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More about Registered Capital (bilingual)

What Does Registered Capital Mean?

As we mentioned in our previous articles, for most industries, there is no requirement for minimum registered capital any more. So it seems funds will not be as much of a problem for most startups as a couple of years ago, but no minimum capital requirement doesn’t mean you can run a company in China with zero funds.

Practically, how much funds will be needed to maintain a company?

1. Rent

Virtual offices are not allowed in mainland China. In most cities, business is not allowed to be done in residential property. This means you have to rent an office to run your company.

2. Book-keeping service

Once the company is incorporated, a tax report has to be submitted to the tax authority from the first month the business license is granted (the day the business license is granted is the day the company is incorporated). Most startups will hire a part time accountant to do the bookkeeping in line with related requirements.

Another thing startups should keep in mind is that they have to submit the annual tax report and go through a joint annual compliance inspection by the end of June each year.  Otherwise, they will be put on the blacklist of the AIC, their business license will be revoked and they cannot do business any more. Usually, they will pay someone to do it.

3. Salary

For some startups, they won’t hire any employees in the beginning. However, they have to at least one employee, the owner themselves. They have to apply for a work permit and residence permit as an employee of their startups. Local authorities have a stricter requirement for work permit issuance now...

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