![\"\"](\"https:\/\/pacersconsulting.com\/wp-content\/uploads\/2022\/02\/60eng-1024x560.png\")
<\/figure>\n\n\n\nIn addition, if you are running a partnership business, you will receive a separate tax return form \u2013 Persons Other Than Corporations (BIR52). The different tax return forms are the only difference between partnership and sole proprietor businesses in terms of taxation.<\/p>\n\n\n\n Unlimited companies do not need to submit their accounts when submitting tax returns, and there is no other law that requires unlimited companies to submit financial statements or business accounts, so they generally do not need to submit company accounts.<\/p>\n\n\n\n In Hong Kong\u2019s current laws, there is no requirement to hire an accountant for preparing financial statements or business accounts when operating as an unlimited company. Yet, under the Inland Revenue Ordinance, regardless of the company type, company accounts must be kept for at least 7 years, so even if you operate as an unlimited company, you will still need to have company accounts.<\/p>\n\n\n\n In addition to keeping relevant records for at least 7 years, the IRD may also require unlimited companies to submit accounts. When a company\u2019s total business income exceeds HK$2 million or more, the IRD will require that unlimited company to submit their account together with their tax return. For companies with total operating income expected to be less than HK$2 million, although the IRD does not require unlimited companies to submit their accounts together with their tax returns, the tax assessor can still request the company to provide it at any time, so the company should still prepare company accounts every year.<\/p>\n\n\n\n The wages earned by the proprietor is taxed through salaries tax, while the profit of unlimited companies is taxed through profits tax. The two taxes are different. The more wages an unlimited company pays to the proprietor, the less profits tax paid by the company .<\/p>\n\n\n\n According to Article 17 of the Inland Revenue Ordinance, any salary paid to the proprietor or his spouse, partner or partner\u2019s spouse is a non-deductible expense. No matter how much a company pays the proprietor, it will still be counted in a tax calculation table.<\/p>\n\n\n\n Except for the proprietor\u2019s wages, if the proprietor or his spouse, partner or partner\u2019s spouse borrows money from the company, then the company has incurred interest expenses. Regardless of whether the relevant loans and interest are reasonable or not, they are all non-deductible expenses under Article 17 of the Inland Revenue Ordinance.<\/p>\n\n\n\n \u201cThe accounts of an unlimited company do not need to be audited by an accountant. I can keep the daily expenses of myself and my family in the unlimited company so that the company can pay less tax.\u201d<\/p>\n\n\n\n According to the Inland Revenue Ordinance, all expenditures and expenses incurred in any period of profit that are taxable under this part can be deducted. In other words, the related expenditures must be related to the company’s business. Only expenses that generate profits can be deducted. Therefore, since household and private expenses cannot bring profits to the company, the related expenses cannot be deducted in the tax assessment.<\/p>\n\n\n\n In addition, although the accounts of unlimited companies do not need to be audited by accountants, the tax assessor of the Inland Revenue Department will review the company\u2019s accounts more carefully. For example, they will compare the company\u2019s past data and infer whether the reported expenses are reasonable based on the company\u2019s industry, so as to make a preliminary judgment, before deciding whether to ask for more documents.<\/p>\n\n\n\n According to the two-tiered profits tax, a company can enjoy a tax rate of 7.25% for the first HKD2 million. Therefore, some proprietors may plan to use the two-tiered profits tax for two sole proprietorship businesses to achieve the purpose of tax deduction.<\/p>\n\n\n\n But in fact, the tax bureau considers sole proprietorship businesses with the basis of a person as a unit, so no matter how many sole proprietorship businesses there are, only one can enjoy the tax rate of 7.25%, while other sole proprietorship businesses will be subject to the original tax rate of 15%.<\/p>\n\n\n\n Pacers is a company that provides multifaceted and professional consulting services. We are eager to grow with our clients, so if you encounter any issues on taxation, you\u2019re welcome to contact us through our website or email at info@pacersconsulting.com<\/a>.<\/p>\n\n\n\n Want to learn more about real-life examples in taxation? Follow us on Facebook<\/a>, Instagram<\/a>, and Google now to stay on top of our latest news!<\/p>\n","protected":false},"excerpt":{"rendered":" Many proprietors of unlimited companies think that it is very easy to file tax returns for unlimited companies. They do not need to prepare financial statements, let alone find an accountant to prepare audit reports. Therefore, bosses often handle it by themselves or find someone who has basic accounting knowledge. Yet, if you continue doing […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":" [et_pb_section admin_label=\"section\"] The trend of emigration to foreign countries has been growing lately, and it is crucial that fulfil your tax responsibilities first if you want to be at ease when you leave Hong Kong. In this post, we\u2019ve compiled some basic tax responsibilities you\u2019ll have to fulfil before you leave, and we hope that this will set everyone\u2019s mind at rest when stepping out of Hong Kong. Specifically, we will be focusing more on key points for outbound Hong Kong employees.<\/p>\n\n\n\n According to the Inland Revenue Ordinance, all outbound employees leaving Hong Kong for over a month have to notify the Inland Revenue Department, regardless of whether they plan on coming back. This allows the IRD to decide whether they have outstanding tax items that need to be paid before leaving Hong Kong. The above procedure is called \u201ctax clearance\u201d.<\/p>\n\n\n\n Yes; if the employee has to leave Hong Kong frequently due to work, they do not have to notify the IRD.<\/p>\n\n\n\n If a person does not go through tax clearance before leaving Hong Kong, they are liable to a Level 3 fine of HKD 10,000. The IRD may also obtain a court order to prohibit those who have not cleared their tax from leaving Hong Kong. To avoid unnecessary trouble, remember to clear your tax before you leave.<\/p>\n\n\n\n Pacers is a company that provides multifaceted and professional consulting services. We are eager to grow with our clients, so if you encounter any issues on taxation, you\u2019re welcome to contact us through our website<\/a> or email at info@pacersconsulting.com.<\/a><\/p>\n\n\n\n Want to learn more about real-life examples in taxation? Check out our Facebook, Instagram and Google profiles for the newest updates!<\/p>\n\n\n [\/et_pb_text][\/et_pb_column]![\"\"](\"https:\/\/pacersconsulting.com\/wp-content\/uploads\/2022\/02\/eng_-1-1024x939.png\")
<\/figure>\n\n\n\nUnlimited companies do not need to prepare accounts?<\/h2>\n\n\n\n
Can the proprietor\u2019s wages provide tax deductions for unlimited companies?<\/h2>\n\n\n\n
If household and private expenses are recorded in an unlimited company, can tax be deducted?<\/h2>\n\n\n\n
Can two unlimited companies share profits and pay less tax?<\/h2>\n\n\n\n
[et_pb_row admin_label=\"row\"]
[et_pb_column type=\"4_4\"][et_pb_text admin_label=\"Text\"]<\/p>\n\n\nForeword<\/strong><\/h2>\n\n\n\n
Who needs to clear tax?<\/strong><\/h2>\n\n\n\n
Are there exemptions?<\/strong> <\/h2>\n\n\n\n
Procedures for Tax Clearance<\/strong><\/h2>\n\n\n\n
What if I don\u2019t clear my tax?<\/strong> <\/h2>\n\n\n\n
[\/et_pb_row]
[\/et_pb_section]<\/p>","_et_gb_content_width":""},"categories":[27,29],"tags":[],"yoast_head":"\n