Hiring your first employee means adding payroll to your growing list of responsibilities. Hong Kong has many regulations and requirements covering payroll. Understanding the must-do’s helps you get your payroll done right every time. Payroll software makes the task easier because your employees get their wages on time. And, you only need to set up the complex processes once.
Required Payroll Records
As soon as you hire your first employee, you become responsible for taxes. When you have employees, you need to keep certain payroll records based on Inland Revenue Department requirements. You’ll need to keep those payroll records for at least seven years, which is the minimum requirement in Hong Kong. Each employee record needs the following info:
- Personal details, including name, address, marital status, and identity card or passport number and place of issue
- Type of employment, which is either full-time or part-time
- Position within the company
- Cash remuneration
- Other benefits, such as quarters, share award, and share option
- Contributions from you and the employee to the Mandatory Provident Fund or similar funds
- Details about the employee’s contract
- Amount of time employed with your company
You also need to let the IRD know if any of this information changes. For example, sometimes a new employee might not have a Hong Kong identity card when you first hire them. When the employee gets their ID card, it’s your job to let the IRD know the number.
Documents You Need to Submit
IRD requires you to fill out forms each year. You have one month to submit form BIR56A, Employer’s Return after you receive it. The purpose of the form is to report the amount you pay each employee for the year. It’s required even if you don’t hire an employee. Closing your business? You still need to complete the form. If you don’t receive it, you might ask the IRD for another copy.
Not sure whom to include on the form? The IRD requires you to include employees who meet the following criteria:
- Single with at least $132,000 in annual income
- Part-time employee
You may need to submit other documents to the IRD periodically. The forms cover changes in employees’ statuses. Each form has a required time frame. It’s usually best to finish the forms as soon as you know they’re necessary. Those forms include:
- IR56E to report a new hire within three months of the hire date
- IR56F to report a termination one month before the last day of employment
- IR56G to report an employee leaving Hong Kong for an extended period of time