(Almost) Everything you need to know about Accounting software in Hong Kong
Wed, 04/22/2020 - 00:24 admin
Do I really need an accounting software system in Hong Kong?
- You do not have to have an accounting system to run a business, but you do have to keep proper record of all your transaction according to the tax law in Hong Kong.
- If you run as small sole proprietor (unlimited, trading as company), it is possible that you do your own record keeping even if you do not have any accounting software or professional training by using an Excel spreadsheet. (Cash basis)
- Once you have your transactions recorded, it is just a matter of adding and deducting to find out the net profit every year, and prepare a simple Profit and Loss report
- For limited company (Incorporated entity), you must do the accounting following accounting standards. Means usually done by an trained accounting person, and recording transactions using accounting double entries. Excel, is usually not suited for double entry (though skilled people can customize Excel worksheet to do that, but not for the most of us)
- Do accounting by hand is like walking, yes it will get you to where you want, but not without significant time cost. There is a reason why most people take a bus or car to work.
- Accounting software system is like a bus or car, you will need to take some time to learn about it, pay a bit of price, but it will get you to where you want much faster, easier and let you focus on what you want to do (instead of how to get there).
- As a rule of thumb, if you have more than 50 records a month, there is really no point in handling them manually or using Excel.
- Using an accounting software system, you do not really need to know too much about accounting. Because most of the accounting skills required (for probably 90% of the transactions) are abstracted out, just enter a sales invoice, and at the accounting software system backend, the system will do the double entry for you (and that automatically comes the balance sheet, profit and loss report etc.)
- For the remaining 10% of the transactions (like depreciation, equity and profit allocation), you do need an trained accounting person. This you can either outsource, hire an accounting person or just ask your auditor to do it for you.
But accounting software system is not accounting software actually
- As stated, accounting skills are mostly abstracted out of the accounting software system. So the software itself, is not about accounting, but managing your business. Accounting, financial reports and double entries are just some of the value of using it.
- Most modern accounting software systems have modules and functions to help businesses manage their common tasks, namely, Sales, Purchase, Contact Management, Product and Inventory Management, Cash Management and Reporting etc.
- Depending on the accounting software system's price level and target users, each system handles tasks like Sales or Purchase differently. But in general, the small business market accounting software systems provide features that will run the most standard sales process: Quotation > Order > Invoice > Payment etc.
- For small business market accounting software system, do not expect the software to be very flexible, and usually requires the business to fit into the software occasionally.
- Having a single software system to manage the whole business operation is very efficient. All the data is there and can be reused. You do not need to copy and paste information at all, just select and search customer, products etc., and a sales invoice is automatically generated with all the customer address, phone and details, with product details and pricing all there ready to print/email, even ready for online payment. (and remember, all the accounting has been done for you automatically while you do that few clicks)
Accounting Software each has unique specialty
- Each accounting software system vendor has its unique strength and weakness, there is no a single best product
What does it really means by best accounting software?
- Best is not the same for everyone, it is like asking which car is the best car. The answer depends on the user's requirement now and the requirements in the future
- If you need mobility, and not always work in front of a desk or computer, and there is no supporting staff to help you while you are on the road, cloud accounting software is your best bet.
- If you have very specific document (like Sales Invoice) layout and data fields requirements, cloud software probably could not satisfy you need. Most desktop accounting software systems have more data fields and better document layout design flexibility.
- If you do not want to fit your business into the software, but have the system fits exactly your need, you need an accounting software system that has extensibility built-in. Many accounting software system can let you extend functionality by providing some form of Application Program Interface (API).
- As long as you are not running a very simple business process, having an extensible accounting software system is very important. It ensures the accounting system will not become the obstacle limiting your growth.
Top accounting software vendors in HK and their history
- In Hong Kong, the most famous global accounting software brands are MYOB/ABSS, Sage/Peachtree, QuickBooks and Xero.
- Sage 50 US Accounting Software (formerly known as Peachtree): is probably the oldest software of its kind, since 1976. It was called, by long time users, Peachtree (the fruit which is also its logo) and was one of the top 7 software company in the world. Years of continuous development make it one of the most stable and solid system. As it was developed in the 70s, the foundation is focused on accounting. It is still quite accounting minded, and required users to have a higher level of accounting skills.
Sage, a global top accounting software provider, acquired Peachtree in 1998, and raising its distribution power higher and higher.
There is no official Sage 50 Hong Kong representative. All companies selling Sage 50 are distributors/resellers. There are some good, and some very bad supplier out there, so please be warned.
- ABSS (formerly known as MYOB) Accounting Software: MYOB claimed it is the best selling accounting software in Hong Kong. MYOB had no official representative in Hong Kong in the early day, and later acquired the best Hong Kong MYOB distributor and turned it into their official Hong Kong Office and training center (I actually taught courses and developed a computerized examination system for them back then). With effort put into localizing the software, and developing localized version of Payroll function and a Chinese user interface, MYOB quickly became the best known global accounting software vendor.
MYOB closed its office in Hong Kong in early 2000, and the business was in turn bought by a Malaysia based company called ABSS. Subsequently they renamed the MYOB product ABSS, but most people still call it MYOB anyway.
MYOB has the best network in Hong Kong, many consultant, vendors, trainers and most importantly, accounting people know the software very well. It is very easy to hire an accounting staff with MYOB knowledge.
- QuickBooks is the, globally, biggest player especially in the US. However, in Hong Kong and Asia in general, it is not performing particularly well. Currently they have no official representative in Hong Kong. They offer both desktop and cloud software (not compatible between them unlike Microsoft Office). If you really need support, QuickBooks is not your choice.
- Xero is the new comer with a deep pocket, as it is a public listed company, with a very high growth rate. As a pure cloud player, they are able to move fast and venture into many areas, like banking integration with DBS and HSBC. If you are looking for simple, fast, mobile and easy to use solution, Xero is your choice.
Should I buy or build an accounting software system
- If your operation is very simple, and there is nothing you need that does not offer by off-the-shelf accounting software system, of course go buy one of them and start running your business with it, and continually review the needs.
- However, if you have a little bit more specific requirements, and found many opportunity to improve productivity or effectiveness thru automation, we very recommend small businesses to adopt a hybrid approach.
- A hybrid approach means using an off-the-shelf accounting software system, like MYOB or Sage, and build your own automation workflow and extend the system customized to your business needs.
- As each business is unique, and human resources cost is so high these days, there is no reason not to invest in automation with a customized workflow. Put all your best business logics, operation best practices and knowledge into the customized workflow, and the whole company team will be able to run much faster and farther.
- The government of Hong Kong will pay for businesses (Learn more about our Package) 75% of the cost to automate and customize your system. There is definitely no reason not to go for it. Build an automated online store, an automated reporting system, a mobile data collection app or expenses and sales call management system, just think out of the box and there will be opportunities for improvement.
Contact us, ask us questions, brainstorm with us, see what we can build together to empower your business and your accounting software system.