Sufficient records would enable ascertainment of your business’s assessable profits, which is essential for the calculation of profits tax. Business records should be kept for at least seven years after the date of the transactions concerned. Failure to comply with such a requirement may be liable to a fine up to HKD 100,000. To confirm your calculations, your business record 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 day by day record of all sums of money received and expended by your trade, profession or business together with supporting details of the receipts or payments.
- a record of the assets and liabilities of your business.
- in relation to your business assets and liabilities, lists of debtors and creditors, and stocktake figures.
Please read the Guide to Keeping Business Records for details regarding business-specific additional records and other records.
Key Takeaways
- It is important that you have prepared and submitted all relevant documents on time to the Inland Revenue Department to fulfil profits tax obligations.
References:
- A Guide to Keeping Business Records: https://www.ird.gov.hk/eng/pdf/51c_pam.pdf