China Company Registration
Registering a Business in China isn’t complicated…
In many ways, registering a business in China has become easier over the years. Gone are the mandatory minimum capital injection requirements for registering a business in China and the number of licenses required to begin operation have been reduced. Nevertheless, there are many important considerations to be made when registering your business in China.
Integra Group provides assistance at each stage from selecting the right legal entity and tax status to post- setup procedures such as opening bank accounts and obtaining special licenses. To speed things up, we pre-screen all documents and application details to ensure you can get on with your business as quickly as possible.
Business Registration Process
Integra removes all the complexities of registering your business in China. We help you prepare all the necessary documents to ensure your applications proceeds smoothly. We can also assist in registering a business in a Free-Trade Zone for businesses that meet the requirements. Contact us for more information on business registration in Free-Trade Zones in China.
Step 1: Pre-registration preparation
During the pre- registration, we will help you select a Chinese name for your new business as well as draft all the necessary documents necessary for the application. Documents required vary depending on the legal entity type and the shareholders involved. We pre-screen all documents and application details to ensure you can get on with your business as quickly as possible.
For a detailed list of documents required, please contact us for a free consultation.
Step 2: Application Process
Registering a business happens in two phases. First, the business scope must be approved by the Ministry of Commerce and then the Administration of Market Regulation (AMR) issues the business license. From start to finish, registering a business in China takes roughly 5 weeks.
Step 3: Post-registration procedures
Once the business license has been obtained, Integra will help you complete the following procedures:
Carving the company seal (aka. Chop / Chomp)
Opening a company bank account
Registering with the tax authorities
Registering with the social security bureau
Registration with the customs authorities (if applicable)
Obtaining special licenses (if applicable)
Application for an expatriate employment permit (if applicable)
In addition to business registration, completing all of the necessary procedure above takes between 2-6 weeks, depending on the tax registration status and other factors. Once completed, the business can commence its operations including hiring employees, making and receiving payments, and issuing invoices.
Note: Special licenses and expatriate employment permit can take more than 6 weeks to obtain.
Step 4: Monthly, Quarterly and Annual Compliance
All businesses in China are required to meet monthly, quarterly, and annual compliance requirements, regardless of if they had any turnover. Integra Group provides flexible bookkeeping and compliance services to help you meet all your compliance requirements.
Type of Business Structures
Choosing the right business structure is of paramount importance to your business. The selection should be done according to a variety of factors including; nature of business activity, size of the investment, industry, and goals of the shareholders. Integra Group provides advisory on selecting the right business structure best suited to your needs.
WFOE
A Wholly Foreign-Owned Enterprise (WFOE) is the most common legal entity type in China and is is suitable for most forms of business ventures. According to the Catalogue of Industries for Guiding Foreign Investment, foreign investment in China falls into three categories: Encouraged, Restricted, and Prohibited.
Encouraged – Consulting, Manufacturing, Trading, etc.
Restricted – Telecommunications, Exploration of natural resources, Railway, etc.
Prohibited – Domestic freight, Tobacco, Radio & TV programs, etc.
Note: Free-trade-zones are not subject to the Catalogue of Industries for Guiding Foreign Investment and can therefore often provide access to otherwise restricted or prohibited industries unless explicitly stated by the free-trade-zone.
Key Benefits of a WFOE
Ownership can only be non-Chinese individuals or corporations
Can earn profits in China
Can issue legal VAT invoices (fapiao) to clients
Can send money overseas in accordance with SAFE
Can hire local and expatriate staff
Can hold intellectual property rights
Joint Venture
There are two forms of joint ventures in China: Equity joint ventures (EJV) and Co-operative Joint Ventures (CJV).
Equity Joint ventures are new legal entities with shared ownership between two or more parties who share risk and return equal to their share of ownership . They are a good option for partnerships where a local partner offers strategic advantages to the business venture in China. EJV’s can sometimes provide access to restricted industries as outlined by the Catalogue of Industries for Guiding Foreign Investment if a controlling share is owned by a local individual or company.
Co-operative Joint Ventures are new legal entities with shared ownership between two or more parties whose profits are distributed according to the terms of a contract – as opposed to the share of capital contribution – allowing for more structural flexibility over an equity joint venture.
Representative Office
A representative office (RO) is a liaising organization of a mother company located inside China or outside of China. Representative Offices are unique in the way that they cannot engage in “profit-making activity” or issue official VAT invoices (fapiao) to clients. Their use is often to establish a connection to China, rendering advice, displaying products and services, conduct research or liaise with business partners.
Branch Office
A branch office is an office belonging to another company in a different jurisdiction. It is not a separate legal entity, thus, it is limited to the scope of its main office but allows the business to expand geographically and hire local staff where a branch office is located. Branch offices must pay tax locally and comply with the regulations in the jurisdiction in which it is located.
Branch offices do not need to receive approval from the Ministry of Commerce and thus can be set up quicker than a conventional WFOE.
More Resources |
Understanding the Role of the Legal Rep. in China
By Integra Group | Legal
The Legal Rep. has broad control over the company – here’s what you need to know.
Understanding the the Four Legal Persons in China
By Integra Group | Legal
The four legal roles in China are ultimately responsible for the operations and governance.
How to Properly Register a WFOE in China
By Integra Group | Legal
Key considerations for foreign investors looking to register a WFOE in China…
Overview of the PRC Tax System and Administration
By Integra Group | Tax
Applicable tax rates, filing deadlines, and considerations for WFOEs in China.
Frequently Asked Questions
Do I need to be physically present to register a business in China?
Whether you needs to physically travel to China to register your company in China depends on your choice of city in which to register the company. Many cities do not require your physical presence in China, however, some cities may require you to be physically present during the registration process.
Do I need to travel to China to open a bank account?
Many banks, especially in tier 1 cities, can provide options to open the bank account via a video call or at a local branch in your country of residence. Detailed requirements subject to the banks final decision.
Do I need an office in order to register a business in China?
What documents are required to register a company in China?
The documents required to register a company in China vary between cities and whether the shareholder is an individual(s) or company. Generally, you are required to provide the following documents:
Individual shareholder – Original passport -OR- notarized copy of the information page of shareholders passport and notarized letter of authorization notarized.
Company shareholder – Notorized copy of the business license issued in the home country, notarized copy of the articles of association, and notarized copy of appointment letter of the authorized signatory.
All documents need to be notarized by a Chinese embassy/consulate in the home country and translated into Chinese.
Can i obtain a working visa as the owner of a WFOE?
Yes, as long as you meet the requirements for employment in China and hire yourself as an employee.
How can I repatriate funds back to my home company?
There are multiple ways to repatriate funds back to your home country, such as service agreements, dividend payments, and decreasing the registered capital. However, payments must be in accordance to State Administration of Foreign Exchange (SAFE). Consult with your accountant on the safest way to move funds back to your home country.
Can I convert a RO to a WFOE at a later date?
No. You must create a new WFOE and move all resources to the new legal entity and then de-register the RO.
Whats is a fapiao?
A fapiao is an official state issued VAT invoice that serves as proof of purchase of goods or services in China. All business expenses incurred by the business must be accompanied by an official VAT fapiao. Fapiaos are issued via a government issued fapiao printer or by visiting the local tax bureau.
Got a Question?
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Integra Group | Accounting Tax HR
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