Best Accounting and Bookkeeping Practices for Hong Kong Startups
Suppose you have established a startup in Hong Kong, and you are running your business or are about to begin operations. In that case, maintaining a record is essential and mandatory, too, because you must have the chronicles of a particular transaction for at least seven years in Hong Kong. Accounting and Bookkeeping play a significant role in the management, planning and filing of taxes with the Hong Kong Government.
Many new entrepreneurs think that they can take all the responsibilities on their shoulders. This can affect the business as it may become hectic to manage all the functions of the company. Accounting and bookkeeping are very important for your business, but they demand time. It is a very time demanding process to manage the accounts and keep a record of the business transactions.
You may require someone to assist you with the accounting and bookkeeping services. You may need someone to put everything in order, maintain the financial records, and keep track of money in and out of the company. And Startupr is a company which makes accounting and bookkeeping easy and available for everyone. So, let us discuss the best accounting and bookkeeping practices for Hong Kong startups.
What are the best Accounting Practices for Hong Kong Startups?
A startup needs to be careful in maintaining financial records in the initial stages of setting up the company. Therefore, the best accounting practices for Hong Kong startups are as follows.
1. Separate Personal and Business Finances
The first and foremost thing is to open a business account for your startup. It can be done after you get your Hong Kong Business Registration Number (BRN). Business bank accounts provide several benefits over other versions.
- It provides personal liability protection as your business funds are kept separate from private funds.
- An opportunity for a line of credit is open, which the startup can use to conceal the cash gaps.
- As the business expenses are separate, it indicates that you can get advantages in tax deductions.
- Tracking your business expenses becomes easier as the confusion between personal and business expenses gets eliminated.
2. Hire an Accountant and Use an Accounting Software
It is wise to hire an accountant to keep track of the income and expenditures because doing the accounting work may be complicated for a new entrepreneur who is setting up a startup as he has to focus on many things at the same time. So, by hiring an accountant, the load of maintaining financial statements gets reduced. An accountant will have better knowledge and experience in supporting financial statements, which may help you to establish your startup quickly.
Accounting software is exceptionally advantageous for maintaining your financial statements. They make the process less time-consuming and make it easy to find information to assemble the financial statements. The errors which may occur while completing the financial statements manually get reduced.
3. Maintain Business Records
One of the most significant things for the accounting process is to maintain business records. Keeping business records helps finalize the financial statements, which later helps you while filing for taxes. Accounting software eases the process of maintaining business records and reduces the chances of errors. Some business records that a startup owner must maintain are:
Expenses- A business owner should maintain a record of the costs he incurs to run the business. Expenses records include account statements, documented proof of electronic or physical payment, credit card receipts, cancelled checks and invoices.
Gross Receipts- The next record that a startup owner should maintain is gross receipts. It contains information about the income generated by the business, receipt books, cash register tapes and invoices.
4. Create a Budget
One of the most important things a startup needs to do is to create a budget. The budget helps you move in the right direction as you will have a clear vision in your mind. It provides a roadmap to the business, which, if followed correctly, may help the company to grow successfully. When you make an estimate of all the expenses and compare them with your budget, you will come to know what needs to be done to establish your startup successfully. And this will help in accounting for the finances.
What are the best Bookkeeping Practices for Hong Kong startups?
The next important thing in a startup is bookkeeping. It is highly recommended to constantly practice bookkeeping in your business. The best bookkeeping practices for Hong Kong startups are as follows.
1. Keep Track of your Business Expenses
Keeping track of your business expenses is essential to bookkeeping services in Hong Kong. Hiring a financial expert is highly advisable as he has experience handling finances. He can help you to deduce the areas in which your business is lacking and those in which you are spending extra money. So, by hiring an expert, you may be able to deduct the cost and use it in the growth of the business.
One thing you must avoid is doing business transactions in cash, as it may be complicated to keep track of physical transactions. Instead, use business credit cards for business transactions as the expenses are sorted into categories. The next thing to avoid is keeping physical receipts, as it is a hectic job to maintain them. To avoid such situations, you may use some applications to convert and keep a detailed record of your receipts digitally. These detailed receipts can be used to claim deductions on your tax returns.
2. Digital Bookkeeping Processes
Manually tracking the expenses and keeping its records is a monotonous job. There may be chances of errors while recording the costs manually. So, it is a wise choice to use cloud-based bookkeeping software for keeping business records. Bookkeeping software simplifies this process and eliminates the chances of any human error.
The bookkeeping software could be used for completing your online business banking procedures. Moreover, it also provides the facility to link your business account with the software so that you can get an updated financial record after each transaction you make. So, it is very advantageous to use cloud-based bookkeeping software for keeping business records.
3. Keep Business and Personal Finances Distinct
For innovative bookkeeping practices in Hong Kong, you must draw a line between business and personal finances. If you use the same account for your business and individual transactions, then you may face problems later in the business. It may become highly complicated to segregate the business and personal income and expenses.
The first thing you must do when you set up a startup is open a business account and get a business credit card. This will help you to manage the records easily without any confusion. Business credit card helps to manage your business and personal finances. It also helps you to fabricate a good credit score which can be helpful while arranging the funds.
4. First Weekly and then Quarterly Review of the Records
One of the significant pieces of advice for bookkeeping for Hong Kong startups is that you must review your records every week, as it helps you to keep the records updated. It provides you with data on the startup’s present condition and helps in managing the weekly expenses. It also provides knowledge of the current invoices for your startup commodity.
The next thing is to review your bookkeeping records quarterly. The accounting records too may be needed for a quarterly in-depth review. It feeds you the information which could be used to establish the startup and increase sales. It also allows changing the plans according to the present market status and is helpful in identifying mistakes in sales.
Conclusion
It is highly recommended to constantly track expenses and maintain a financial record for Hong Kong startups. It is commonly known as accounting and bookkeeping. Accounting and bookkeeping practices play a major role in the success of a startup.
Accounting and bookkeeping help to contend deductions on tax returns. If you want to do accounting and bookkeeping, follow the above-provided steps and directions to do it perfectly. These are the best accounting and bookkeeping practices.
If you want to do accounting and bookkeeping effortlessly, then Startupr is the platform you seek. Startupr provides all the facilities which are required to perform accounting and bookkeeping. Startupr helps you to manage your records efficiently and reduces the burden from your head.
