The accounting setup checklist for a new Hong Kong company

Incorporating in Hong Kong is quick. The accounting decisions you make in the first month decide whether month eighteen, when the first tax return and the first audit land together, is routine or painful. Every date and figure below comes from the Inland Revenue Department (IRD), the Companies Registry or the MPFA, linked to the page it came from.

Your first 18 months, step by step

1. Choose the first year-end. Who: the directors. By when: within 18 months after incorporation; if they specify no date, the first financial year ends on the last day of the month in which the first anniversary of incorporation falls [7].
2. Open the books and a business bank account. Who: the company. By when: before the first transaction; records must be sufficient for assessable profits to be readily ascertained and kept for not less than 7 years [6].
3. Enrol each employee in MPF and file an IR56E. Who: the employer. By when: MPF within the first 60 days of employment [4]; the IR56E within 3 months of commencement of employment [5].
4. Renew business registration. Who: the company. By when: when the demand note arrives, around the middle of the month before the renewal certificate starts [3].
5. Deliver the first annual return (NAR1). Who: the company secretary or a director. By when: within 42 days after the first anniversary of incorporation, with the HK$105 fee [2].
6. File the Employer's Return (BIR56A, with an IR56B for each employee). Who: the employer. By when: within 1 month from the date of issue; the IRD normally issues it on the first working day of April [5].
7. Close the first year and have it audited. Who: the directors prepare the financial statements, which must be audited [7]. By when: soon after the first year-end, ahead of the first profits tax return.
8. File the first profits tax return (BIR51). Who: the company. By when: within 3 months from the date of issue, generally some 18 months after incorporation [1]; if none arrives and the company is chargeable, notify the IRD within four months after the end of the basis period [1].

1. Choose your financial year-end deliberately

Your first real decision. For a company formed under the current Companies Ordinance, the first financial year runs from incorporation to a primary accounting reference date that the directors specify, which must fall within 18 months after incorporation; if they specify nothing, it is the last day of the month in which the first anniversary of incorporation falls [7]. Later years run on from there, and the directors can alter the accounting reference date by resolution, subject to the Ordinance [7].

The date matters for tax. Under the IRD's block extension scheme for 2025/26, a represented company with a December year-end had a due date that was first set at 17 August 2026, then extended by the IRD's circular of 14 July 2026 to 31 August 2026 (2 October 2026 if filed electronically) [9], and one with a year-end from January to March had until 16 November 2026, while year-ends from April to November got no block extension [1]. A year-end chosen carelessly, say the incorporation month, can leave you with the shortest possible deadline every year.

2. Open the books on day one

The Inland Revenue Ordinance requires every business to keep sufficient records, in English or Chinese, of income and expenditure so that assessable profits can be readily ascertained, and to keep them for not less than 7 years; failing to without reasonable excuse can mean a fine of up to $100,000 [6]. Your first profits tax return, generally issued some 18 months after incorporation, covers everything since day one [1]. Set up a real double-entry ledger before the first transaction, not after the first year.

Every receipt, invoice and contract gets kept from the start. Reconstructing month one in month eighteen is the single most common, and most expensive, new-company mistake: eighteen months of bank lines have to be matched to paperwork before an auditor can even start. The bookkeeping requirements guide lists what the records should contain.

3. Separate the money immediately

Open a dedicated business bank account and run everything through it. Mixing personal and company money doesn't just make the bookkeeping miserable; it makes the eventual audit slower and more expensive, because every mixed transaction has to be explained. A director's expense paid from a personal card, or company money spent on something personal, should be recorded as a balance with that director on the day it happens, not discovered at year-end.

Reconcile the bank account to the books every month. A ledger that agrees with the bank statement at each month-end is far cheaper to audit than one reconciled once, eighteen months in, by someone who was not there when the money moved.

4. Register for MPF when you first hire

Except for exempt persons, employers must enrol full-time and part-time employees aged 18 to 64 who have been employed for a continuous period of 60 days or more in an MPF scheme within the first 60 days of their employment [4]. Signing a series of contracts shorter than 60 days does not avoid the duty [4]. Employer and employee each contribute 5% of the employee's relevant income, subject to minimum and maximum relevant income levels, currently $7,100 and $30,000 for monthly paid employees [8].

A hire also starts the IRD's paperwork. File Form IR56E within 3 months of the employment starting [5]. From the following April the company receives the Employer's Return, Form BIR56A, normally issued on the first working day of April each year and due within 1 month from the date of issue [5]. Our Employer's Return guide covers every form.

5. Know the deadlines already ticking

• Annual return (NAR1): within 42 days after each incorporation anniversary, HK$105 if on time and HK$870 to HK$3,480 if late [2].
• Business registration renewal: from the IRD, with the demand note around the middle of the month before the renewal certificate starts [3].
• First profits tax return: generally issued some 18 months after incorporation [1], with audited financial statements behind it.
• First audit: the financial statements of every Hong Kong company that is not dormant must be audited [7]; engage an auditor before the year closes, not after.
• Employer's Return: each April once you have employees [5].

The first tax return, in detail

The IRD does not send a new company a return in its first April. Generally, it issues the first profits tax return some 18 months after the date of incorporation, though it may issue a provisional profits tax return for completion earlier where circumstances warrant [1]. A taxpayer that receives its first return during the year may submit it within 3 months from the date of issue, with no need to apply for an extension [1].

That window is shorter than it looks. By the time the return arrives, the first financial year has usually ended, and for a corporation with gross income, audited financial statements should be submitted with the return [1]. A company that waits for the envelope before closing its first year will be closing, auditing and computing tax inside three months.

The duty to speak first can sit with you. A person chargeable to tax must notify the Commissioner in writing within four months after the end of the basis period, and in a commencement case that applies even though no return has been received [1]. The profits tax return guide covers the rates and the return itself.

6. Decide who owns the calendar

Every deadline above is knowable on day one. Companies get into trouble not because the rules are complex but because no one owns the calendar. Whether it's a founder, an accountant or software: one owner, both clocks (incorporation anniversary and year-end), written down. The annual return guide puts the Companies Registry side of that calendar in one place.

How Suma handles this

Suma is accounting software. It does not incorporate or register your company, deliver returns to the Companies Registry, run your provident fund scheme or deal with the IRD for you. What it does is give a new company correct books from the first transaction:

• Double-entry books with 4-digit account codes from day one, where every edit is a void and a re-create rather than a silent overwrite.
• A bank feed through Finverse that brings each line from the new business bank account into the books.
• Receipts and documents vaulted against the books, attached to the entry they support, so month one is still on file in month eighteen.
• A year-end pack exported to our partner CPA firm, with more than 40 years in practice, under a hash the server computes, and a filed year locked against edits afterwards.
• Auditor questions answered on your request desk, with the receipt attached to the answer.

Frequently asked questions

When does a new company file its first profits tax return in Hong Kong?

When the IRD issues it, which is generally some 18 months after the date of incorporation [1]. A company receiving its first return during the year may file it within 3 months from the date of issue without applying for an extension [1]. The IRD may issue a provisional return earlier where circumstances warrant [1]. The return covers the whole period since the company started, so the books for that period need to be closed and audited by then.

When do I file my first tax return in Hong Kong if none has arrived?

Do not simply wait. A person chargeable to tax must notify the Commissioner in writing within four months after the end of the basis period, and in a commencement case that applies even though no return has been issued [1]. On receiving that notice, the IRD issues a profits tax return for completion [1]. Generally, though, a newly incorporated company receives its first return some 18 months after incorporation [1].

When is a new company's first annual return due?

Within 42 days after the first anniversary of the date of incorporation, and then every year [2]. The fee is HK$105 if it is delivered on time; late delivery costs from HK$870 to HK$3,480, and the company and its officers can be prosecuted [2]. The annual return runs on the incorporation anniversary, not the financial year, so it often falls months apart from the tax deadlines.

How soon must a new company enrol its first employee in MPF?

Within the first 60 days of employment, for full-time and part-time employees aged 18 to 64 employed for a continuous period of 60 days or more, unless they are exempt persons [4]. Employer and employee then each contribute 5% of relevant income, within the relevant income levels [8]. Separately, file an IR56E with the IRD within 3 months of the employment starting [5].

General information current as of 16 October 2026. This is not legal, tax or accounting advice. Deadlines and thresholds change; confirm the current position with the IRD, the Companies Registry, the MPFA or a licensed practitioner.