TL;DR
- Every company incorporated in Hong Kong gets audited every year. No turnover threshold, no small-company exemption.
- The only way out is being a properly dormant private company, and a bank account with fees on it usually rules that out.
- Small companies do get simpler accounts under the SME framework, which tends to make the audit shorter.
- As a rough guide, expect HK$5,000 to HK$15,000 for a small company's audit, separate from bookkeeping.
Why Hong Kong never exempted small companies
Two sets of rules lean on each other. The Companies Ordinance requires the directors to prepare financial statements each financial year and have them audited before they go to the shareholders. The Inland Revenue Department, for its part, expects audited accounts with a company's profits tax return, and it has withdrawn the old concession that let corporations with gross income of HK$2 million or less file without them. Our reading, and it's only that, is that the audit has stayed because the tax system leans on it as its main outside check.
The dormant company route
There's one exception. A private company can pass a special resolution declaring itself dormant and deliver it to the Companies Registry. For as long as it then has no accounting transactions, it doesn't need an audit or an AGM, it stops filing annual returns, and the IRD will accept its profits tax return without audited accounts.
The catch is what counts as a transaction. The Ordinance leaves out any fee the company is required by an Ordinance to pay, so the business registration fee doesn't break dormancy. A bank charge isn't that kind of fee, and on a plain reading it counts. Plenty of companies that think they're dormant have lost the status without noticing, because the bank's been taking a monthly fee and one accounting transaction ends dormancy automatically.
Lighter accounts for smaller companies
What small companies do get is a simpler set of accounts. If a private company meets two of these three tests, it qualifies for the reporting exemption:
- revenue of HK$100 million or less
- total assets of HK$100 million or less
- 100 employees or fewer
Banks, insurers, licensed securities firms and money lenders are excluded, and groups have their own tests. A company that qualifies can prepare its accounts under the SME Financial Reporting Framework in place of full HKFRS. There's no cash flow statement and fewer disclosures, so the audit tends to be shorter. Most owner-run companies will qualify.
What the auditor does
They go through the books and bank statements, the invoices and contracts behind anything significant, and the year-end balances, then give an opinion on the accounts. For full HKFRS accounts that's whether they give a true and fair view, and under the reporting exemption it's the narrower question of whether they've been properly prepared under the Companies Ordinance. With clean books at a small trading company, that's typically a few days' work. With a year of records in a spreadsheet and a box of receipts it can run to weeks, and you're paying for every hour.
When it's due
A new company's first financial year can't be longer than 18 months from incorporation, and the first profits tax return tends to arrive around then too. After that, a private company has nine months from year-end to put the accounts to shareholders, at an AGM or by circulating them if it doesn't hold one.
In practice the deadline that matters is the tax return. Returns go out at the start of April and are due a month later, but a company with a tax representative normally gets the IRD's block extension, which for a December year-end runs to mid-August (17 August 2026 for the 2025/26 return).
What it costs
As a rough guide, a small company's audit fee usually falls between about HK$5,000 and HK$15,000. Treat that as an indication and not a quote. Revenue and transaction volume both matter, but in our experience the biggest factor is how tidy the books are when the auditor opens them.
That fee is on top of bookkeeping and preparing the accounts. Our accounting plans, from HK$3,800 a year for companies under HK$300K revenue, cover the bookkeeping, the year-end close, the accounts and coordinating with the auditor. We use a small panel of audit firms and get them to quote on your actual numbers.
Keeping the bill down
Reconcile the bank every month rather than once a year. Save invoices and receipts digitally as they come in, and don't leave it until March. Use proper accounting software so the auditor gets a ledger instead of a spreadsheet. Explain anything odd up front as well, such as related-party payments, director's loans or one-off transactions, because every question the auditor has to ask is billable time.
