WHAT IS ACCOUNTING?
For most of the common people, accounting means input of financial data into a spreadsheet, it is true but they see the surface. In business environment, the accounting service means the complete process to produce the financial statements of the company. this process includes and begins with book keeping, which is to record the company’s business transactions into spreadsheet and is commonly seen by other people.
The financial statements are reports which allow interested parties to evaluate a business.
The reports are presenting the company’s financial information after sorting, retrieving and summarizing by professional accountants. These reports are prepared in compliance to certain general purpose standard (e.g. for producing balance sheet, income statement, etc.) and accounting principles (e.g. GAAP) for ease of comparison.
In general, a company must be preparing the financial statement as follows:
- balance sheet
- income statement
- statement of owner’s equity
WHY PROFESSIONAL ACCOUNTING IS NEEDED FOR MY BUSINESS?
In other words, it must be done for compliance with regulations of Inland Revenue Department (IRD), the tax department of Hong Kong, pertaining to income tax reporting.
According to Inland Revenue Ordinance (Section 51C), the tax law in Hong Kong, it requires every person (body corporate and natural individual) carrying on a trade, profession or business in Hong Kong to keep sufficient records in the English or Chinese language of his income and expenditure to enable the assessable profits to be readily ascertained and shall retain such records for not less than 7 years. Failure to comply with the record-keeping requirement under 51C shall be guilty of an offence and will be subject to a maximum fine of HK$100,000.
Accounting also enable a company’s management to obtain the information it needs to keep the business financially healthy. Some of the information originate from the recorded transactions but some is estimation and projections based on various assumptions.
Reference for external investors
Investors are fund providers to a company, they include shareholders, bankers, etc.
Conceptually, shareholders and bankers have the risk of loss in a business, so they must request a business to provide its current and the past financial statements which reflect the financial position of a companies for evaluation of the business’s profitability and solvency.
BENEFITS OF ONGOING ACCOUNTING:
- Keeping tract to a person’s financial position (asset, liability, cash, etc.)
- Offering insight of a person’s financial crises and in turn seeking solutions.
- Maintaining a systematic system of storing a person’s financial information.
OUTSOURCING OF ACCOUNTING SERVICES:
Any person who run business (company and natural individual) should consider to contract professional accountants to handle their accounting and book keeping duties. Not only operation costs are minimized but also more effort are spared to explore opportunities.
AsiaBC offer accounting service which has the characteristics as follows:
- Service fee is charged based on a pre-determined fee schedule
- Generally, estimated service fee is calculated according to the number of transaction of a business per 1 accounting year.
- Computerized accounting is a “must”.
- Prepare general ledger, cash account, bank account, accounts receivable and accounts payable for clients.
- Prepare bank reconciliation statement for clients.
- Prepare financial statements (e.g. balance sheet, income statements, etc.) for clients.