it in the country, then you can count on obtaining tax-exempt status. But for this all conditions must be met:

• The business is managed outside the country by non-Hong Kong residents.
• All activities are carried out outside the state.
• Your company's products must not move around the country. But this does not apply to goods in transit.
• You can't work with residents.

If you want to get the right result that will positively affect the development of your business, contact Crystal Tax. Choosing us, you will provide yourself with the help of a whole team of qualified accountants, lawyers and financiers who will take responsibility for the correct preparation of financial and accounting reports. At the same time, you will be relieved of the need to delve into the bureaucratic process yourself and save you time, nerves and effort that you can spend on your family or your favorite pastime. To get what you want, make an appointment with Crystal Tax specialists, and we will provide you with the desired result!