Hong Kong Company Audits

[tihz]

I've heard that one of the drawbacks of a Hong Kong company is that fees for the annual audit are based on the number of transactions (Up to US$3 per transaction).

Surely these audit fees will eliminate any profitability for online retailers selling low ticket items.

Does anybody have any experience with how the audits play out in practice?

For example, if we have 1,000 small value transactions running through our merchant account in one week, but the merchant account only credits once per week to the bank account. Will it be classed as 1 transaction for audit purposes or 1,000?

What would be the best way to structure low ticket online sales (direct to consumer) through a HK company?

 

[bibing]

I have no direct experience running a HK company but I gathered lots of info because I wanted to get one.

Usually the first step is to contact several accounting/auditing firms and tell them beforehand how many transactions you have on a monthly or yearly basis.

They will give you a ballpark figure.

So you can chose which one is more convenient for you.

EDIT: Despite what people say, I honestly doubt they go through each transaction. That would be humanely impossible. They probably will ask you to use an accounting software they support and have a look and say everything is OK. And you pay the auditing. But again, I have no proof, just a logical thought.

 

[NicolasMaduro]

They dont check each sales transaction. Its more like sampling on the expense side. Contacting your bank to make sure your balance on the 31 december is the same as in your books.

 

[Sols]

The price of an audit is not fixed at some per-transaction value. It's an open market with competing prices. Describe your business model and ask for quotes.

Your accountants might know an audit firm they work with and can recommend.

You can simplify accounting and auditing a lot by automation and showing that balances match up at year end or monthly.

 

[tihz]

Ok, thanks for the advice. I will shop around.