Eight out of ten small-company bookkeeping errors come from one thing: accounts are not separated.
Why separation matters
Money sits in one place. You take in HK$10,000 cash, then deposit it into the bank. You did not earn it twice. The same money moved from cash to bank.
If you do not record the move, cash still shows HK$10,000 and the bank shows another HK$10,000. The numbers look great. They are wrong.
The five accounts we recommend
| Account | What it is for | Counted in balance |
|---|---|---|
| Cash | Petty cash, market change | Yes |
| Bank — savings | Customer payments, rent, payroll | Yes |
| Bank — current | Cheques, supplier payments | Yes |
| E-wallet | AlipayHK, WeChat Pay, Octopus | Yes |
| Credit card | Buy now, pay later | No (liability) |
Open one account per payment system. Your AlipayHK balance and your Octopus balance are two separate amounts. Do not merge them into one "e-wallet" figure.
How to set the opening balances
Pick a start date, for example today. Open your banking app and copy the real balance of each account. Count the cash in your wallet and safe.
A credit card is a debt. Enter a negative number. If you owe HK$2,500, enter −2,500. The software keeps the card out of your available balance, but it remembers what you owe.
How to record "cash deposited to bank"
Record a transfer. Do not record income. A transfer needs two accounts: where the money came from, and where it went.
A transfer does not change income and does not change profit. It only moves money from one pocket to another.
Three common mistakes
1. Personal money and company money in the same account
The Octopus card you use for lunch and the one your company collects money into are not the same thing. Keep them apart. If you mix them, you will never know what the company really earns.
2. Treating a credit card as cash
You bought HK$3,000 of stock with a credit card. Record the expense once. Do not deduct it from cash again. Otherwise expenses double and profit looks too low.
3. A payment method with no account
You added "PayMe" under Payment Methods, but you did not assign an account to it. When you pay with PayMe, nothing is deducted from any account.
Fix: assign one account to every payment method. Once assigned, old records recalculate automatically.