Close & reporting
Prepaid schedules
Insurance, software licences, prepaid rent and annual government fees spread across the months they actually cover, instead of hitting one month's profit and loss all at once. A common example in Hong Kong is the Business Registration Certificate fee, paid once a year but covering the whole period ahead.
Management report
Illustrative client · August 2026
HKD
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
What lands on a Hong Kong prepaid schedule
Annual insurance premiums, yearly software licences, prepaid rent, retainers paid in advance, and statutory fees such as the Business Registration Certificate renewal, which is HK$2,350 for a one-year certificate, effective from 1 April 2026, and applies to every active company regardless of size.
Why this matters more than it looks
A HK$2,350 annual fee paid in one month but expensed in one month overstates that month's cost and understates every other month in the year, which quietly distorts a KPI dashboard or a budget-vs-actual comparison if it is not spread properly.
How the release works
Each prepaid item is listed with its term and monthly amortisation, a journal entry releases the correct share to expense each month, and the remaining prepaid balance is reconciled to the schedule so it never quietly drifts from what is actually left to expense.
Flags before renewal
Items nearing renewal or expiration are flagged ahead of time, which matters for a statutory fee like the Business Registration Certificate that dormant companies still have to renew annually even with no trading activity.
Not a tax decision
A prepaid schedule affects your books, not automatically your Profits Tax treatment; how a prepaid amount is treated for tax purposes is confirmed separately, generally alongside your annual filing.
Related schedules
Prepaid schedules sit alongside accruals as the two most common adjustments inside every month-end close.
Questions
Frequently asked questions: Prepaid schedules
What is a common example of a Hong Kong prepaid item?
The Business Registration Certificate renewal fee, HK$2,350 for a one-year certificate effective from 1 April 2026, is paid annually but its schedule can be spread across the year it covers.
Do dormant companies still need to track this?
Yes. A dormant Hong Kong company still has to renew its Business Registration Certificate annually even with no trading activity.
Does a prepaid schedule change my Profits Tax return?
It affects your books, not automatically your tax treatment; how a prepaid amount is treated for tax is decided separately from the bookkeeping.
What happens when a prepaid item is close to expiring?
It gets flagged ahead of the renewal date, so there is no surprise gap between one prepaid period ending and the next one starting.
How do you decide the period a prepaid item should be spread across?
By the coverage period on the invoice itself, such as a twelve-month insurance policy or a one-year software licence, so the expense lands in the months the benefit is actually received rather than the month it was paid.
What typically ends up on a prepaid schedule?
Annual insurance premiums, yearly software licenses, prepaid rent and retainers are the most common items.
Does a prepaid schedule change my tax return?
It affects your books, not automatically your tax treatment; your tax preparer decides how prepaid amounts are handled for tax purposes.
What is included in prepaid schedules?
Prepaid schedules covers prepaid expense schedule listing each item, term and monthly amortization and monthly journal entries releasing the correct amount to expense. The exact scope is agreed and set out in writing before work starts, so you know precisely what is and is not covered before the first deliverable arrives.
How is prepaid schedules priced?
Pricing for prepaid schedules depends on your transaction volume, the software you use, and how much cleanup is needed before ongoing work starts. Current ranges are published on the pricing page, and your exact fee is confirmed in writing before anything begins.
Related services
- Close & reportingAccrualsExpenses and revenue recorded in the period they actually happen, even when the invoice or cash has not moved yet, so the month's numbers reflect that month's activity.
- Close & reportingMonth-end closeA repeatable monthly close that ties every account back to source records and hands you a finished set of financials on a predictable date each month.
Industries
Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.