The list every business keeps
| Record | What it means in practice |
|---|---|
| Books of account | Receipts and payments, or income and expenditure |
| Underlying documents | Vouchers, bank statements, invoices, receipts and other papers that verify the entries |
| Assets and liabilities | A record of what the business owns and owes, including year end lists of debtors and creditors |
| Daily money record | Day to day entries of all sums received and spent, with supporting details |
Businesses dealing in goods
A goods business also keeps a record of all goods purchased and sold, showing the goods and the sellers and buyers in enough detail for the Commissioner to verify quantities, values and identities, with the invoices[1]. It keeps statements of trading stock at the end of the accounting period and the stocktake records behind them[1]. A concession applies to retail trades normally conducted in cash: they need not record the details of every buyer, but must still keep full purchase records and a day by day record of money received and spent[2].
Businesses providing services
A service business keeps records of the services provided in enough detail for the Commissioner to verify the entries[1]. The sums charged and paid must be traceable through the books of account to the statement of income and expenditure[2].
Banking habits the IRD recommends
- Keep separate bank accounts for the business and for personal use; if you cannot, record separately any money you put in and any private expenses paid from the account[2].
- Bank all business income regularly into the business account[2].
- Pay purchases and expenses in a way that leaves a permanent record on the bank statement; the IRD gives paying by cheque as its example[2].
- Record on each cheque butt or payment voucher the date, the payee, what was bought and the amount[2].
Language, period and penalty
Records must be in English or Chinese and kept for not less than 7 years[1]. Failing to comply without reasonable excuse can bring a maximum fine of HK$100,000[1].
What a company adds under the Companies Ordinance
A company's accounting records must also be sufficient to show and explain its transactions, to disclose its financial position with reasonable accuracy at any time, and to let the directors ensure the financial statements comply with the Ordinance[3]. A director who fails to take all reasonable steps to secure this is liable to a fine of HK$300,000[3].
Electronic records
Keeping the books on a computer is accepted, and the IRD lists its advantages, but source documents must still be kept to substantiate income and expenses[2]. The IRD publishes a separate pamphlet on the admissibility of business records kept in electronic form[1].
About the IRD guide
The IRD's guide to keeping business records dates from August 1995[2] and still mentions floppy disks for backups. Its list of records matches the record keeping page, but where they differ, the statutory list on that page is the one to follow[1].
Rules, forms and figures can change, and the official pages listed below are the authority wherever this summary differs from them.