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In all Hong Kong limited companies, it is required by law to keep an up-to-date book of accounts and to perform annual audits and file annual tax returns to the Inland Revenue Department. It is vital that all company accounts are accurate and as updated as possible to be within the guidelines of tax compliance. This also helps with keeping track of the company financials which is key for a company to both analyse its performance and what flexibility it has when making key business action in the future. To some in the business industry, we coin this responsibility and task as bookkeeping and the individuals responsible as bookkeepers.
Bookkeeping is the practice of recording and tracking the financial transactions of a business. Bookkeepers regularly summarise this activity into reports that show how the business is doing. They may also perform wider tasks such as invoicing, paying bills, preparing tax returns, monitoring key performance indicators, and providing strategic advice.
However, we must make something clear. Bookkeeping is a subset of Accounting. They are not one and the same. Although the terms are often used interchangeably with one another there are some key differences. To analyse, accounting itself involves a process which involves numerous sets of steps and instructions including recording, summarizing, reporting, reviewing, and interpreting the financial facts in order to make a well-informed and advised business decision. In any business venture, whether it be commercial or otherwise, the ability to flourish comes down to how organized your financial records are. Depending on how big your company is, is how complex the bookkeeping system is. So, in summary whilst bookkeeping focuses on the timely and accurate recording of financial transactions, accounting is all about interpreting and analysing the report data generated from those original transactions.
The Accounting Function and the Benefits of Bookkeeping
As mentioned in the above paragraph, one of the best reasons to keep your company’s bookkeeping under control is to help you understand and categorize all the financial data your company is receiving. First the basics, accounting is essentially:
The terminology used to allow you to understand, comprehend and discuss information regarding your company’s current ‘assets’.
A valuable method for deciding where your business stands financially.
The process that makes it possible for your company to stay compliant with key tax and other financial/ compliance documents.
he most effective and efficient way to investigate your company’s progress towards a certain goal in growth and its financial success/failure.
By using bookkeepers, you are essentially allowing you and your company to create a financial roadmap for your business. This accounting allows you to transform your bookkeeping records and accounting records into an actionable and adaptable ‘skeleton’ business plan.
Bookkeepers and Bookkeeping Function
As there are accountants who are responsible for the accounting function in general. Bookkeepers are individuals in a company who are responsible for the bookkeeping functions in the company. In many larger organisations, accountants are the ones that usually plan and ‘set up’ the accounting system. This is then handed over to the bookkeepers. Bookkeepers then record financial transactions on a day-to-day basis and keep records which is then backed up by documentation. It is the bookkeeper’s job while recording and updating the new financial information in the accounting system to maintain and comply with the rest of the accounting principles. The bookkeeping process typically rotates around a chronological record of all your financial activity. This includes:
The use of a general ledger to log (or post) the details of your sales, expenditures, and their associated bank transactions.
The creation of customer invoices.
The processing of employee payroll.
The bookkeeper then communicates this information to the accountants which then take over and prepare the final financial statement. Without bookkeepers, businesses would not be able to understand what is happening with their financial transactions. Bookkeepers need to be accurate, to keep complete records and to be extremely confidential with all the information they are reviewing. These are the foundation for businesses to have effective and reliable accounting.
Bookkeeping and Accounting in Partnership
Knowing what you know, with the correct insight of both bookkeeping and accounting, it makes perfect sense for all businesses to take advantage of the synergy to achieve business success. For many businesses, whatever the size, the best way to do it is by investing in an in-house or outsourced team of accounting professionals and by having some amount of focus on your company’s own financial functions. Primasia can help you with this. Our qualified and experienced accounting professionals in Hong Kong are here to ensure companies are compliant with the local regulations. For bookkeeping and accounting, we offer a wide range of services which can be custom made for your company’s various needs. With our high-quality professional bookkeeping services, we can help your core business achieve greater efficiency and effectiveness. After all, bookkeeping and accounting functions go together like Yin and Yang. When you combine them together with other professional business services you have the potential of a high promising commercial venture.
Do you want to learn more about bookkeeping and Primasia’s bookkeeping services? We are more then happy to assist you with understanding how we can help your company so you can focus on what your company is truly about in your core business activities whilst we focus on the tedious accounting and tax compliance Please click here to visit the Primasia Corporate Services website and learn more about company registration in Asia, as well as the wide range of corporate services we offer.
Primasia Corporate Services is a Hong Kong based corporate services provider that has been supporting its clients in Asia for over three decades. Among several of our services, Primasia Hong Kong (Primasia) offers our clients Online Accounting services, China Company Incorporation services, Virtual CFO services, MPF Filing services, Profit tax filing services, Employment return filing services, Wholly Foreign Owned Enterprise (WFOE) incorporation and registration services etc. One of our services which we are proud to be offering our clientele is our investment visa and working visa Hong Kong services.
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