As an internationally renowned financial, trade and shipping center, Hong Kong has become one of the preferred offshore company registration places for mainland businessmen by virtue of its special geographical location and relaxed policy environment.
According to the Hong Kong company law, a Hong Kong company is required to carry out maintenance work every year, which includes key annual audits and audits, which is an important matter that every Hong Kong company should pay close attention to.
However, many clients tend to confuse the two services of annual audit and audit of Hong Kong companies. So, what's the difference between them?
The concepts of Hong Kong company audit and annual audit are common in the financial and business worlds, but there is a big difference between them. This article will explain what they are and how they differ.
Time difference
A Hong Kong company audit is usually conducted in the 18th month after the incorporation of the company, while the annual audit is conducted in the 12th month after the incorporation of the company.
Content differences
The main content of a Hong Kong company audit is to verify and approve the company's financial accounts. However, although the annual examination is also related to finances, its content mainly involves commercial aspects such as business registration certificates, annual returns, legal secretaries and registered addresses.
NO.1, the main content of the annual review
1. Replacement and renewal of business registration certificate
The Business Registration Certificate is one of the necessary documents for a Hong Kong company, which marks the form of legal operation of the company. The business registration certificate is generally valid for one year, so you need to renew it once a year and pay the registration fee.
2. Submit an annual return
Every year, after the first anniversary of the company's registration, the Hong Kong company is required to provide the Hong Kong Companies Registry with the latest company information and file a new annual return at the same time. The contents of the annual return include basic information such as the company's directors, shareholders, legal secretary, address, etc., and the company registration certificate needs to be renewed.
3. Legal secretary
Verify the legal secretary of the company as it is necessary for the legal formation of the company.
4. Registered address
Verify the company's registered address as it is necessary for the company to be legally incorporated.
5. Business secretarial services
Business secretarial services include answering phone calls, receiving faxes, receiving business letters, government bank letters, etc., and providing timely feedback to customers.
6. Failure to complete the annual examination within the time limit will be fined
Under normal circumstances, the annual review time is within 42 days from the anniversary date of the company's establishment. If the annual examination is not completed after this period, the penalty will vary depending on the length of the deadline.
If the filing date is more than 42 days but within 3 months, a fine of HK$870 will be imposed;
If the filing date is more than 3 months but within half a year, a fine of HK$1,740 will be imposed;
If the filing date is more than 6 months but within 9 months, a fine of HK$2,610 will be imposed;
If the filing date is more than 9 months, a fine of HK$3,480 will be imposed.
The above is a detailed explanation of the audit and annual audit of a company in Hong Kong, and we believe that this information can help you better understand and deal with the audit and annual audit issues of your company.
NO.2. Benefits of bookkeeping registration
What are the benefits of registering a company in Hong Kong?
1. Corporate accounting audit will enhance the credibility of Hong Kong companies in the government.
2. The audit of the company's accounts is conducive to the company's future loans and other businesses in the bank.
3. Enterprise accounting audit can improve the probability of listing of enterprises, increase corporate fundraising, and facilitate domestic investment.
4. The audit of enterprise accounts can facilitate the cancellation of enterprises in the future. If a company registered in Hong Kong has been registered for more than 1 year and is profitable, then an audit report is required at the time of deregistration.
5. The audit of corporate accounts clearly shows the company's financial and operating conditions, which can improve the international attractiveness of Hong Kong companies and shape their brand image.
NO.3. Which companies need to be audited?
In Hong Kong, a company without a business can choose to directly file a zero declaration and audit report, but if the company is actually engaged in business activities, then it must carry out accounting and audit work in order to file tax returns.
As long as the company conducts any business transaction or activity under its name, the business has already begun. A company is operating a business if it meets any of the following criteria:
1. The company has a business record in a bank account;
2. The company has left import and export records with government customs and logistics companies;
3. The company has a purchase and sale relationship with Hong Kong merchants;
4. The company has hired an employee;
5. The Company has permitted or authorised the use of patents, trademarks or designs in Hong Kong;
6. The company has permitted or authorised the use of movable property, rents and lease fees in Hong Kong;
7. The company has entrusted the consignment sales in Hong Kong;
8. The company has generated other profits in Hong Kong.
NO.4. What are the consequences of a Hong Kong company that does not conduct an audit?
Fines may be imposed by the Hong Kong Inland Revenue Department
If the company fails to file the tax return within the prescribed time limit, or deliberately conceals the true tax situation, and the circumstances are serious, then the Hong Kong Inland Revenue Department will recover a penalty equivalent to 3 times the tax in disguise.
In the case of a large amount of tax evasion and serious circumstances, the company may also be prosecuted.
Hong Kong bank accounts and creditworthiness status may be restricted
If a Hong Kong company does not file a tax return on its actual revenue, its integrity will be questioned.
The bank may directly freeze the company's account, and the tax office will also collect the tax due. In addition, there is a risk that the company will be blacklisted by the government.
Penalties are imposed in accordance with the Inland Revenue Ordinance
Section 51C of the Hong Kong Inland Revenue Ordinance requires every person carrying on a trade, profession or business in Hong Kong to keep adequate records of his income and expenses in Chinese or English so that his taxable profits can be easily ascertained.
A person carrying on a business in Hong Kong should keep the relevant records for at least 7 years. If there is no reasonable excuse for keeping business records in accordance with the tax laws, then they may face a fine of up to HK$100,000.
It is essential to maintain the compliance, compliance with legal requirements and ethical business principles of Hong Kong companies. Finding the right agency to conduct audits and tax filings is invaluable to the maintenance of your business.
In short, the annual review and audit of Hong Kong companies are two completely different procedures, the annual review is similar to the review of companies in the mainland, and the audit work is similar to the tax inspection in the mainland, and both need to be submitted for review and declaration in a timely manner, otherwise there will be great risks, which is very unfavorable for the company.