Keeping Business Records

There are statutory requirements all persons carrying on business in Hong Kong are required to keep sufficient records, in English or Chinese, of their income and expenditure to enable their assessable profits to be readily ascertained. Business records must be retained for at least seven years after the date of the transaction to which they relate. Failure to keep the prescribed records may result in a fine up to $100,000.

Business records should include:

*Sales*

The sales records can include:

-	Invoices issued
-	Cash register tapes
-	Receipt books
-	Note books and diaries
-	Day to day record of all sums received
-	Credit notes for returned goods

*Purchases/Expenses*

The purchases and expenses records can include:

-	Receipts obtained for payments made include cash register tapes/account statements/diary
-	Cheque butts
-	Invoices received
-	Petty cash vouchers for small purchases
-	Day to day record of all sums expended

*Bank Accounts*

The business and personal bank accounts must be separated maintain. The business bank accounts records should include:

-	Deposit receipts
-	Cheque butts dealing: - date of payment - amount of the cheque - name of the payee - details of goods or services purchased - whether the expense is for business or private purposes
-	Bank statements

*Assets*

The expenditure relating to assets records should include:

-	Copies of contracts of purchase and sale
-	Market valuations, if required
-	Statements, invoices and receipts for associated expenses (legal fees, commissions, stamp duty)
-	Details of costs of improvements

*Cash Received and Expended*

The daily record of all money received and expended by the business must be kept. Any cash received or expended that is not recorded in the records relating to sales, purchases and expenses, or assets, must be separately recorded.

End of the Accounting Period

At the end of each accounting year, you must prepare:

-	A statement, including quantities and values, of trading stock held (if you are dealing in goods)
-	A list of debtors and creditors