6 August 2015
WHY KEEP ACCOUNTING RECORDS
There are many reasons why a Company should keep accurate business records. Below are some of the reasons:
- accurate records allow the Company to be in better control its business by helping with financial planning and decision making
- the Company will portray a more professional image that makes it easier to deal with your bank
- appropriate records enable the Company to file an accurate profits tax return
- losses and theft in the business may be detected
- in greater overall control of the business
In Hong Kong where we have taxation obligations, one of the main reasons to keep sufficient records is to enable the Company’s assessable profits to be readily ascertained. All records must be retained for seven years from the transaction date. It is an offence not to keep adequate records. The Company can be penalised for not doing so by being fined up to $100,000.
RECORDS THAT MUST BE KEPT BY ALL BUSINESSES
The Company must keep sufficient records to enable the assessable profits of the business to be readily ascertained. To confirm the Company’s calculations, business records must include:
- the books of account recording receipts and payments, or income and expenditure
- the underlying documentation necessary to verify the entries in the books of account; such as vouchers, bank statements, invoices, receipts and other relevant papers
- a record of the assets and liabilities of your business
- a day by day record of all sums of money received and expended by trade, profession or business together with supporting details of the receipts or payments
The Company must also keep records relating to all business assets and liabilities at the end of each year, including:
- lists of debtors and creditors
- stocktake figures
In addition to the records that must be kept by all businesses, depending on the business nature, the Company may need to keep additional records such as bank statements, cheque books, cash book, Receipts, Invoices issued etc.
Should you require a list of documents, please contact our accounting department below.
(852) 2574 8289
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